Gov. Tom Corbett released a plan for Pennsylvania's natural gas boom Monday that would allow the state's counties to impose a fee on drilling to help pay to regulate it and fix environmental damage in communities where it is happening.
The fee, which could be as high as $160,000 per well over a 10-year period, is part of broader plan that Corbett said calls for even-handed laws that recognize the competition beyond the state's borders for an industry that he said is boosting the economy and lowering energy bills. The plan also would toughen laws that protect the state's water sources and help the industry find new outlets for its product, such as converting school bus fleets and mass transit systems to natural gas power.
"Affordable, reliable energy allows companies to grow, but how do we get there? We have to make sure that we do this right, from the very beginning," Corbett told a crowd at a unionized carpenters training hall in Pittsburgh. "If we're looking at this industry, it's a little bit beyond a newborn, it's not even crawling yet though. ... We have to get there by smart, sound, even-handed, level playing-field regulation and legislation."
Corbett, a first-term Republican who is viewed as an industry ally, did not go as far in his proposal as have plans from many urban and suburban lawmakers for extracting tax revenue from producers in the Marcellus Shale region or imposing tougher environmental standards on drilling. Pennsylvania is the only major gas-producing state in the country that doesn't tax natural gas production.
Corbett took a campaign pledge not to increase taxes or fees, and he opposes a tax because he says he fears it would drive the industry away and harm Pennsylvania's efforts to recover from the recession. He defends the fee proposal as being in line with his campaign pledge.
Under his plan, counties could impose a fee of up to $40,000 per well in a well's first year. The maximum would decline to $30,000 in the second year, $20,000 in the third year and $10,000 in the fourth through tenth years of production. After that, it would disappear.
The Corbett administration estimates that the plan would generate up to $120 million in the first year and up to $195 million by the sixth year.
Most of that money, 75 percent, would be split up by counties and municipalities that are home to the drilling for a wide range of uses, including improvements to roads and bridges and water and sewer systems. The rest would go to the state for environmental protection, road and bridge improvements, health studies, emergency response and pipeline safety.
One prominent industry member, Fort Worth, Texas-based Range Resources Corp., said it had a favorable first impression of Corbett's plan.
"At first glance this is a competitive model and certainly one that adequately accounts for impacts," Range Resources spokesman Matt Pitzarella said. "The most important element right now is ensuring the growth remains in Pennsylvania."
One environmental group was critical.
"This plan is neither fair nor comprehensive, and is full of giveaways to the drillers," said Jan Jarrett, president of Harrisburg-based PennFuture. "It appears that the governor's thinking in devising his plan was, `What's the least I can ask of the drilling industry?'"
The Legislature has debated whether to impose a tax or a fee on the natural gas industry since it arrived in earnest in 2008 to tap into the Marcellus Shale natural gas formation, considered the nation's largest-known natural gas reservoir. The drilling has drawn opponents who fear it is polluting public water supplies, damaging public health and ruining the quality of life in rural Pennsylvania.
The Marcellus Shale formation lies primarily beneath Pennsylvania, New York, West Virginia and Ohio. Pennsylvania is the center of activity, with more than 3,000 wells drilled in the past three years and thousands more planned in the coming years as thick shale emerges as an affordable, plentiful and profitable source of natural gas.