Flawed Analysis by (Gasp) the EIA on Severance Taxes

flawed logicOur favorite government agency, the U.S. Energy Information Administration (EIA), published an article on Friday that appears to “take sides” in the Pennsylvania debate over whether or not to institute a severance tax. Which is a disappointment. Until now the EIA has stayed above the fray in such issues. The EIA article from Friday offers a grossly misleading side-by-side comparison of where states get their primary source of revenue to feed their voracious appetites to transfer wealth from those who earn it to those who don’t–and how much is contributed by oil & gas severance taxes. The EIA compares tax revenues from five major fossil fuel generating states–Alaska, North Dakota, Wyoming, Texas and Pennsylvania. The graphic they use is powerful (and misleading) and appears to support calls to increase a severance tax in Pennsylvania. We disagree–strongly–with that position. Here is the EIA post from Friday, followed by MDN’s explanation of how it is grossly flawed…
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Philly Republicans Expose Wolf Severance Tax as a Shell Game

shell gameTwo Republican members of the Pennsylvania House of Representatives have penned a column that points out the math for PA Gov. Tom Wolf’s so-called severance tax on the Marcellus Shale industry a) doesn’t add up, and b) doesn’t actually end up funding education. What makes the column noteworthy is that the two Republicans are not the conservative leaders of the PA House, but instead are from the Philadelphia area. Every Republican we’ve seen from the Philly area are moderate at best–usually RINOs (Republican in Name Only)–and certainly not anywhere near conservative. Yet these two, Rep. Tom Quigley from the 146th district in Montgomery County, and Rep. Warren Kampf from the 157th district in parts of Montgomery and Chester counties, ever-so-eloquently skewer Wolf and his inane high tax plan. Remarkable, coming from two Philly-area Republicans…
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Moody’s Downgrades Ascent Resources Credit Profile to Basement

chart going downAlthough MDN caught and reported on the Bloomberg article questioning Aubrey McClendon’s high roller ways (see Has Aubrey McClendon Finally Hung Himself with High Debt?), we somehow missed the Moody’s announcement downgrading McClendon’s prodigal Ascent Resources, née American Energy Appalachia Holdings. The Moody’s downgrade of Ascent reads almost the same as the downgrade of EXCO Resources that we previously reported (see Moody’s Downgrades EXCO Resources Credit Profile to the Basement). In fact, Ascent’s rating is a step lower than EXCO’s–that’s how poor the outlook is for Ascent…
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Kentucky Supreme Court Rules Against Landowners in Royalty Dispute

court gavelThe Supreme Court of Kentucky has just ruled, in a pair of cases, that producers (i.e. drillers) CAN deduct post-production costs before calculating royalties to landowners. Once case involves landowners suing Magnum Hunter, the other involves landowners suing EQT, claiming (much like what has happened in Pennsylvania) that post-production costs mean they are getting less than one-eighth or 12.5% of the fair value of the gas as a royalty payment. The Supreme Court of Kentucky ruled the language in the leases is unambiguous as is the law–and that the lease allows for post-production expenses to be deducted. Here’s a summary from the legal beagles at Vorys…
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Private Company Fracked EQT’s Monster Utica Well, Working on More

As MDN recently reported, EQT is the reigning champ for biggest initial producing Utica Shale well–ever. Their ginormous Scotts Run 591340 dry Utica well in Greene County, PA produced an initial production (IP) of 72.9 million cubic feet of natural gas per day (see EQT’s 1st Utica Well Shatters Record – 72.9 MMcf/d IP Rate!). We also brought you some of the details and data from that well, a well so important that it changed the future course of drilling for EQT (see EQT Releases Data on Biggest Utica Well Ever; Dumping UD Drilling). We’re now happy to bring you the name and a bit of the back story for the privately-held company that fracked the Scotts Run well…
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PA AG Kathleen Kane’s Dirty Deeds Against Minuteman Environmental

guest postPennsylvania’s Attorney General, Kathleen Kane, will appear in court today to answer charges that she is, herself, a criminal. She will appear in Montgomery County court to face nine criminal charges, including perjury (i.e. lying under oath). As we have reported, Kane is attempting to divert attention away from her own criminal actions by resurrecting an old porn case, claiming angry white men are out to get her (see AG Kathleen Kane’s Defense: Dirty Old Men are Out to Get Me!). Kane has lost the confidence of everyone, including PA Gov. Tom Wolf–the most liberal governor in America, who is calling on her to resign. Kane lost our confidence from her first day in office in 2012 when she started out by targeting the drilling industry (see Will New PA AG Go After the Marcellus Drilling Industry?). One of the many companies in the Marcellus industry targeted by Kane for extinction over the past three years was Minuteman Environmental Services, a PA company that serves the shale industry with several different businesses (see PA’s Anti-Drilling AG Charges Minuteman with Enviro Crimes). Kane orchestrated what can only be called a terror attack on Minuteman and its owner Brian Bolus and his family (see Minuteman Enviro Says PA AG Office “Terrorized” Family Members, Filing Lawsuit). Amazingly, Minuteman is still in operation–even though Kane and M&T Bank, working with Kane, froze Minuteman’s assets and tried to bankrupt them. An employee of Minuteman has written a guest editorial for MDN to point out that although Kane is going to court for reasons unrelated to the travesty she’s inflicted on Minuteman, folks should not forget the damage she’s done to the industry, in particular the damage she’s done to Minuteman and its workers…
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Coal Magnate Says Obama Waging War on All Fossil Fuels

Obamas War On Fossil FuelsWhile MDN has long commented that while natural gas burns cleaner than coal and oil, we are by no means against other forms of fossil fuels. We have not fallen pray to the temptation to “pile on” coal and oil as inferior forms of energy in a vain attempt to prop up natural gas. Why? Because we know how liberals like Obama and the Democrats think. Once they are through destroying coal, they’ll come for natural gas and attempt to destroy it as well. That is now happening. As Robert Murray, chairman and CEO of Murray Energy Corp (big coal company) says, all forms of fossil fuels are under attack by the Obama administration. Murray also points out those who support natural gas and have supported Obama’s rhetoric against coal should not be surprised they have been betrayed by Obama and now are, themselves, a target for elimination. As Murray rightly says, affordable, reliable electricity in America is being destroyed by Big Green groups like the odious Sierra Clubbers…
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OH Electric Generator Cuts Residential Sales in Favor of Shale

President Obama’s war on coal, and indeed all fossil fuels, is affecting electric utility companies. But not all electric generating companies are suffering–at least suffering from loss of profits. One such company, American Electric Power (AEP) from Ohio, made more profit in the second quarter of 2015 than it did in 2Q14–$40 million more. And they did it while shutting down enough coal-fired electric plants to serve 5.5 million homes across the Marcellus/Utica region. Who cares if there’re rolling blackouts because Obama’s war on coal is causing electric plants serving residential homes to shut down, right? How does AEP actually make *more* money when up to 5.5 million potential customers are now not being served with electricity? By swapping out electricity sold to residential customers with selling to a different kind of customer: the natural gas industry itself. AEP has added a number of new customers in the oil/natural gas industry, like compressor stations…
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Range Partners with FTSI to Use Shale Gas to Power Fracking Ops

This news is a few weeks old, but interesting and important nonetheless. FTS International reports they have partnered with Range Resources to use shale gas produced by some of Range’s Marcellus Shale wells to power an entire pressure pumping fleet used to frack more Marcellus wells. So far FTS has fracked 15 wells for Range using pumpers run mostly on local shale gas (with a little bit of diesel mixed in)…
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