Giving Away the Store: A Fact Check

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Updated with November 14 amendment to Scarnati bill, changes to Murt-DiGirolamo proposal, August 2010 industry tax plan

Governor Tom Corbett’s proposed drilling impact fee, contained in HB 1950, would collect $160,000 over the 50-year life of an average Marcellus Shale gas well, the equivalent of a 1% rate.  Senator Joseph Scarnati’s SB 1100, as amended on November 14, would raise $360,000 over the life of an average well, the equivalent of 2.2%.

A comparable well in Texas would raise $878,500 – five times more than Governor Corbett’s plan and nearly two-and-a-half times more than SB 1100.  Even an industry-supported proposal from August 2010 would collect more than these plans.

Other drilling tax and fee plans, proposed by Representatives Tom Murt and Gene DiGirolamo and Representative Marguerite Quinn, would put Pennsylvania more in line with other energy-rich states, assessing effective rates between 4.4% and 4.6% over the life of an average well.  The average Marcellus Shale gas well in Pennsylvania is projected to generate $16 million over its life.[1]

Other shale gas-producing states ask much more from drillers than SB 1100 and HB 1950. State Drilling Tax Revenue Effective Tax Rate Arkansas $555,700 per well 3.4% Texas [2] $878,500 per well 5.4% West Virginia $993,700 per well 6.1%

Don’t give away Pennsylvania’s future with a weak drilling fee/tax bill.

Endnotes

[1] The revenue estimate for Sen. Joseph Scarnati’s SB 1100 assumed 3.8 billion cubic feet of production per well. To compare plans over time, we used a constant estimated price of $4.28 per thousand cubic feet over 50 years.

[2] Texas provides a tax reduction for “high cost wells.” This projection assumes a 3.75% rate (50% high cost well rate) for the first 10 years of production, then returning to 7.5% in Year 11. Actual rate reductions would vary by well.