Monday, July 27, 2009

Study Supports Marcellus Drilling

Supporters of proposed Marcellus Shale natural gas drilling unveiled a study composed by Penn State University researchers. Associate Professor of Natural Gas Engineering Robert Watson helped author the report and says one of the major concerns surrounding the drilling – water – is not an issue of great impact. Watson says water used to drill wouldn’t pollute groundwater and would represent only a small amount of the state’s total consumption. Watson says that gas could be “the biggest thing since steel” for the Commonwealth, if we play our cards right by leasing state gamelands to drillers and not taxing extractions. He says the industry created by Marcellus Shale drilling could last 100 years.

State Representatives Tim Solobay and Brian Ellis, who co-chair the House Oil and Gas Caucus, say the governor’s plan to tax drilled natural gas would harm, not help, state revenues. “We don’t believe the numbers he’s projecting of how much we would collect are accurate, because we don’t believe we’d get the growth that he anticipates,” says Ellis. They say the jobs created by the wells would extend past drillers – transportation, management, and professional experts would be necessary employees as well, they say, further stimulating the state’s job market.
Governor Rendell has proposed taxing gas extraction from the shale formation to help balance the budget. An administration spokesman says the tax would not negatively impact drilling interest because other states have already imposed taxes on the drilling.

Meantime, the public interest group PennFuture says the study released today is "replete with fuzzy logic and even fuzzier math.”

President and C-E-O Jan Jarrett says the the study's main finding that a severance tax would drive up the cost has a very basic flaw....“There is no cheaper gas anywhere, with or without a severance tax. Pennsylvania’s natural gas deposits have a huge competitive advantage, with higher Btu ratings than supplies elsewhere, and reduced delivery costs, since the gas is close to lucrative northeast markets. And I don’t care how much they dress it up with a study, this fact cannot be denied."

Jarrett says there's no indication that the tax will harm the industry..."Pennsylvania is 15th out of 32 gas-producing states, nearly all of whom have a severance tax. The gas is here, and the industry will drill where the gas is."

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