Pennsylvania Gov. Proposes Marcellus Shale Natural Gas Drilling Regulations

Shale natural gas drilling uses a controversial extraction method known as hydraulic fracturing, or fracking, to get at massive stores of natural gas. Fracking can offer huge economic benefits and help the U.S. meet its future energy goals but has been criticized for potentially producing severe public health risks. On Monday, Pennsylvania Governor Tom Corbett announced his plan for resolving the risks and rewards of shale natural gas drilling in his state.

Corbett’s proposal calls for drilling companies to pay a per-well fee of $40,000 to help recoup costs associated with drilling, offset the wear and tear on transportation infrastructure caused by the drilling industry and fund enforcement of tougher state environmental standards by individual counties that will hold drilling companies accountable for environmental damage.

Corbett’s proposal was highly anticipated in Pennsylvania, where fracking is a hot topic. The state sits on the Marcellus Shale, the nation’s largest gas reserve. While expanding drilling at the shale could help provide an economic boost to the state’s sagging economy, residents, environmentalists, and lawmakers are concerned about the negative effects that unregulated drilling may have on public health and infrastructure, such as roads and bridges.

“Affordable, reliable energy allows companies to grow,” Corbett said at a recent event in Pittsburgh, but how do we get there? We have to make sure that we do this right, from the very beginning.

Lawmakers Disagree About Who Should Benefit from Shale Drilling Regulations

Corbett said his plan provides the “smart, sound, evenhanded, level-playing-field regulation and legislation” necessary to achieve a balance between business interests and consumer protections with regard to shale natural gas drilling in Pennsylvania.

Corbett’s plan allows counties to set a fee of no more than $40,000 per well that would be reduced over time until, after 10 years, it would be eliminated. Three-quarters of the money would remain in the counties where the wells are drilled and go towards industry regulation, infrastructure improvements, and social services such as affordable housing.

The remaining money would fund state programs, such as gas-related environmental protection, infrastructure improvements, health studies related to drilling, pipeline safety, and emergency response. According to Corbett, his plan would generate $120 million in the first year and could increase to $195 million within six years as more wells are drilled.

However, Senate Pro Tempore Joe Scarnati, a Republican from Jefferson, said the proposal would unlikely be approved in its current form because it too narrowly benefitted the roughly 40 counties where shale natural gas drilling occurs. Scarnati has pushed his own legislative proposal that calls for an impact fee that not only assists communities affected by drilling but also funds related environmental programs on a statewide level rather than through the efforts of individual counties. Scarnati has estimated that his plan would generate $200 million a year for the state starting as early as 2012.

Lawmakers and Environmental Advocates Say Regulations Don’t Go Far Enough

Doug Hill, executive director of the County Commissioners Association of Pennsylvania, said he was pleased that Corbett’s plan would reimburse counties for the activities of drilling companies. However, Hill expressed concerns that the plan would place undue administrative burdens on counties responsible for collecting and distributing the fee revenue while creating potential “border wars” between counties that assessed a per-well fee and those that did not.

Other lawmakers say Corbett’s proposal doesn’t go far enough. Former Gov. Ed Rendell said the fees levied against drilling companies wouldn’t generate enough revenue to take care of the counties and help the environment. Meanwhile, some Republican lawmakers, complaining that Corbett’s plan doesn’t go far enough, are proposing an outright shale tax. Rep. Gene DiGirolamo and House Rep. Tom Murt, both Republicans, have introduced a bill that would impose a 4.9 percent extraction tax on drillers that’s estimated to generate as much as $562 million.

For their part, environmentalists have a mixed view of Corbett’s proposal. Activists claim that the plan does a good job of increasing setbacks for wells near water supplies, setting aside funds for plugging abandoned wells, and doubling civil penalties against companies that break the law, but doesn’t provide the money needed to offset the damage that fracking does to the environment. According to Maya van Rossum, head of the Delaware Riverkeeper Network, Corbett’s impact fee represents a “drop in the bucket.”

The Marcellus Shale Coalition, an organization that represents 244 gas companies, said Corbett’s plan would allow the fast-growing shale drilling industry to flourish. Coalition president Katherine Klaber said it would allow Pennsylvanians to reap the “countless benefits” of shale drilling, including lower energy costs, economic revival, and the “environmental advantages of increased natural gas use.”

Sources

Corbett Offers Fee Proposal for Gas Drilling, The Philadelphia Inquirer, Oct. 4, 2011.