The House may vote next week on a drilling fee plan that asks Marcellus Shale drillers to pay significantly less than they pay in major energy-producing states like Texas and Arkansas.
House Bill 1950 (Ellis-R-Butler), supported by House Republican Leadership, would assess the equivalent of a 1 percent rate over the life of a typical shale well, according to an analysis by the Pennsylvania Budget and Policy Center. Other tax and fee plans before the Pennsylvania Legislature would assess effective rates of 3.1 percent to 4.7 percent over the life of a typical well.
By comparison, drillers pay effective drilling tax rates of 3.4 percent in Arkansas, 5.4 percent in Texas and 6.1 percent in West Virginia on comparable deep gas wells.
“The House bill sets a fee that is much lower than drillers pay in most other energy-rich states,” said Sharon Ward, Director of the Pennsylvania Budget and Policy Center. “Drillers in Texas, for example, would pay five times more in drilling taxes on a comparable deep gas well than they will in Pennsylvania.”
House Bill 1950 is modeled on Gov. Tom Corbett’s Marcellus fee plan. It would collect $160,000 over the 50-year life of an average Marcellus gas well, which is projected to generate $16 million.
Other drilling tax and fee plans would assess effective rates closer to those in other energy-rich states. Republican Sen. Joseph Scarnati’s fee plan (Senate Bill 1100) would assess the equivalent of a 3.1 percent rate, raising $505,000, while Republican Rep. Marguerite Quinn’s fee plan (House Bill 1700) would assess the equivalent of 4.4 percent, raising $710,000.
A House bill sponsored by Republican Representatives Gene DiGirolamo and Tom Murt (House Bill 1863) would assess a 4.7 percent drilling tax, raising $770,000 over the life of a typical well. Unlike the fee plans, the Murt-DiGirolamo drilling tax provides resources to early childhood education, job training, and support for people with disabilities and victims of domestic violence, as well as the environment and local communities.
Other shale gas-producing states ask more from drillers than HB 1950, Ward noted. Arkansas assesses a 3.4 percent effective rate on comparable wells (raising $555,700); Texas assesses a 5.4 percent effective rate ($878,500); and West Virginia assesses a 6.1 percent effective rate ($993,700).
“A drilling tax or fee should support the priorities Pennsylvanians most care about,” Ward said. “At a time when huge cuts are being made to our children’s education and tens of thousands of struggling Pennsylvanians are losing their health care, Pennsylvanians want to take a different course. They want to see drillers pay a tax that supports these priorities, protects the environment and helps impacted communities pay for the damages caused by drilling.”