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Marcellus Shale Update in PA: Giving Away the Store

A blog post by Michael Wood, originally published at Third and State.

While the Pennsylvania Senate has delayed a vote on a Marcellus Shale drilling fee, state House Republican Leaders are trying to build support for a fee plan that looks a lot like Governor Corbett’s proposal.

On Monday, the Pennsylvania Budget and Policy Center crunched the numbers and found that the Corbett plan would give Pennsylvania one of the lowest drilling tax rates among major energy-producing states.

The average Marcellus Shale gas well is projected to generate $16 million over its 50-year life. The Corbett plan would generate $160,000 in revenue per well — an effective rate of 1%. A comparable well in Texas would raise $878,500 – five times more than Governor Corbett’s plan.

We also looked at three other leading drilling tax and fee proposals before the General Assembly. The effective tax rates for those and the Corbett plan range from 1.0% to 4.7%.

Plan Total Fee/Tax Revenue Effective Fee/Tax Rate
Scarnati: SB 1100 $505,000 3.1%
Quinn: HB 1700 $710,000 4.4%
Murt/DiGirolamo: HB 1863 $770,000 4.7%
Corbett/Ellis $160,000 1.0%

Other shale gas states ask much more from drillers.

State Drilling Tax Revenue Effective Tax Rate
Arkansas $555,700 3.4%
Texas [2] $878,500 5.4%
West Virginia $993,700 6.1%

 

 

 

A message for state lawmakers: Don’t give away Pennsylvania’s future with a weak drilling fee/tax bill.

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