Marcellus Shale Moratorium Means Little
Whether or not to enact a severance tax on natural gas obtained from state-owned forests in Pennsylvania is a hot campaign issue between the Democratic and Republican candidates to succeed Gov. Ed Rendell, who pushed hard for a tax. The legislature would not acquiesce, so Rendell on Tuesday signed an order halting future drilling in the Marcellus Shale -- but the measure is largely symbolic. Not only does Rendell leave office in January, but there are hundreds of existing permits to drill on state land in the Marcellus Shale that won't be affected.
The formation is a vast natural gas deposit in which numerous exploration and production companies are active. The gas is located a mile or more below the ground in most of Pennsylvania and parts of New York, Ohio, Maryland, and West Virginia. From January through September 2010, 1,099 wells were drilled in Pennsylvania into the Marcellus Shale, according to the Pennsylvania Department of Environmental Protection's Bureau of Oil and Gas Management.
Rendell originally sought a 5 percent severance tax on the value of gas at the wellhead plus 4.7 cents per thousand cubic feet, but on Oct. 11 he said he would accept a phased-in tax rising from 3 percent in year one to 5 percent in the third year. On Oct. 21, he accused House and Senate Republicans of refusing to negotiate and thus killing the proposal.