PA Gov. Wolf Promotes New Budget with (Yes) Severance Tax
We just have to shake our heads. Did Pennsylvania Gov. Tom Wolf learn nothing in his first year in office? Does he not see that expanding taxes during the Obama recession is a recipe for disaster? Is cutting spending (for a Democrat like Wolf) congenitally impossible–like cutting off your own arm? Apparently all of the above is true. Even though we have the worst economy nationally (and in PA) in the past eight years, thanks to Obama and his policies; and even though the shale industry is still in free fall because of low prices (victims of our own success); and even though the default budget passed in PA without a huge increase in education spending for this past school year didn’t result in any “harm” being done to little kiddies; PA Gov. Tom Wolf and his budget lackey Randy Albright are once again out there promoting (i.e. demanding) huge tax increases in the budget due in June of this year. Wolf/Albright want to raise the personal income tax in PA, and (once again) take a run at instituting a Marcellus-killing severance tax, even though the state already has the FULL equivalent of a severance tax when you add corporate income taxes with the impact fee they now pay. Words escape us. It’s beyond insanity. Perhaps gross mismanagement and leadership malpractice?…
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Pennsylvania State Rep. Martin Causer (R-Turtlepoint) testified before the U.S. House Committee on Agriculture in Washington, DC on Wednesday, April 13. Causer was there to tell the House Agriculture Committee that new pipelines are desperately needed in the farm country he represents. We have a copy of Rep. Causer’s masterful testimony below…
More trouble may be ahead for drillers in the Marcellus, Utica and beyond. Fitch Ratings has just released a report that says the Office of the Comptroller of the Currency (OCC)–a federal agency–is set to downgrade the ratings of loans for many exploration and production (E&P) companies that are considered “high yield” (HY). If the outstanding loans these companies have (and most of them, if not all of them, have outstanding loans), the downgrade means it will be much more difficult for drillers to get their hands on new money. And if they can somehow get their hands on new money, it’s going to cost them a lot more to do it, i.e. higher interest rates. Word on the street is that banks are feeling the pressure from the Federal Reserve and the OCC and will “reduce most energy company credit lines by roughly 20-40 percent this month.” Ouch. Banks have pretty much quit financing coal projects. According to one source, “Crude oil and natural gas productions may not be far behind.” Here’s the low down…
Yesterday MDN brought you a copy of a fascinating new study published by the Interstate Natural Gas Association of America (INGAA). The new study is titled “North American Midstream Infrastructure Through 2035: Leaning into the Headwinds” (see 
MDN is strongly in favor of property rights. “You don’t tell me I can’t allow drilling a shale well or a pipeline–and I don’t tell you that you must allow it.” That’s always been our guiding philosophy. It pains us when pipeline companies use eminent domain to force landowners to allow a pipeline to be built. Having said that, it’s a pipeline! It’s underground. Farmers can plant crops over top of it after it’s in the ground. After a few years, you’re hard pressed to even tell where the pipeline is buried! We say if there’s widespread opposition to pipelines in a given community, don’t bother building it there. However, if there’s a handful of holdout landowners (often driven by global warming insanity), eminent domain may be justified. Life is complex. These issues are complex. Again, forcefully using eminent domain against any landowner–even the stupid anti-drilling ones–pains us. We don’t like it. But eminent domain is part of our laws, created to benefit wider society. We spotted an article about some Massachusetts landowners who equate opposing Kinder Morgan’s Northeast Energy Direct pipeline with being patriotic, like the patriots from the original Boston Harbor Tea Party revolt. We had to laugh…
Once a month our favorite government agency, the U.S. Energy Information Administration (EIA), issues a Short-Term Energy Outlook (STEO). The EIA issued their latest edition on Tuesday. We have a full copy below. We’ve grabbed out the section on natural gas because it includes a couple of key points: (1) U.S. natural gas inventories just finished the winter heating season at their highest level ever, and are expected to be at a record high at the start of next winter heating season in November. (2) This summer natural gas consumption for electricity generation is expected to reach a record high. Here’s the natgas section of the STEO, along with a copy of the full report…
In March MDN told you that Alpha Natural Resources (ANR), primarily a coal company with 27,400 acres of Marcellus/Utica Shale leases, was throwing in the towel and calling it quits (see
NGLs, or natural gas liquids, are the “other” hydrocarbons that come out of the ground along with methane, or natural gas. The most common NGLs that come out of Marcellus and Utica boreholes in southwestern PA, eastern OH and northern WV are ethane, propane and butane. Ever so gradually new markets are opening up to sell NGLs. Right now for many drillers in the region ethane, the most common NGL, actually costs drillers to dispose of. It is an expense. But ethane could be used to feed cracker plants and so much more! Pipelines are beginning to cart NGLs to other regions like Canada, the Gulf Coast and (now) to the Philadelphia area where the NGLs can either be used in petrochemical plants or exported to be used in petchem plants overseas. But what if drillers had a way of storing NGLs until they could get access to pipelines or rail or new petchem plants to use it? That’s the premise behind a brand new startup called Mountaineer NGL Storage. Started by a group of industry veterans and backed with big money from Goldman Sachs, Mountaineer NGL Storage is developing a new underground storage facility in Monroe County, Ohio, near Clarington, along the Ohio River. Yesterday the company announced a non-binding open season for drillers who want to reserve storage capacity in the new facility when it goes live sometime in 2018…