WILKES-BARRE — With Pennsylvania sitting on the third largest pocket of Marcellus Shale natural gas in the world, the state is poised to become an energy exporting giant and should have a severance tax in place when the boom begins, state officials argued Monday during a public hearing.
“The eyes of the world are watching,” said Dennis Davin, secretary of the state Department of Community and Economic Development. “Pennsylvania is at the epicenter of an energy revolution.”
Natural gas prices are currently low in the region and production is at record low levels because the state has a limited pipeline infrastructure to export gas, causing a surplus of the natural resource.
Once construction of proposed pipelines is completed over the next two years, the state could generate billions annually from taxing and exporting the gas while drilling companies will remain highly profitable, Davin said Monday at a Democratic state House policy committee hearing at Wilkes University.
Only the countries of Russia and Qatar have more natural gas reserves than Pennsylvania, Davin said.
“We will help fuel the nation,” Davin said. “Beyond that, we will help fuel the world.”
Monday’s hearing involved a group of Democratic state lawmakers that make up the party’s policy committee. They questioned experts in the field during a public hearing.
State Rep. Eddie Day Pashinski, D-121, Wilkes-Barre, who hosted the event, said he doesn’t think the gas companies pay “their fair share.”
“Our committee wants to find a balanced approach to this. We want to make it clear to the industry: We welcome them and want to be good partners, but the time has come for a fair severance tax,” Pashinski said.
Since 2008, when gas production started in Pennsylvania, the state of Texas has collected $12.7 billion in severance taxes on its gas industry, while Pennsylvania has collected only
$1 billion in impact fees over that same time frame, Davin said.
State Rep. Mike Sturla, D-96, Lancaster, chairman of the committee, noted other states with a severance tax also tax the natural resources underground and drilling infrastructure.
“They have a severance tax, plus all those other things,” Sturla said.
Frank Joanlanne, president of Luzerne County-based Borton-Lawson Engineering, said his company has curtailed hiring because of the natural gas downturn until the future of the industry in Pennsylvania becomes clear.
“My goal is to grow opportunity for our company and our employees. Raising taxes on the industry that provides that opportunity in a state already largely viewed as uncompetitive is not the way to do it,” Joanlanne said. “It is a threat to all of the businesses working directly and indirectly for the oil and gas industry.”
Marc Stier, director of the state’s budget and policy center, said little has changed since 2008 in the debate in Harrisburg about a severance tax. Now is the time to enact one before the expanded pipelines go online in the next year or two, he said. — (AP)
“If there is a boom, it would be a great shame if we didn’t take advantage of it,” Stier said. — (AP)