Gas drilling group wants low well tax

Marcellus coalition also would force some to sell gas

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A trade group wants state officials to reinforce their authority over natural-gas drilling operations, force some reluctant landowners to sell their gas and tax new wells at a low rate during years when they're at their costliest but also producing the most gas.

Those are some of the legislative and regulatory priorities that the Cecil-based Marcellus Shale Coalition outlines in an internal policy document obtained by the Pittsburgh Post-Gazette and other media.

The coalition acknowledged the document, marked "draft confidential," but said many of the proposals had been on its website -- -- since spring.

The document says drilling should be a use by right in all zoning districts, even as Pittsburgh and other municipalities have proposed bans or zoning restrictions. It also says the state should encourage natural gas consumption and oppose anti-drilling arguments that "are not logically or scientifically based."

Kathryn Klaber, coalition president and executive director, said such steps would promote the orderly, efficient harvesting of the gas and protect landowners who want to lease their mineral rights.

But Pittsburgh City Councilman Patrick Dowd, who has introduced a bill to place certain restrictions on drilling operations in the city, says the document inflames the debate over natural gas drilling.

"I think it's completely one-sided ... a failure to be evenhanded," Mr. Dowd said.

Ken Weir, a Lincoln Place resident and spokesman for the opposition group, said the industry's priorities signal "corporate greed."

Titled "A Holistic Solution to Modernizing Pennsylvania Policies Impacting Marcellus Shale Development," the document calls for the Legislature to bolster the Oil and Gas Act to give the state Department of Environmental Protection clearer, broader authority over enforcement of the industry.

Many municipalities lack the expertise to enforce environmental regulations, Ms. Klaber said. "We as a nation have put state governments in charge of that critical function," she said.

On its website, the group raises the specter of two or three officials in a municipality passing an ordinance to prevent gas exploration and says a pair of conflicting state Supreme Court decisions left the door open for municipalities to usurp state control. Pittsburgh City Councilman Doug Shields added to the coalition's concern this week with a proposal to ban drilling citywide for environmental reasons.

The coalition's website says state law should be clarified to specify that drilling is a permitted use in all zoning districts and in every municipality, while allowing municipalities to retain authority on issues such as "lot size, coverage, access and landscaping and safety features."

The document also calls for the state to adopt a "fair pooling" program to promote efficient development of gas fields. Critics refer to the concept as "forced pooling."

Gas companies employ or contract with landmen who negotiate drilling or extraction leases with property owners, but not all owners are interested.

The coalition wants the state to allow gas companies to extract gas from property owners who decline to sign leases if the holdouts hinder development of the resource on neighboring properties. According to the policy document, the pooling program would ensure "all property owners -- leased and nonleased -- are fairly compensated for gas extracted under their properties."

Ms. Klaber said it was unfair that some landowners could prevent neighbors from developing their mineral rights. Mr. Dowd and Mr. Weir said forced pooling wasn't the answer.

"One thing I know about Pennsylvania is that property rights are very, very important," Mr. Dowd said.

On its website, the coalition balks at a severance tax, noting that the industry pays a variety of other taxes and warning that harsh taxation will stymie capital investment. The internal policy document takes a different approach, suggesting a 1.5 percent severance tax on the market value of gas obtained from Marcellus Shale wells during their first five years of operation and a 5 percent tax after that.

Ms. Klaber said producers needed to recover capital costs during the initial years of a well's operation, but critics said that's also when wells produce the most gas.

Joe Smydo: or 412-263-1548.


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