Marcellus Shale drilling more expensive as PA raises fees

By: Scott Detrow

A Pennsylvania commission has approved increasing permit fees on Marcellus Shale drilling from $100 to a minimum of $900, which will take effect next month. But Governor Rendell is still pushing for an additional tax on Shale drilling, which he argues will net the state more than 100 million dollars in the next fiscal year.

By: Scott Detrow

A Pennsylvania commission has approved increasing permit fees on Marcellus Shale drilling from $100 to a minimum of $900, which will take effect next month. But Governor Rendell is still pushing for an additional tax on Shale drilling, which he argues will net the state more than 100 million dollars in the next fiscal year.

Transcript:
The Rendell Administration would tax five percent of each natural gas wellhead’s value, and impose a 4.7-cent levy on every thousand cubic feet removed from the ground.

Drilling companies argue the tax would take a big chunk out of profits and discourage drilling in Pennsylvania, but acting Department of Environmental Protection Secretary John Hanger says it hasn’t hindered production in the 39 states with severance taxes in place already

Stephen Rhoads, the president of the Pennsylvania Oil and Gas Association, argues Rendell is vastly overestimating the amount of money a tax would bring in next year, pointing out there’s not much shale drilling underway yet.

Rhoads: “There’s no money. There’s no real income to tax at this point in time. And until we have a few thousand wells drilled in this state and operating-which will take a couple years-there won’t be any revenue stream from the severance tax.”

Instead, Rhoads suggests Pennsylvania lease out more state forest land for drilling.  He says that would create definite revenue.