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April 09, 2014


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Another question deserving careful discussion and attention is the return to the state and its citizens on the licenses granted to frack, potentially a long-term economic benefit but variously realized. This from http://www.pewstates.org/

States collect vastly different amounts of severance tax revenue on oil and gas. North Dakota, for example, imposes an 11.5 percent severance on oil, subject to certain exemptions, and collected nearly $1.9 billion in all severance taxes in 2011, up from just $83,000 in the pre-fracking days of the 1990s. Pennsylvania has no severance tax at all. Instead it has an impact fee that helps localities fix roads and other drilling damage. The impact fee brought in $204 million in 2011, but that was only about half of what the state could have collected had it used a tax comparable to that of neighboring West Virginia, by one estimate. “There should be a tax like other states have,” says Pennsylvania state Representative Gene DiGirolamo, a Republican who last session pushed a 4.9 percent tax on companies drilling for natural gas in the Marcellus shale field, the largest such gas deposit in North America, and one that also covers parts of Ohio, West Virginia and New York, among other states. “We’re not chasing the gas industry out of the commonwealth,” says Republican state Representative Tom Murt, who is cosponsoring the legislation. “We just want the industry to pay their fair share.” Pennsylvania is the only state with substantial oil and gas reserves that does not have a severance tax.

Yes indeed, Richard - another important issue. One of the problems is the significant variation in the rules and regulations from state to state, whether they be financial or operating engineering requirements, public disclosure obligations or regulatory enforcement processes.

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