IFO Report: Proposed Wolf Severance Tax Hits PA Landowners Hard
One of the lies told by Pennsylvania Gov. Tom Wolf in attempting to sell a Marcellus-killing severance tax to the general population is that most of the tax would fall on businesses and corporations outside of PA. The rallying cry has always been that PA landowners would not bear any of the severance tax–as in deductions from royalties paid. That lie was exposed by none other than the PA Independent Fiscal Office last week when the IFO released a report that calculates of the estimated $210 million in severance taxes that would be raised, per year, by the latest Wolf proposal–some $28 million of it (over 13%) would come out of the pockets of landowners–IN THE FIRST YEAR. By the third year, that number rockets to $51 million (or 24%). That is, a meaningfully large portion of the proposed severance tax WILL get passed on to landowners as deductions from their royalties. Lesson for landowners: Don’t fall for the siren song from Wolf and RINOs who say “If you support the severance tax (it won’t affect you), we’ll get you your minimum royalty bill.” It’s a farce…
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Tom Gellrich, founder of Top Line Analytics–a consultancy focusing on downstream shale gas development like ethane crackers–spoke Wednesday at Kallanish Energy’s “Crackers, Storage & Pipelines 2018” event at Southpointe. He had some interesting things to say. Among them: The Marcellus/Utica region has enough ethane to easily support up to eight ethane cracker plants–plants the size of the massive Shell cracker being built now in Monaca (Beaver County), PA. So far only Shell has pulled the trigger and begun to build such a plant. PTT Global Chemical, based in Thailand, is actively considering (and likely) to build a second regional cracker plant in Belmont County. So the multi-billion question is this: Why aren’t more companies building crackers in our region, given the abundance of cheap ethane? Gellrich had some thoughts on that…
This week representatives from Shale Crescent USA are in Houston, TX attending the 33rd Annual World Petrochemical Conference–and they have in hand a dynamite study that shows it’s more cost effective to build a petrochemical plant in the Marcellus/Utica region than it is along the Gulf Coast. Which is heresy if you live along the Gulf Coast. “Benefits, Risks, and Estimated Project Cash Flows: Ethylene Project Located in the Shale Crescent USA versus the US Gulf Coast” is an independent report by IHS Markit commissioned by Shale Crescent USA to evaluate and compare the financial returns and risks of a major petrochemical and plastics investment in the region with an identical investment in the US Gulf Coast. The numbers don’t lie. Here’s one juicy statistic from the newly released study: ethane (the feedstock used to make raw plastics) in our region costs 32% less than it does in the Gulf Coast region. One more factoid from the report: If the Marcellus/Utica were its own country, it would be the #3 natural gas producing country, IN THE WORLD! Our region produces more natural gas than the countries of Saudi Arabia, Iran and Qatar. Last year the Shale Crescent folks were the new kids at the World Petrochemical Conference. They were just about laughed out of the event. We have a feeling this year is going to be a lot different…
Yesterday our favorite government agency, the U.S. Energy Information Administration (EIA), issued our favorite monthly report, the Drilling Productivity Report (DPR). The DPR is the EIA’s best guess, based on expert data crunchers, as to how much each of the U.S.’s seven major shale plays will produce for both oil and natural gas in the coming month. The numbers continue to be mind-blowing–hitting new all-time highs that take your breath away. Last month EIA estimated the Marcellus/Utica (called Appalachia in the report) would produce a new high of 27.15 billion cubic feet (Bcf) per day of natural gas, which would be 321 million cubic feet (MMcf) (nearly 1/3 of a Bcf) higher than the month before. The actual number for February turned out to be 27.56. That is, EIA underestimated the number! This month, which is an estimate for all of March, EIA says M-U natgas production will go up ANOTHER 359 MMcf (over 1/3 of a Bcf)! The Permian, an oil play that produces “associated natural gas” along with oil, is estimated to go up another 233 MMcf/d. Yikes! The new total natgas production from all seven major shale plays is estimated to be 66.119 Bcf/d in March. Last year this time output was 55.2 Bcf/d. Mind blowing!…
Did you know that once upon a time, around 100 million years ago when dinosaurs roamed the earth, that mom earth had no permanent polar ice caps, and that the amount of greenhouse gas (carbon dioxide, CO2) in the atmosphere was 10 times (i.e. 1000%) higher than it is today? And yet, somehow, life survived. Who knew? Contrary to the scaremongering balderdash being pedaled today, the amount of CO2 we humans pump in the atmosphere today by burning fossil fuels is puny compared to what volcanoes used to pump into the atmosphere eons ago. Humans today are pikers–bush league–compared to the volcanoes of old when it comes to warming up mother earth. That’s what we learned in reading a newly published study on the link between the formation of today’s shale oil and gas deposits and ash from long-ago volcanoes. “Nutrient-rich ash from an enormous flare-up of volcanic eruptions toward the end of the dinosaurs’ reign kicked off a chain of events that led to the formation of shale gas and oil fields from Texas to Montana.” So says “Volcanic ash as a driver of enhanced organic carbon burial in the Cretaceous”–a new study just published in the journal Nature…
The Ohio Dept. of Natural Resources (ODNR) has just issued production numbers for the fourth quarter of 2017. Production was up for both natural gas AND oil, as it was in the third quarter (see 
Pennsylvania ended 2017 with a bang–at least with respect to natural gas production. Yesterday, the PA Independent Fiscal Office (IFO) released their latest quarterly Natural Gas Production Report for Oct-Dec 2017 (full copy below). It shows natgas production rose 9.8% compared to the same period last year. It also shows the number of producing wells is up 9.2% from last year. Total natural gas production volume was 1,401.8 billion cubic feet (Bcf) and the number of producing wells in 4Q17 was 8,268…
Yet another “fracking may cause earthquakes” study has been published in the so-called peer reviewed journal PNAS (Proceedings of the National Academy of Sciences). Researchers from the University of Miami (in Ohio) admit the kind of earthquakes they talk about in their paper, potentially caused by Utica Shale drilling, are “rare.” But, they are also “concerning.” Yes, everyone should be concerned that in zero percent of Utica well drilling cases (statistically speaking) there have been NO earthquakes. Actually a couple of cases are thought to be related to fracking over a fault–but it’s still unproven. Statistically speaking, it’s 0%. But, there could be problems! Maybe. If the conditions are “just right.” Ya never know. We note the researchers didn’t address concerns over fans in football stadiums that, when they all stomp their feet at the same time, have caused “earthquakes” that are higher on the Richter scale than the ones they postulate “may, maybe, might” happen in Utica drilling. No mention of football fan earthquakes in this study. Below is the “news” about this latest, breathlessly urgent report that everyone should read…
Yesterday our favorite government agency, the U.S. Energy Information Administration (EIA), issued our favorite monthly report, the Drilling Productivity Report (DPR). The DPR is the EIA’s best guess, based on expert data crunchers, as to how much each of the U.S.’s seven major shale plays will produce for both oil and natural gas in the coming month. The numbers continue to be AMAZING. Natgas production continues to explode (poor metaphor!)–especially here in the Marcellus/Utica region, which is labeled “Appalachia” in the report. EIA predicts production in the Marcellus/Utica will soar another 321 million cubic feet per day (MMcf/d), roughly one-third of a billion cubic feet (!), between February and March. That’s after M-U production went up a stupendously massive 428 MMcf/d last month, even more than the 377 MMcf/d originally forecast (see 
This is one of those zany Friday kind of stories. Yet another so-called study on the Marcellus Shale industry recently caught our attention. We’ve often pointed out the “bought and paid for” research that abounds on shale drilling. This one goes to a whole new metaphysical plane. Instead of researching and drawing conclusions from research data, the recently published study “Engaging over data on fracking and water quality” (University of Pittsburgh and Penn State University) talks about talking about the issue of Marcellus Shale drilling. Yeah. How do you *feel* about drilling? Here, lie down on this sofa while we ask you some questions about your childhood and fracking practices. OK, so maybe a study about how people talk about the issues involved with Marcellus Shale drilling isn’t so far-fetched–if such a “study” were to appear in the Journal of Idiosyncratic Sociology. This “study” however, was published in the journal Science. As in hard science–not social science. So now it no longer matters what real science finds–whether or not fracking actually pollutes water and air. Whether or not living near a fracking site will stunt your growth. Whether or not fracking carves up forests or increases automobile accidents or any of a plethora of other issues. What REALLY matters is what you *think* about all that. That’s what now passes for science in Science…
In 2011, then-Gov. Tom Corbett’s Marcellus Shale Advisory Commission filed a final report with 96 recommendations (see 
How often do we have to repeat the warning that electrical blackouts are coming to New England if the region does not get new sources of natural gas by building more pipelines? This is not some reckless, wild eyed blogger guy saying it–the warning comes from the top, from the people who operate the electric grid! We first raised the warning back in 2014 (see