Magical Marcellus Mystery Tour

 

Last week, Governor Ed Rendell announced, to the shock of no one, that he would again pursue an extraction tax on natural gas.  Some may recall that taxing natural gas drillers has become the preferred method of funding pretty much everything in the commonwealth, from environmental protection, to road and bridge construction, to low income heating assistance. The billions of cubic feet of gassy goodness trapped below Penn’s Woods have indeed become a big, fat, lucrative target for a state government swimming in red ink.

There isn’t a fiscal problem we have, some say, which cannot be solved by slapping a tax on natural gas extraction. 

But for those who maintain that the natural gas industry in Pennsylvania cannot survive a crushing (or perhaps simply a bruising) tax, we would ask you to please consider what the real cost driver is going to be:

Water.  We have mentioned it before.  Perhaps you missed it.  Here is a refresher.

The convergence of actions by the U.S. Environmental Protection Agency and the PA Department of Environmental Protection are poised to have what could be a devastating effect on gas drilling in Pennsylvania.  Natural gas, the so-called “transition” fuel that environmentalists love, the one that will bridge the gap between old-school fossil fuels and renewable sources like wind and solar, might end up being far too expensive to drill for, treat or deliver. 

We spoke to water resource guru and longtime Senior Consultant George Wolff today about the recent EPA memo to the six Chesapeake Bay watershed states.  We asked George because, quite frankly, if it has to do with the Chesapeake Bay and he doesn’t know about it, well, it never happened.  The memo, according to George, was heavy on threats and short on science, but made it clear that gas drillers who remove and treat water are firmly in the crosshairs of the EPA, as the new allowable levels of Total Maximum Daily Load discharges are likely to seriously squeeze drillers, who produce “frac” water from their drilling process.

The DEP, meanwhile, is moving forward with new regulations on Total Dissolved Solids allowed in Pennsylvania’s rivers, streams and creeks.  Depending on who you believe, however, many industries may end up escaping these new stringent levels, except for one relatively new one.  If you guessed “natural gas drillers,” then proceed past “Go” and collect $200.

So if the EPA and the DEP decide to ratchet way back on allowable discharges into Pennsylvania waterways, one thing is a dead certainty.  For natural gas drillers, the cost of a severance tax will be negligible when compared to the cost of removing, using, and treating the water they will need to bring our mother lode of natural gas to the surface.

This is a gift horse.  Anyone wanna check its mouth?  

Comments

[quail hill irvine]

Natural gas, the so-called “transition” fuel that environmentalists love, the one that will bridge the gap between old-school fossil fuels and renewable sources like wind and solar, might end up being far too expensive to drill for, treat or deliver.

[holy land tours]

Natural gas in recent time become very popular.One of the reason is that it is the bridges the gap between old-fossil fuels and renewable resouces.Natural gas driller is a option available for us.I am completely in favor of taxing the drilling operations. cost is very negligible as compare to other sources that we have.you to natural gas drillers...

[Dan Alderman]

Let me start by saying I own partial shares in two gas wells in Western PA and until everyone and their mother started drilling in PA the investment return was pretty good. Lately is has sucked, because there is to much supply due to the explosion of companies looking to cash in on the Marcellus field.

The first time I saw pictures of a fracking operation it scared the crap out of me. It looks like an environmental nightmare waiting to happen. I can just imagine the holding ponds leeching into the neighboring streams and causing big problems.

I am in favor of taxing the drilling operations. They are using our resources; DEP, local EMS and police to name a few. And they are benefiting, (profiting) from OUR natural resources. They should pay just like the rest of us. Otherwise we'll end up paying for them.

If we are letting the Drill Baby Drill we should tax them while we can.