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Local News

The politics of natural gas drilling

By MIKE REUTHER - mreuther@sungazette.com
POSTED: October 11, 2008

As part of an ongoing political series in the weeks leading up to the November election, candidates for state legislative seats were asked their thoughts on drilling for natural gas in the area.

The candidates for 23rd state Senate are Louis "Trey" Casimir, Democrat; Michael A. Dincher, Independent; and E. Eugene Yaw, Republican. The 83rd state House candidates are Dave Huffman, Republican, and Rick Mirabito, Democrat.

Each was asked the following: There is a potential bonanza in our area for both residents and companies drilling for gas with the companies willing to pay residents big dollars for gas leases. However, there is no guarantee that there will not be some environmental damage. In fact, it may be inevitable that something will occur at a drill site in the way of a leak or groundwater problem.

Beyond that, communities most impacted by natural gas exploration with regard to water supplies, pipelines, road and bridges have no way of raising revenue from natural gas windfalls.

What measures can be better used to safeguard against environmental problems caused by drilling? What can be done to ensure municipalities receive some type of compensation for drilling?

23rd Senate District

CASIMIR: "First and foremost, the current rules must be changed regarding distribution of gas lease revenues in the Commonwealth. At the moment, the Bureau of Forestry receives the monies and distributes them around the state as it sees fit. We have to change this procedure so that some percentage of the revenue remains in the district from which it is derived - it is the local infrastructure which is stressed, and it is the local environment which is at risk ...

"Second, we have to make sure that there is provision in the budget to hire and train more drilling site inspectors. When best practices are in place and responsible companies are drilling, the risk to the environment is greatly reduced ... Following the lead of Texas, with its Barnett Shale region, we must ensure that the state has plenty of appropriately trained inspectors to make sure the drillers are acting responsibly, and to shut them down when they don't.

"Finally, we have to look into instituting a severance tax in Pennsylvania. Most other oil- and gas-producing states have such a tax, which charges 5 to 6 percent typically of the market value of every cubic liter of gas that is removed (or severed) from the ground. This is an immensely valuable resource we are sitting on - the gas companies' escalation of leasing fees in the last year and a half proves that. The state has an obligation to claim its share of that wealth, to keep it in the district, and to use it as insurance against the inevitable accidents, mistakes and miscalculations of our new gas drilling friends ...

"We also need to consider how the use of our water for deep frac gas drilling will impact our obligations under the Chesapeake Bay initiative. It may well be the case that it is necessary for the gas drilling companies to assume some portion of the municipalities' obligations regarding reduction of pollutants and nutrients in the Susquehanna watershed if their activities impact their concentration. This is the job of legislators, inspectors and the state's other fiscal and environmental stewards - to recognize opportunities when they bubble to the surface, and to think downstream and figure out solutions to problems before they occur."

DINCHER: "It is in the best interests of the drilling companies to ensure safe practices. Natural gas heats about half of U.S. homes and provides energy for 20 percent of U.S. power plants. It also supplies raw materials for fertilizer and anti-freeze products. This means reducing dependence on foreign sources of energy and new jobs. A barrel of oil is equivalent to 6,000 cubic feet of natural gas and is one third cheaper. New drilling is expected to drop that cost by 30 percent or more. People need an energy source for heating their homes that is cheaper than oil. The drilling is bringing wealth and jobs to our area. We must promote that. Since 2004, $4 billion have been spent in Pennsylvania. Instead of contemplating why we can't drill, let's figure out how we can.

"Municipalities should be provided for in the same way they are now. Looking at other states where drilling has been going on longer may provide insight. I applaud the committee of representatives that journeyed west to become informed. Quite possibly that type of information gathering should continue. First and foremost, however, we need to be sure not to stifle the economic upturn in an area of Pennsylvania in need of the boost being driven by drilling."

YAW: "My assessment is that the Department of Environmental Resources and the Susquehanna River Basin Commission are doing an excellent job of balancing their obligations to protect the environment while still recognizing the economic importance of the gas drilling. Both DEP and SRBC have streamlined their permitting procedures while not compromising their respective standards. Similarly, the county Department of Planning and Economic Development has recognized the importance of its input into the permitting process and has committed staff time accordingly. From my perspective, I have seen an unprecedented level of cooperation between federal, state and local agencies in dealing with our newest industry.

"Several years ago, the Pennsylvania Supreme Court issued a decision that states that gas cannot be taxed as part of the real estate taxing system in Pennsylvania. Consequently, there is currently no authority to tax gas production from gas wells ... Given the status of gas law in Pennsylvania, legislation must be enacted to authorize any compensation assessment directed to gas drilling or production. Any compensation program must be structured in two parts. One part needs to provide immediate compensation to offset current costs and expenses incurred by counties and local municipalities, and the other part should provide for a long-term sustained level of compensation based on production.

"To this end I would propose that gas companies be assessed an impact fee payable at the time that a permit is issued by DEP. The purpose of this impact fee would be to reimburse counties and townships for the expenses which they incur in the initial permitting and drilling before a well might become productive. The amount of this fee would need to be determined but preliminary information is that a fee of $25,000 to $50,000 per well site would not be out of line. Perhaps the best administrator of these fees would be at the county level which already has experience in allocating other state funds, such as liquid fuels, among municipalities. The second level of compensation would be a severance fee based on the production of the well. This would provide a continuous source of compensation to county, local municipalities and school districts which could be impacted at this point. Again, the logical administrator of the severance fee would be at the county level."

83rd House District

HUFFMAN: "An obvious suggestion is that it is necessary to follow the laws that are already in place. The Department of Environmental Protection recently assured us that we already have sufficient regulations where we need to be vigilant and have them enforced.

"It is important to emphasize that drilling is a bonanza and we must maximize the potential for the benefit of our residents in the area.

"Since government and its bureaucracy is often an obstacle to progress, we need to sweep that obstacle away. This gas is very important to our economy in this area and we need to be aggressive in developing the potential.

"Of course, good judgment and common sense should be exercised. We can't endanger the health and safety of the people in this area with water supply and water quality issues, for example. But monitoring these concerns can be done without excessive government control and regulation, especially if we plan to allow for more local control.

"Right now we have nothing for municipalities. It wouldn't be fair and just for companies to damage our public roads with their equipment, for example, without some accountability. The Legislature is working on coming up with something for municipalities. In my opinion anything implemented should be managed at the local level and not through the state where there is always the possibility monies could end up in places like Philadelphia. Our local people know what is best for their areas and must be consulted before the final development of any legislation. We don't want anything that would increase the burden of the taxpayers in the area."

MIRABITO: "To start we must develop a working group of rural legislators who will be in a position to propose appropriate local municipal control, regulatory oversight, and creation of a fund to deal with potentially irresponsible companies ... We should consider that concept in our approach when leasing our public land to private companies or when companies drill on private land ...

"We also want to make sure that our region benefits directly in an economic sense from user fees and most importantly depletion royalties. When a valuable asset or resource is used up, that affects our area land forever. We need to make sure that an allowance royalty is paid that is directly reinvested in infrastructure such as schools, hospitals, roads and landscape. We also may want to use the royalties to reduce property taxes.

"We have the opportunity to encourage tremendous economic development in our communities, while at the same time making sure there are appropriate assets for future citizens, taxpayers and children for generations to come. The worst approach would be to spend time in partisan bickering and accomplish nothing. We do not want to be shortsighted and assume that no problems will develop simply because we have not yet experienced an environmental disaster. We do not want to wind up with perpetual underground fires, the risk of explosions, collapse, polluted water runoff and other environmental disasters that have plagued virtually every oil, gas and coal operation in the United States.

"The areas of our country that have prospered the most with natural resource recovery are those which have planned for it by wise, efficient regulation, honest oversight and creation of funds necessary to deal with problems and to support the community infrastructure. As a business person, a lawyer and a resident of my district with a serious and substantial stake here, I am ready to sit down and roll up my sleeves to tackle this difficult problem sooner rather than later."

 
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