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API study says a Marcellus severance tax would hinder shale development

An advocacy group for the oil and gas industry released a study Thursday that found a shale gas tax proposed by Pennsylvania Gov. Tom Wolf would mean fewer new wells, less gas and lost jobs in the commonwealth over the next decade.

The study for the Associated Petroleum Industries of Pennsylvania, the state division of the American Petroleum Institute, found that the severance tax proposed by Mr. Wolf would lead to 1,364 fewer wells, nearly 18,000 fewer jobs in fields supported by the industry and 2.86 trillion cubic feet less natural gas produced in the state by 2025 compared to projected levels without the tax.

A spokesman for the governor said the study is misleading and its conclusions have no merit.

Mr. Wolf has proposed a 5 percent tax on the value of gas and natural gas liquids produced from shale wells, plus 4.7 cents per thousand cubic feet (Mcf) on the volume of the natural gas. His proposal sets a $2.97 per Mcf minimum value for shale gas, regardless of the actual sale price.

In related news, API of Penn. director speaks out about severance tax study.

Mr. Wolf wants to use the money from the tax to fund education and environmental protection programs, while maintaining funding for communities that host wells at roughly the same level they are expected to receive this year from the current impact fee that companies pay based on the number of wells they drill.

“A report from the American Petroleum Institute opposing a severance tax and misleading people about the effects of a tax on the industry is not surprising, and their claims have no merit, especially at a time when gas companies are posting billions in profits,” said Jeffrey Sheridan, the governor’s press secretary, in a statement. He said it is “past time for gas companies to pay their fair share so we can fund our schools.”

Pennsylvania is the only major oil and gas producing state without a formal severance tax. Public opinion polls have regularly found that a majority of Pennsylvania voters favor enacting such a tax, although industry-commissioned polls have found that fewer voters say they would back a tax if it would lead to lost jobs.

API-PA does not support any level of a severance tax, executive director Stephanie Catarino Wissman said Thursday.

“Let’s end the conversation about any new taxes.” she said. “The system is working for Pennsylvanians.”

 

(c)2015 the Pittsburgh Post-Gazette

This article was written by Laura Legere from Pittsburgh Post-Gazette and was legally licensed through the NewsCred publisher network.

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