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Drilling For Budget Dollars
From Monessen, PA
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GOP bill would lease state forests for drilling
Environmentalists outraged by proposal
Wednesday, March 25, 2009
By Tom Barnes, Post-Gazette Harrisburg Bureau
HARRISBURG -- House Republicans don't like Democratic Gov. Ed Rendell's plan to slap a "severance tax" on natural gas produced by drilling in some areas of Marcellus shale in Pennsylvania.
So they've come up with an alternative -- greatly expand the amount of state forest land where gas drilling can be done and then require the private drilling companies to pay the state a fee of $2,000 an acre. That could raise $260 million a year, far more than the $107 million that Mr. Rendell would raise with his new tax, the GOP said yesterday.
But environmentalists, who fear potential damage to state forests, have come out strongly against the GOP plan.
"This plan to open up hundreds of thousands of acres of state forests, whether or not it harms our natural resources, is the height of fiscal and environmental irresponsibility," said Jan Jarrett of Penn Future.
She said state forests are designed to protect the environment and should not be "plundered." The GOP legislators, she said, "want to give the [natural gas] industry a free pass to drill anywhere without paying a severance tax -- the same tax they have to pay in most other states."
Jeff Schmidt of the Sierra Club also was opposed. He said it's not necessary "to open up more state forest land for drilling when there is already so much land available on private land and existing public lands."
Last year, 74,000 acres of state forests were opened up for drilling by the Department of Conservation and Natural Resources. The state has gotten $190 million in leasing fees on that land, most of which Mr. Rendell wants to use to help erase a state budget deficit. Some parts of the Allegheny National Forest, as well as much private land, are also open for oil and gas drilling, Mr. Schmidt added.
He said he supports Mr. Rendell's proposed severance tax, which would be paid only by gas drillers, not by the owners of the land. The tax would be based on the number of cubic feet of gas produced at the wellhead. Mr. Schmidt said some of the tax money "should be dedicated for environmental programs."
Rendell spokesman Chuck Ardo didn't dismiss the GOP idea out of hand. He said the governor "has always said he's willing to listen to ideas other than his own, although he continues to believe that his severance tax proposal has merit."
Rep. Dave Reed, R-Indiana, prime author of House Bill 1050, said his bill would generate $260 million a year for the next three years and create more than 7,000 new jobs over the next decade. He wants DCNR to lease an additional 390,000 acres over three years, and charge a minimum lease payment of $2,000 per acre.
"We have an industry that wants to grow here and create more jobs, and the governor responded by putting up a roadblock" in the form of new taxes, Mr. Reed said.
However, Mr. Schmidt questioned whether the state can still get $2,000 per acre from the gas drillers, as it did last fall when DCNR leased the initial 74,000 acres. The ailing economy doesn't allow private gas companies to pay such a high amount any more, he said.
"Right now the [gas] market is depressed," he said. "The demand for natural gas is down."
Under the Republican plan, 130,000 acres of additional state-owned forest land would be leased for drilling in the first year after the bill is enacted, with a like amount in the second and third years. Eighty percent of the annual revenue, or $208 million, would be used to offset the state's budget deficit of $2.3 billion. Other funds would go to municipalities that host the drilling and to conservation districts around the state.
Mr. Reed said there is a total of 2.1 million acres of state-owned forest land, and he wants to lease only 390,000 additional acres. He said it would be up to DCNR officials to decide what additional forest areas are leased for drilling.
Bureau Chief Tom Barnes can be reached at email@example.com or 717-787-4254.
First published on March 25, 2009 at 12:00 am
Posted on: 2009/3/25 6:39
I don't like spinach, and I'm glad I don't, because if I liked it I'd eat it, and I just hate it. --Clarence Darrow
Re: Drilling For Budget Dollars
From Greensburg, PA
Let's see...make the gas companies pay and pass the cost onto us or make us pay by letting them drill on our public lands for a product in which there is little demand right now. Ok, which one is the good choice?
Posted on: 2009/3/25 12:40
Re: Drilling For Budget Dollars
Dont forget about the money for "Environmental programs".
What good are they if we let them drill in our most remote and pristine areas?
Posted on: 2009/3/27 6:05
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