PA Gov Wolf Proposes Marcellus-Killing 7.5% Severance Tax

taxes go up - jobs go downNewly elected Pennsylvania Gov. Tom Wolf has turned out to be another tax and spend liberal. Surprise! If you’re a regular MDN reader, you’re not surprised. We warned you about this from day one. Wolf released his severance tax plan yesterday, and it’s even worse than what he talked about on the campaign trail. He’s proposing a 5% severance tax PLUS another 4.7 cents per thousand cubic feet of natural gas that flows from a well. PA’s House Majority Leader Dave Reed (Republican) says it works out to be roughly a 7.5% tax–one of the HIGHEST IN THE NATION. On top of low low gas prices and rigs beginning to idle and capital budgets slashed 30-50%. In other words, if this tax is passed, not only will it not bring in Wolf’s disingenuous promise of $1 billion “for the children” (i.e. teachers unions), it will KILL Marcellus drilling in the state–and that’s not a bluff. It’s now apparent that Wolf is a man completely out of his depth and not ready for a big job like governor…
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PA Towns to Gov Wolf: Don’t Kill the Impact Fee with Your New Tax

Yesterday Pennsylvania Gov. Tom Wolf (Democrat) proposed what amounts to a 7.5% severance tax on Marcellus and Utica Shale drilling in the state (see our lead story today). Wolf’s severance tax is being erroneously reported as a 5% severance tax PLUS 4.7 cents per thousand cubic feet of natural gas produced at the wellhead. When you work it out, it’s actually about 7.5%, NOT 5% as Wolf misleadingly implies. Coupled with PA’s high corporate income tax rate, the proposal, if passed, would put PA at the top of the list of states taxing the oil and gas industry, essentially killing future Marcellus Shale drilling in the state (not an idle threat). Some of those most opposed to this hare-brained plan are the townships where drilling actually happens–they stand to loose big-time because the impact fee money they get now will be traded away for a few table scraps. The impact fee will be converted into the severance tax–and given away to Philadelphia…
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John Quigley’s Old Employer Likes High Wolf’s Marcellus-Killing Tax

MDN has several stories today about the newly proposed 7.5% severance tax on Marcellus Shale drilling proffered by newly-elected Pennsylvania Gov. Tom Wolf. If you want to know whether or not this severance tax will work to undermine, and even stop, Marcellus Shale drilling, all you have to do is look at the comments of anti-drilling groups in the state–like the comments of the radical PennFuture. You may recall that Wolf’s nominee to head the Dept. of Environmental Protection, John Quigley, used to work for PennFuture (what does that tell you about the future of drilling in the state?). According to the new “acting” CEO and head of PennFuture, this severance tax will help to end Marcellus Shale drilling in the state…
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Corporate Raider Mason Hawkins Holds 14% of CONSOL Energy Stock

Mason HawkinsWe consider this bad news for CONSOL Energy: Corporate raider (mainstream media calls it “activist investor”) Mason Hawkins, founder, chairman and CEO of Southeastern Asset Management, has just purchased another boatload of stock in CONSOL Energy. Hawkins, you may recall, is part of the dynamic duo, along with corporate raider Carl Ichan, who pressured Aubrey McClendon to leave Chesapeake Energy in 2013 (see Breaking: Chesapeake Energy CEO Aubrey McClendon Gets Pink Slip). Hawkins and Ichan then hired Doug Lawler as their proxy who came in and fired over 1,200 people at Chesapeake–an action intended to line the pockets of Hawkins and Ichan. Southeastern was/is the #1 stockholder in Chesapeake with 13.4% of Chessy’s stock. Southeastern is now, we believe, the #1 stockholder in CONSOL. After Hawkins’ latest spending spree, Southeastern now owns (according to our calculations) 14% of CONSOL’s stock…
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Repsol Accelerates Plan for Canadian LNG Exports Fed by Marcellus

Spanish oil giant Repsol loves North American shale. In December, Repsol purchased the troubled Canadian company Talisman Energy for $8 per share (see Spanish Respol Buys Marcellus E&P Talisman Energy for $8/Share). That deal is awaiting regulatory approval before it becomes official. Repsol is also contemplating building an LNG (liquefied natural gas) export facility along the coast of Saint John, Newfoundland. Those plans, according to new filings with Canada’s National Energy Board, have been accelerated. Part (much?) of the gas that will feed the Saint John LNG operation will come from, yes, the Marcellus and Utica Shale…
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Southwestern’s Contrarian Plan: Double Down on Drilling in the Marcellus

Southwestern Energy is one of the few exploration and production (E&P) companies that is bucking the trend. Most E&Ps are slashing their 2015 drilling budgets by a third or more. Not Southwestern. They recently closed on the purchase of a massive 413,000 Marcellus Shale acres, mostly in West Virginia, from Chesapeake Energy (see Chesapeake Using $1B from Southwestern Deal to Buy Back Stock). Southwestern paid $5.375 billion. Rather than pull back on spending, in December the company announced it would double its investment in drilling for the northeast (see Southwestern Energy on a Tear – Doubles Marcellus Budget for 2015). We picked up a few more details on Southwestern’s plans for 2015, which include drilling 70 wells in northern WV…
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FMC Technologies Axing 2,000 Jobs, Some in the Marcellus/Utica

FMC Technologies is a subsea oil-field equipment manufacturer and supplier of hydraulic fracturing technology and other wellhead services in North America–including a large presence in the Marcellus/Utica region. The company, based in Texas, employs 20,000 people worldwide. Yesterday FMC became the latest big oil and gas industry firm to announce job cutbacks due to low oil prices. FMC said it will trim (more like ax) 10% of its workforce, some 2,000 people, most of them in North America and located “outside of Houston.” One can deduce that some number of those lost jobs will be in the Marcellus/Utica…
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Marshall County Property Values Rise Yearly Thx to Marcellus

In contravention to the erroneous claim by anti-drillers that property values go down when drilling comes to town, Marshall County, WV continues to prove it’s just the opposite. Last year at this time MDN told you that the property values in Marshall County for 2013 had collectively risen an astonishing $605 million–in just one year (see When Drilling Comes to Town, Property Values Go…UP, Not Down). What about property values in 2014? They broke the record, again. Values are up a collective $631 million!…
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EIA’s Feb Drilling Productivity Report: Marcellus/Utica Up Again

Our favorite monthly report from our favorite government agency was released a few days ago. The U.S. Energy Information Administration (EIA) produces the monthly Drilling Productivity Report (DPR), which looks at production from both new (drilled in the last month) and legacy (drilled more than a month ago) wells along with overall production numbers for the seven top commercially active shale plays in the U.S. In a consistently recurring theme, all seven plays showed an increase in natural gas production from February to what they predict will be the numbers in March. The Marcellus stands head and shoulders above all other shale plays in producing what they say will be 16.7 billion cubic feet per day in March, up from 16.5 Bcf/d in February. The Utica is also forecast to increase–from 1.86 Bcf/d of natgas production in February to 1.93 Bcf/d in March. Below is the full February 2015 DPR report along with two charts not included in the full report…
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Growing Jobs: Marcellus/Utica PR Agency Opens Branch Office in TX

Used to be that companies working in and for the oil and gas industry–located in states like Texas and Oklahoma–would set up branch operations in states like Pennsylvania, Ohio and West Virginia to take advantage of the Marcellus and Utica Shale. These days, however, the trend is sometimes reversed. Bravo Group is a public relations firm based in Harrisburg, PA with a long list of clients in the oil and gas industry. Yesterday Bravo announced they’re opening a branch office in Texas. We love it when northeast shale drilling starts to export jobs to “foreign” places (as OH Gov. John Kasich calls them) like Texas…
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