Rendell to order halt to gas wells

Plans moratorium on state forests after losing battle to enact gas tax

HARRISBURG -- Gov. Ed Rendell plans a moratorium on further leasing of state forest land for natural gas drilling after losing a grueling battle to enact a Marcellus Shale tax and watching Republican gubernatorial candidate Tom Corbett -- who opposes a tax -- take in campaign cash from natural gas companies.

The Democratic governor will hold a news conference today in his hometown of Philadelphia, where he will "sign an executive order instituting a strategic moratorium on future drilling operations in the state," according to a news release.

However, a future moratorium wouldn't stop natural gas drilling planned for 700,000 acres of state forest land located in the vast areas of Marcellus Shale -- land that has already been leased to private companies. There have been two lease sales since 2008, bringing in a total of $296 million for the state's Oil and Gas Fund.

Only 25 wells are now producing gas on that forest land, but eventually 1,000 "well pads," each with six to 10 wells, could be located there, according to the Department of Conservation and Natural Resources.

Mr. Rendell will leave office in January, so whether a moratorium on leasing forest land would continue beyond January would be up to either Mr. Corbett or Democratic gubernatorial candidate Dan Onorato. They'll face off in the Nov. 2 election.

As for Mr. Corbett, a new report by Marcellusmoney.org, compiled by Conservation Voters of Pennsylvania and Common Cause/Pennsylvania, listed his political contributions from the gas drilling industry at $856,220 over the last 10 years, with most of the money coming in over the last two years.

The new Corbett total is up from the $700,000 reported a few weeks ago and the $373,000 reported in June. Mr. Onorato has received significantly less in the last decade -- $124,300. Mr. Onorato favors a severance tax on Marcellus Shale gas, while Mr. Corbett does not.

"In the last weeks before the election, drilling industry CEOs went all out for Tom Corbett because he thinks that ordinary Pennsylvanians should pay to clean up the messes that their drills leave behind,'' claimed Josh McNeil of Conservation Voters.

Mr. Corbett said the natural gas industry is just in the beginning stages in this state and he doesn't want to impose a tax that could send thousands of jobs elsewhere. He said his policies will not be swayed by campaign contributions.

The Marcellus Shale, a rock bed a mile or more beneath three-quarters of Pennsylvania and parts of New York, Maryland, Ohio and West Virginia, contains as much as 363 trillion cubic feet of natural gas. The extraction process involves a high-pressure procedure that pumps up to 8 million gallons water and chemical additives into the wells to fracture the shale and release the gas.

Also in Philadelphia today, Mr. Rendell will continue his criticism of Senate Republicans for their "unwillingness to enact a severance tax on the natural gas industry." He said Monday the Legislature is displaying "recklessness" regarding a projected $3 billion or more budget shortfall in 2011 by its failure to enact a gas severance tax.

He claimed it's "senseless" for Pennsylvania to ignore the $100 million or more that could be generated by imposing a "fair'' extraction tax on the thousands of cubic feet of natural gas being extracted from Marcellus Shale.

He said he had offered a compromise tax plan that is reasonable for both the drillers and the state, one that's less burdensome than his original severance tax plan, proposed in February and modeled on the tax used in West Virginia.

He criticized legislators for taking large campaign contributions from the shale drillers, claiming there is "no question'' that those donations have led to the Legislature's reluctance to enact a shale tax.

Senate Republicans favor a tax of 1.5 percent on the selling price of gas at the wellhead for the first five years of a well's life, then rising to 5 percent. Mr. Rendell favors a 3 percent tax the first year, rising to 4 percent the second year and then 5 percent thereafter.

Senate President Pro Tem Joe Scarnati, R-Jefferson, who has gotten $143,000 from the gas industry, said the drilling industry has created many jobs in his district, especially in Tioga County, and he doesn't want drillers to go to other states if Pennsylvania enacts too high a tax.

Mr. Rendell said all other states with Marcellus Shale drilling have an extraction tax. He said it makes no sense for Pennsylvania to be the only state without such a tax, especially when the state faces a large budget shortfall next year. He called on Senate leaders to return to session after the Nov. 2 election to work on a shale tax, saying, "I will negotiate night and day.''

But GOP Senate leaders say they won't meet during the "lame duck'' session after the election. The Democrat-led House plans to come back for a few days in November, but without the Senate, no tax bill could get final action.

This version corrects details of Republicans' gas tax proposal. Harrisburg Bureau Chief Tom Barnes: tbarnes@post-gazette.com or 1-717-787-4254.

First published on October 26, 2010 at 12:00 am

Correction/Clarification: (Published October 27, 2010) Senate Republicans have proposed a natural gas severance tax of 1.5 percent for the first five years of a well's life, rising to 5 percent after that. The proposal was described incorrectly in an article Tuesday.