Gas-drilling moratorium won't happen here, governor says
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Before he made a speech today in his ongoing push for a "significant" natural gas severance tax, Gov. Ed Rendell told a group of protestors worried about Marcellus Shale natural gas drilling that a moratorium on drilling like New York state has enacted will never happen here.
"I would like tomorrow to be able to comb my hair in a pompadour," the balding Mr. Rendell told one of the protestors, "but it's not going to happen."
The first reason, he said, is "because I disagree with you; I think we can find a balance" between encouraging the natural gas industry growth and keeping the environment safe.
"The second reason is because it doesn't matter what I think. The Legislature will never vote for a moratorium."
Instead, Pennsylvanians concerned about the natural gas industry should join him in pushing the Legislature to enact a "robust severance tax" over the next month, he said.
As part of the budget deal crafted by legislative leaders and the governor earlier this year, a severance tax on the natural gas industry has to be approved by Oct. 1 and in effect by Jan. 1 to raise $70 million or more the rest of this fiscal year to help close a roughly $282 million budget gap.
During his speech to an audience of about 80 invited residents and local officials inside the Courthouse Square building in Washington, Pa., Gov. Rendell again outlined his push for a severance tax on the industry, but he deflected questions about his view on efforts by local governments, including Pittsburgh, to impose bans or their own limits on where wells can be drilled.
"We'll see how that plays out," he said about the local control issue, refusing to take a position either way.
He reiterated his support for a severance tax identical to one already enacted in West Virginia that would impose a 5 percent tax on the value of the extracted gas, plus a levy of 4.7 cents per thousand cubic feet of gas.
When he proposed his budget earlier this year, Mr. Rendell predicted such a tax could raise up to $475 million a year in new revenue within five years.
With some companies predicting to their shareholders that they may make as much as a 64 percent return on their investment in drilling for gas in the Marcellus Shale vein that runs throughout the Appalachians, the industry can afford to pay a significant tax, the governor said.
"But the industry is fighting us," he told the audience.
The industry is proposing a tax that would start at 1 1/2 percent on the value of the extracted gas in the first five years of a well's life, to make back much of the investment, followed by an increase to 5 percent in later years.
But, Mr. Rendell said, "about 50 percent of all the natural gas is pumped out during those first five years."
"It's ridiculous," he said. "And I won't sign legislation like that."
First Published September 7, 2010 2:58 pm