Statewide PA

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    PA DEP Issues “Final” New Drilling Regulations; Industry Pushback

    PA DEPJohn Quigley, the Secretary of the Pennsylvania Dept. of Environmental Protection (DEP), yesterday released a finalized version of proposed new oil and gas drilling regulations, otherwise known as Chapters 78 and 78a. A copy was sent to the Environmental Quality Board (EQB) for their required review which is planned for Feb. 3. The entire set of revised/new regulations (copy below) will then get published in the Pennsylvania Register and become final. Both the Marcellus Shale Coalition (MSC), representing unconventional drillers, and the Pennsylvania Independent Oil & Gas Association (PIOGA), representing conventional drillers, have come out against the new regulations. The MSC says the new regulations will cost the industry $2 billion annually without a corresponding benefit for the environment or safety, and PIOGA minces no words when it says the four-year revision process “has been flawed to the point of being fraudulent”…
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    PA DEP Fines Kinder Morgan $745K for Spills in Philly

    pay fines here signEDITOR’S NOTE: It’s interesting what a negative story can produce. The DEP posted a back-dated press release on their site after MDN released this story pointing out they had not informed anyone but StateImpact. We can assure you the release was not there until we pointed out its absence. You can read the back-dated press release here.

    Is the Democrat-controlled PBS outlet StateImpact Pennsylvania now the official stenographer for PennFuture Secretary of the PA Dept. of Environmental Protection (DEP), John Quigley? That’s the thought we had when reading a StateImpact story that the DEP has fined Kinder Morgan $745,000 for leaks at two Philadelphia-area storage facilities owned by Kinder. In every case we can recall, going back more than six years of writing the MDN blog site, whenever the DEP fines a driller or midstream company (Kinder is the latter), the DEP issues an official public press release on their own website. Not this time. Apparently the only “news” outlet to receive notification of the fine has been StateImpact because we’ve searched high and low and nobody else is (so far) carrying the news. Why did the DEP not post the news on their own website as they always have in the past? Why did only certain (perhaps just one) news outlets get this particular press release? Hence our observation that perhaps StateImpact is the new official stenographer for the PennFuture DEP. Here’s what the Dems at StateImpact say about the Kinder fine…
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    Some PA Republicans Beginning to Cave on Severance Tax

    Kudos to Pennsylvania Republicans for hanging tough and pushing back against the bullying of PA Gov. Tom Wolf with respect to a Marcellus-killing severance tax. However, the battle for a severance tax may have taken its toll. At least one, perhaps more, Republicans are going squishy now that the fight is over for the 2015/2016 budget. State Rep. Jim Christiana, a Republican (RINO) from Beaver County (where Shell may build an ethane cracker plant) says he will propose new legislation that creates a 3% severance tax. His tax plan includes abolishing the existing impact fee, which is the equivalent of a severance tax, and using some of the 3% tax revenue to replace the impact fee. Christiana says, “many Republicans support the concept of a severance tax, but simply reject the governor’s punitive approach.” He also says Republicans “have lost the public relations battle in explaining that the impact fee is a severance tax.” In other words Christiana has lost his nerve. Christiana is a major disappointment and, possibly, an harbinger that PA Republicans may cave and pass a severance tax after successfully fending one off this year…
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    57% of Pennsylvania’s CPAs Favor a Marcellus Tax – Surprised?

    Each year the Pennsylvania Institute of Certified Public Accountants (PICPA) conducts a poll of its membership. Last year PA accounts answered the question “How should PA close the state budget gap?” by indicating the state should privatize liquor sales – 69%, by instituting a Marcellus Shale severance tax – 67%, and by legalizing pot smoking – 27% (see PA Accountants Love Marcellus Severance Tax (and Smoking Pot)). This year’s PICPA poll results have just been published. Perhaps it was our criticism and poking fun at the absurdity of the question last year–but this year the question changed. This is the question they asked this year of PA accountants: “Pennsylvania faces a structural budget deficit estimated at nearly $2 billion. Which of the following should the state use to close the deficit?” The #1 preferred solution for PA’s accountants? A Marcellus Shale severance tax–57% favor it. As we said last year, does anyone else find it suspicious that the people who would have to manage and file reams of tax forms on a severance tax (generating lots of billable hours) are in favor of such a tax? Can anyone say, conflict of interest? Why do we care a wit about what CPAs think about taxes and budget deficits? They’re the ones who helped create it!…
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    PA AG’s Lawsuit Derails Demchak/Chesapeake Royalty Settlement

    In March 2015 MDN reported on the “Demchak” royalty case in which a group of Pennsylvania landowners had agreed to a settlement with Chesapeake over Chessy’s alleged shorting of royalty payments (see Chesapeake’s PA Royalty Settlement Affects Some, Not All Landowners). As we reported at the time, “several thousand” landowners sharing two-thirds of the $11 million settlement (the other one-third going to the lawyers) didn’t seem all that great a deal to us. But we’re not PA landowners with a dog in this fight. Toward the end of last year the issue got heated again as landowners (many landowners) were faced with a decision of whether or not to opt out of the settlement (see Packed Meeting in Towanda Discusses Chesapeake Royalty Settlement). Then along came PA Attorney General Kathleen Kane, herself under indictment for felony crimes, with her own lawsuit against Chesapeake over the royalty issue (see PA Atty General Sues Chesapeake Energy, Williams for Royalty Fraud). It seems Kane’s lawsuit has now put the brakes on the Demchak settlement that was supposed to have taken place in early February. That plan is now delayed…
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    Impact “Fee” or Impact “Tax”? It Matters in this (Court) Case

    Is the money collected from drillers in Pennsylvania for wells a fee, or a tax? Under the Act 13 law passed in 2012, it’s called an impact fee. We’ve long made the case that it’s part fee, part tax (see our story from 2012: PA’s New Tax on Drilling (er Sorry, Impact Fee)). Our definition, which we think makes eminent sense, is that a fee is money collected to reimburse the government for a service used. You drill a well in a community, you run big trucks over rural roads–those roads get damaged and it takes money to repair them. Or if there’s an accident because of the increase in traffic and fire/police are called out more frequently–there’s a cost associated. Local towns meeting to review and debate requests related to new wells? Takes precious time, and money. The impact fee, as originally intended, would compensate local municipalities for out-of-pocket expenses they incur when drilling comes to town. But then greedy politicians who like money to flow through their stick fingers got involved and in order to “sell” the impact fee in Harrisburg, compromises were made. In the end, 60% of the money collected from the impact “fee” stays local–to reimburse towns and counties for out-of-pocket expenses. The other 40% goes into the Harrisburg black hole and disappears into the fingers of local and state politicians who don’t incur any expense from drilling. So we call that 40% portion a tax–an obscene one at that. Why does it matter whether it’s considered a tax or a fee? Because of a Commonwealth Court case in which a driller maintains it’s a tax and the company doesn’t owe it if it’s considered a tax…
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    Scranton Newspaper Supports Stealing Gas Money for Philly

    It shouldn’t surprise anyone that the Democrat-controlled Scranton Times-Tribune doesn’t like the fair impact fee collected on Marcellus drilling in the state and instead prefers an unfair severance tax. It certainly doesn’t surprise us that they they think in such a twisted way. After all, 60% of the impact fee stays local and out of the hands of Harrisburg politicians. That’s just not “right” in Democrat-land. The other 40% that does go through the sticky fingers of Harrisburg politicians isn’t “enough” for good Lib Dems like those who control the Times-Tribune. So in their latest editorial, the Times-Tribune fans the flame of PA Democrat Auditor General Eugene DePasquale’s investigation into the industry in tracking down the “missing” $30 million of impact fee money (see PA Auditor General to Investigate “Lost” $30M Marcellus Impact Fee). True to Lib Dem form, the Times-Tribune wants DePasquale to go far beyond a simple investigation. They want DePasquale to somehow override the will of the legislature, and the residents of Pennsylvania, and extra-Constitutionally change the tax structure–throwing out the impact fee and instead slapping a nose bleed severance tax on the industry. That’s their preferred outcome. It will produce more money (so they reason) for them to play with and hand out to welfare slugs in “struggling urban areas” who keep voting for them…
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    PA PUC Commissioner’s Full-Throated Support of Marcellus Shale

    Pamela A. Witmer is one of five Commissioners of the Pennsylvania Public Utility Service (PUC). She is, in our opinion, one of the stars of the PUC–having been appointed by then-Gov. Tom Corbett in 2011. Pam is also a strong supporter of the Marcellus Shale industry and the miracle of fracking, as she indicates in a column she wrote for the Pittsburgh Tribune-Review. Pam writes about the “numerous benefits” of the Marcellus…
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    Why Do Marcellus Drillers Continue Drilling with Prices in the Basement?

    If a company that makes a product can no longer make that product at a profit, why would it keep making that product? Put another way, if Marcellus drillers can’t make money by selling natural gas for 75 cents per thousand cubic feet (and they can’t), why would they keep drilling new wells? And why would they keep pumping gas from existing wells? That’s the question asked–and answered–by an excellent Oil & Gas 360 article…
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    2016: Fewer Rigs Operating, Less Gas Flowing in Marcellus/Utica

    This is the time of year when prognosticators come out of their prognostication holes to prognosticate about the rapidly-approaching New Year. Some of those predictions involve the Marcellus/Utica industry and what we may see coming our way in 2016. And what might we see? Most believe we’ll see cut-backs in drilling–most companies have announced such plans. However, one thing we won’t see is all drilling stop. As we highlight in a companion story today (see Why Do Marcellus Drillers Continue Drilling with Prices in the Basement?), drillers will keep drilling in the Marcellus in 2016. Perhaps not as much as they drilled in 2015–but make no mistake, the industry is not finished. So if they will continue to drill, even though prices are in the basement, where will they get the money to do so? That’s the focus of this particular piece of prognostication…
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    PA Auditor General to Investigate “Lost” $30M Marcellus Impact Fee

    On Monday MDN told you about the case of bureaucratic incompetence in keeping track of reports that detail where and how much money is getting spent from the Pennsylvania Act 13 impact fee (see $30M in PA Act 13 Money Missing – Theft or Bureaucratic Cock-up?). Local municipalities say they’ve filed reports with the state Public Utility Commission (PUC), but the PUC can’t seem to locate those reports. Typical. But what’s this? We have a knight in shining armor riding to the rescue to figure out this financial potential malfeasance. Our hero is (ta da ta da, trumpet fanfare): State Auditor General Eugene DePasquale (Democrat). DePasquale, you may recall, is an anti-driller who targeted the Marcellus industry from the very first day he took office (see Newly Elected PA Auditor General Targets DEP First Day on Job). Most of DePasquale’s ire seems to be directed at the state Dept. of Environmental Protection (DEP). He conducted a very thorough anal exam of the agency, over a period of years, and issued a “report” critical of the agency for shortcomings that were already fixed by the time the report was issued (see Anti-Drilling PA Auditor General Criticizes DEP in “Report”). DePasquale would like nothing better than to find a new Marcellus scab (i.e. issue) and pick it until it bleeds in an effort to smear the industry. DePasquale is a bully if ever there was one. In particular he likes to target charter schools, trying to shut them down with audit after audit. Nice guy. It’s that “hero” who has ridden in on his black horse to conduct an “investigation” (more like an inquisition) of local towns and how they are spending his, er, um, the state’s money…
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    Turns Out “Foreigners” Working in OH are a Good Thing After All

    For years MDN has poked fun at RINO Ohio Gov. John Kasich for his jingoistic talk about not wanting “foreigners” in his state working at Utica drilling sites (see this story from three years ago – OH Gov. Kasich Continues Trash Talk Out-of-State Workers). Don’t tell Kasich, because he hates hearing this, but some are now saying that because Ohio has been employing “foreigners” from exotic places like Texas and Louisiana to work at Utica drilling sites, it has actually turned out to benefit the state. Why? Because in this downturn Ohio businesses are not as adversely affected. If all of those people now laid off had been Ohioans, the Ohio economy would have taken a much harder hit than it has. That’s one of the points in a Cleveland Plain Dealer article. Another point in the article is that because the Ohio Utica is much smaller and was just ramping up as the current price crash hit, when prices recover (and they will recover, eventually), Ohio will take off much faster than the big, old, decrepit Marcellus in Pennsylvania…
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    PA NatGas Production Slowing Down Ever So Gradually

    Natural gas production in Pennsylvania is, ever so gradually, slowing down. This year the Pennsylvania Dept. of Environmental Protection (DEP) began monthly reporting of natural gas and oil production in January of this year. The most recently report available is October (they are delayed by several months). What does the October report show? Average production of natgas was 12.5 billion cubic feet per day (Bcf/d), down 1% from September. Some producers (i.e. drillers) are cutting back–shutting in wells. But others are pumping full speed ahead. It just depends on the producer and where their wells are located. Prices in the northeastern part of the Marcellus are in the basement right now (see today’s companion story). Here’s a high level overview of PA production as of October…
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    $30M in PA Act 13 Money Missing – Theft or Bureaucratic Cock-up?

    poofNearly $30 million of Act 13 shale tax money that comes from an impact fee (i.e. tax) on Marcellus drilling in Pennsylvania is “unaccounted for.” The media is playing this up as “the money has gone missing” with the implication something nefarious is going on. The truth is a little more mundane. Some local municipalities receiving the money are confused as to which forms they have to file, and which agencies they need to file the forms with. It appears to be a bureaucratic cock-up–not theft, as implied by some in the media…
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    Dela. Riverkeeper Attempts to Discredit PA DEP Shale Radiation Report

    Stay tuned for five feet of snow. No, it’s not a weather report, it’s the snow job THE Delaware Riverkeeper (i.e. Maya van Rossum) is attempting with respect to a research report issued by the Pennsylvania Dept. of Environmental Protection (DEP). In January 2015, the DEP filed a report following two years of intense study to determine whether/if/how much radiation exposure is an issue in shale drilling. While the DEP found there is sometimes some low levels of radiation, the report concluded there is “little harm” from radiation in shale drilling (for the study results, see PA DEP Completes Fracking Radiation Study, Concludes “Little Harm”). When real science is published that contradicts the political science of global warming advocates like Maya van Rossum, the real science must go. And so van Rossum hired a discredited scientist to produce a review of the January 2015 report by the DEP, calling it “inaccurate and incomplete.” Van Rossum dragged out Dr. Marvin Resnikoff, who was humiliatingly slapped down by none other than the U.S. Geological Survey in 2012 (see Radon Debate: USGS Responds to Marvin Resnikoff Accusation). Resnikoff is the scientist-for-hire van Rossum used in concocting the latest snow job coming from her outfit…
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    The One Thing Everyone Agreed on at PA Pipeline Task Force Mtg

    Yesterday saw another in a series of meetings by the Pennsylvania Task Force on Pipeline Infrastructure Development–the penultimate meeting for the group of 48 members appointed by Gov. Tom Wolf and the PennFuture Dept. of Environmental Protection Secretary John Quigley. At the last meeting, in November, the group introduced a list of 184 “recommendations” in a 335-page document that would “guide” future gathering pipeline development in the state (see PA Gathering Pipeline Draft “Recommendations” from Wolf Task Force). At yesterday’s meeting the usual anti-fossil fuelers were present to complain, which is what they always do. Seems they’re only happy when they can make other people’s lives miserable–and they did their best to do just that at yesterday’s meeting. According to one report, there was one thing (amazingly) everyone agreed on yesterday…
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