Pennsylvania Gov. Tom Corbett this week reiterated once again his promise to the companies drilling for natural gas beneath the commonwealth: No taxes on gas from the Marcellus Shale.
He told the Associated Press Tuesday he would veto any bill the state assembly sends him that includes such a tax.
The Marcellus Shale Advisory Commission, appointed by Corbett in February to help decide such things, voted last month to recommend an “impact fee” on Marcellus wells. The industry, which was well-represented on the commission, was OK with the fee, with a caveat. It only goes to the county in which the well is located, and only to the extent it can be proven that the well-drilling operations are causing the previously unanticipated increased expense to the county.
In other words, if a county has to improve its roads, or increase trash hauling, or upgrade its emergency services, it can charge the drilling companies – but only if it can show the expense was caused by the gas production companies.
For instance, once a well is drilled about 8,000 feet down and a mile or so sideways into the gas-laden Marcellus Shale, about three million gallons of water, sand and toxic chemicals are pumped in under high pressure to hydraulically fracture the subterranean rock. The gas is thus released, and pushes the fluid back out of the well, where it is collected into a containment – very often simply a rubber-lined open-topped pond – where it is held until it can be treated and released, or used in another well.
The existence of those millions of gallons of fracking fluid might cause a county to decide to upgrade its hazardous materials response equipment and training. The industry made clear its wish: No fair getting the gas industry to pay for improved ability to handle overturned tankers hauling motor fuel to the local Fill-Em-Up.
It seems like a valid request, except that many of those pools of fracking fluid are located on high ground, within the watersheds of rivers and bays far distant from the wells.
I have visited the drilling fields in Loyalsock State Forest. To get there, I drive about three hours along the banks of the Susquehanna River. The river provides drinking water to thousands of towns and cities between northern Pennsylvania and the Chesapeake Bay.
But industry representatives on the commission were emphatic: they would not be responsible for future unforeseen problems their operations might cause downriver, especially as far off as the Chesapeake Bay.
When Nature Conservancy Senior Policy Advisor Ron Ramsey called for “funding for unforeseen needs,” Lt. Gov. and MSAC Chairman Jim Cawley responded, “This provision draws perilously close to going from an impact fee to a tax.”
And Cawley’s boss has promised his campaign contributors in the Marcellus Shale industry he will approve no taxes on their production during his administration.
History is full of Murphy’s Law: If something can go wrong, it will. If several things can go wrong, the one that can cause the most harm will go first.
And Messeder’s Corollary: When something goes wrong, the company which immediately claimed it was responsible will already be looking for someone else to blame.
The BP debacle in the Gulf of Mexico last year is a classic illustration. No sooner had BP CEO Tony Hayward proclaimed his company would accept “full responsibility” and “honor all legitimate claims” for the disaster than he told ABC’s morning news show “Good Morning America,” “This wasn’t our accident. … This was a drilling rig operated by another company. It was their people, their systems, their processes.”
Ultimately, any serious accident in the drilling fields will impact areas outside the fields.
Ultimately, fixing the damage will fall to the taxpayers who live outside the fields.
In 2002, the U.S. Geologic Survey estimated Marcellus Shale contained about two trillion cubic feet of commercial profitable natural gas. This week the USGS revised its estimate, saying there is 42 times more gas down there than initially thought. Several times, drilling companies have boasted of “gushers,” wells that produced way more than was expected.
Some estimates indicated the U.S. could be benefiting from Marcellus gas for fifty years or more.
Pennsylvania is the only large-scale natural gas producing state not taxing the natural gas industry.
To be fair, the industry is being charged for its permits. It is “voluntarily” paying for road improvements necessitated by the thousands of truck-trips hauling equipment and supplies to the drilling sites. It is leasing land in the state forests and it is paying for the timber it cuts to make way for new drilling pads and pipelines.
But it seems fair also to ask the companies and shareholders profiting from what is beneath Pennsylvania to put some of that money into state coffers where, when the time comes, it can be used to help solve whatever unforeseen problem results in a woodland version of the BP oil spill.
The legislature, when it returns from vacation next month, should demand it. Gov. Corbett should keep his promise to veto it – a promise is a promise, after all – and the 203 representatives and 50 senators should promptly override his veto.
That was a promise they implied when they vowed to serve their constituents.
Photo by John Messeder
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