Haynesville Shale Tops Marcellus Rig Count, 1st Time Since 2011
The Haynesville Shale, found in East Texas and Louisiana, last week surpassed the Marcellus for total number of active drilling rigs. That’s the first time the Haynesville has had more active rigs than the Marcellus since 2011–six years. What’s up with the “sleepy” Haynesville? It’s not so sleepy anymore. Last year one of the biggest and best drillers in the Marcellus, Range Resources, paid $4.4 billion to buy out and take over a Louisiana driller (see Range Resources Buys Louisiana Driller in Deal Worth $4.4B). Range drills in the Terryville Field in Louisiana, which sits just over top of the Haynesville. This year Range is spending 34% of their capital expenditure budget on Louisiana drilling–money that could have been spent in the Pennsylvania Marcellus. Why is the Haynesville picking up again? (1) It costs less to drill in Louisiana because taxes and other drilling costs are lower, and (2) pipeline infrastructure is already in place to sell the gas into higher-paying markets. This is a very loud warning to those in PA who say “drillers won’t go anywhere else ’cause the gas is here” as a justification for slapping a severance tax on top of the impact fee on top of a corporate state income tax: THEY’RE ALREADY LEAVING PENNSYLVANIA, going to the Haynesville and other plays. How obtuse can you be? How stupid is it to RAISE taxes when drillers are already shifting away from the state? If PA lawmakers insist on slapping drillers with a severance tax, drillers will be happy to turn the spigots off for a while until prices go up and they can afford to pay the tax. Drillers are equally happy to spend their money drilling new wells in other states, given regulatory problems and high taxes. And then where will your “easy money” come from to balance an overspent state budget?…
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Politicians are once again demagoguing and attempting to demonize “Big Oil & Gas” over the taxation issue. No, we’re not talking about severance taxes. We’re talking about accounting deductions that oil and gas companies take to reflect depletion of assets. Flying under the banner of “eliminating tax loopholes,” some politicians want to strip away deductions from oil and gas companies–while leaving the same deductions in place for other industries. It is the worst kind of sleazy attack on the o&g industry. William Shughart, professor at Utah State University, brings us up to speed on the latest under-the-radar attack on the shale industry…
We continue to read articles about the ongoing effort by Pennsylvania Democrats and some squishy Republicans to slap a severance tax on top of an existing impact tax on natural gas drilling in the Keystone State. As we pointed out yesterday, Philadelphia teacher’s unions are in the forefront of a plan to grab money from drillers and funnel it into the pockets of their members (see 
The steady, daily drumbeat coming from mainstream (i.e. fake) news outlets in Pennsylvania is that the PA House of Representatives is sitting on its hands, dithering, not doing anything about the so-called budget crisis. The fix is, of course, for the House to accept and pass the ludicrous plan from traitorous Senate Republicans that will tax natural gas a total of four times, with four separate taxes (see 
MDN has covered the ongoing budget debate in Pennsylvania for months. The PA Senate and House are controlled by Republican majorities–but not necessarily conservative majorities. The Republicans fell into a trap set by the Democrats. They passed a ~$32 billion budget with only enough revenue to pay for $30 billion–meaning there’s a $2 billion gap that needs to be filled. Instead of doing the adult thing–cut spending–they decided to allow more spending and figure out how to pay for it “later on.” Later on came, and of course pressure intensified to punish a single industry–natural gas–in order to make up the shortfall. At the end of July MDN brought you the sad news that Republicans in the Senate sold out and voted for a severance tax (see 
Yesterday a group of Pennsylvania business and economic leaders from trade associations representing thousands of PA businesses held a conference call to roar their disapproval of the GOP-led Senate plan to impose high/new taxes on energy in the Keystone State. Those on the call included: Gene Barr, president of the Pennsylvania Chamber of Business and Industry; Terry Fitzpatrick, president of the Energy Association of Pennsylvania; David Taylor, president of the Pennsylvania Manufacturers Association; Mark Chasse, treasurer for Industrial Energy Consumers of Pennsylvania; Stephanie Catarino Wissman, executive director of Associated Petroleum Industries of Pennsylvania; David Spigelmyer, president of the Marcellus Shale Coalition; and Dan Weaver, president of the Pennsylvania Independent Oil and Gas Association. A group of heavy hitters. Their message was loud and very clear: no new severance tax, no new gross receipts tax. To enslave Pennsylvanians with these taxes now–to fix a single year’s budget–would sacrifice PA’s economic future. Gene Barr pointed out the Senate plan taxes natural gas four different times: 1. when drillers drill a well (impact fee); 2. the gas coming out of the well (severance tax); 3. when the gas gets used by consumers (gross receipts tax); and 4. if drillers make a profit, their profits are taxed too (income tax). It is a plan crafted to satisfy Big Education–to funnel money to teachers, rewarding them for voting Democrat. How many times do we have to point out this is not compromise, it’s insanity!…
We’ve noticed a meme, largely started by an Associated Press article endlessly repeated and published in dozens of news outlets across Pennsylvania, that the recent budget deal (with a severance tax) passed by the traitorous Republican-controlled PA Senate “jams a shale tax and industry permits into unhappy package” that now sits before a House that essentially has no choice but to adopt it. Here’s the establishment “received wisdom” in a nutshell: Drillers don’t get what they want (a severance tax), but they do get what environmentalist wackos don’t want (streamlined approvals for permits). And guess what? “That’s politics.” And if you don’t like it, on either side of the equation, you’re an unrealistic dope who doesn’t know anything about politics. We manifestly reject that assertion. Here’s why this deal is one sided–a severance tax only deal. Big Green groups with endless pockets to fund litigation factories are already talking about how if this budget is passed with what they want (a high severance tax) but also with what they don’t want (streamlined approvals for permits), no problem. They’ll just sue to remove the streamlined permits part, leaving drillers with the high severance tax. That’s how “fairness” works for Democrats and antis. Get part of what you want, then litigate the rest–force it on people who don’t want it. That’s the strategy laid out in the AP article claiming both sides are unhappy, implying it’s a good deal because both sides are getting something they want and something they don’t want. The clear signal being sent by environmentalists is that they’ll litigate their way to happiness. Meanwhile the Marcellus industry will get the shaft, which is why the House MUST reject this budget as written…
We suspect Pennsylvania Gov. Tom Wolf (a Democrat) may be smoking some of the state’s medical marijuana–sampling the goods, just to be sure it’s safe, ya know. During an interview with a PA public radio station yesterday, commenting on the horrible budget bill passed by traitorous Senate Republicans, Wolf said, “I believe that the House will support the Marcellus Shale tax as well.” Notice the Freudian slip? Wolf WANTS to target the Marcellus industry. He called it a “Marcellus Shale tax” as opposed to a severance tax. The Dems are attempting to conflate a “Marcellus Shale tax” with things like a “cigarette tax.” Nasty, vile stuff–but if people want it, tax ’em to hell and back. RINOs in the Senate fell for the severance tax trap sprung by Wolf and the Dems. We predict the House will NOT pass the Marcellus tax, Mr. Wolf. We don’t smoke weed–so we have a clear head about these things…
Yesterday the Pennsylvania Senate voted 26-24 to pass a so-called compromise budget bill that adopts a Marcellus-killing severance tax. What’s most distressing about the situation is the betrayal of Senators like Gene Yaw, of northeastern PA. The bill not only raises taxes on drillers, slapping a severance tax on top of the existing impact fee, it also slaps a 5.7% gross receipt tax (GRT, or “usage tax”) on natural gas used by homes and businesses, meaning PA gas bills will go up starting August 1st (if the bill passes the House). What happens next? The bill has gone to the PA House for consideration. The pressure on the House, and Speaker Mike Turzai, is intense. The Senate has done a big disservice to the House by not getting agreement ahead of time. But we deal with the cards in our hand. What’s going to happen now?…
As part of the horrible severance tax bill the Pennsylvania Senate passed yesterday (see today’s companion story), Republican Senators placed into the bill what they hope is “an olive branch” (more like a withered twig) by including reforms to the regulatory process they say the drilling industry has been asking for. Senators included a provision to have third party contractors (people outside of the Dept. of Environmental Protection) review applications at the DEP, including permits for oil and gas drilling, when the DEP can’t review those applications in a timely manner. There’s also a provision that certain permits, like those granted to drillers for sediment and erosion, will automatically be granted if the DEP drags its feet and doesn’t grant the permit by the current, specified deadline (45 days, with a possible 15 day extension). Those permits are currently taking up to 200 days to be granted. Enough. If the DEP can’t get it done, the permit gets granted automatically or goes to someone on the outside who can get it done. There are other provisions in the severance tax bill as well. Of course these proposed changes have antis in an uproar. You see, “compromise” for antis and Democrats means “you do it all our way, and we give you nothing in return.” That Republicans actually want something in return for voting for a horrible tax bill is beyond belief for antis, who are now squealing like stuck pigs. Here’s what we’ve been able to find out about the proposed changes, the “olive branch” offered by traitorous Republicans, as part of the newly passed severance tax bill…
Pennsylvania Senate Majority Leader Jake Corman and Senate President Pro Tempore Joe Scarnati have betrayed the Marcellus gas industry and should be tossed out on their rear-ends in the next election. Corman, Scarnati and other so-called Republicans in the PA Senate leadership have signed on to promote a severance tax plan to “close” the budget gap THEY CREATED by idiotically passing a bloated spending plan they couldn’t pay for. Now, caving to pressure from a tax-and-spend liberal media and tax-and-spend Democrat Party, PA Senate Republicans have opened a door that should never have been opened. PA’s Marcellus drillers already pay the equivalent of a 9.16% severance tax–highest in the country (called an impact fee). This new plan leaves the impact fee in place, AND places a severance tax on top of it, guaranteeing LESS drilling (and less tax money) for PA, not more. How utterly stupid is that? Last night 19 members of the PA Senate Appropriations Committee voted on a plan that, among other things, puts a 2 cents per thousand cubic feet severance tax on all natural gas produced, which, according to the wizards of smart in the Senate, will raise an extra $108 million. Today the package goes to the full Senate for a vote, where it is expected to pass. It then goes to the House. If a severance tax is passed (big if), Gov. Wolf can finally “check a box on a campaign promise” to give away other people’s money to teacher’s unions. Our only line of defense now is the steel backbone of PA House Speaker Mike Turzai and the House Republicans, to hold the line and reject the severance tax proposal coming from the Senate…
The lengths to which the leadership of the Democrat Party in Pennsylvania is willing to go to tax Marcellus Shale drillers is amazing. And alarming. As we have pointed out, repeatedly, PA does not have a revenue shortfall problem–it has a spending problem. Like an alcoholic you can’t reason with and convince to stop drinking, PA Dems are taxaholics–addicted to sticking their fingers in other people’s pockets to transfer money to voters who will keep them in office. That’s the sleazy, disgusting mess in Harrisburg going on right now. Republicans stupidly voted to pass a $32 billion state budget with only $30 billion of it covered by current revenue sources. So now the pressure is on to cover the “gap” between expected revenue and overspending. From the very beginning of Gov. Tom Wolf’s tenure as the most failed governor of PA in our lifetime, we pointed out Wolf’s desire and plan to pass a new tax on a single industry, the Marcellus industry, as nothing more than political payback for teacher’s unions. The unions supported and voted for Wolf, and he dearly wants to give them money via a new severance tax, as payback. The interesting/jaw-dropping thing is, the teacher’s unions admit it! They admit, openly via a recent op-ed article penned by Jerry Jordan, president of the Philadelphia Federation of Teachers, that a severance tax is needed for union members. Do Pennsylvanians not see this for what it is–theft and political graft? Jordan wants PA legislators to aim the gun of the government at the heads of drillers (and landowners), take their money, and hand it over to union members…
Since 2012, Pennsylvania has collected the equivalent of a severance tax from Marcellus Shale drillers via something called an impact fee. Same concept as a severance tax. You drill a well, gas comes out, you pay a tax. Except with an impact fee you pay whether or not anything comes out of the ground, meaning an impact fee is superior to a severance tax, which is based on how much comes out of the ground. The impact fee quickly started to generate hundreds of millions of dollars a year in extra revenue for Pennsylvania–60% of which goes back to the communities where drilling happens (which Philadelphia politicians hate), and 40% of which goes to the black hole of Harrisburg for redistribution (which Philadelphia politicians love). Drilling began to slow in 2014, and crashed in 2015/2016, with low low commodity prices for natgas. The impact fee doled out this year is based on revenues raised last year, in 2016, during the worst part of the downturn. So it’s no surprise that impact fees collected and distributed this year, in 2017 have been the lowest since the impact fee began (see 
Once again it’s necessary to counter the false narrative in Pennsylvania media that “Pennsylvania is the only state without a severance tax” and “a severance tax will magically fix our over budget mess.” Last week MDN brought you news that 12 so-called Republicans in the PA House were behind an effort to force a vote on a severance tax (see 