On April 20, I participated in the PCN Call-In show, along with Marcellus Shale Coalition President David Spigelmyer, to discuss the issues surrounding natural gas drilling in Pennsylvania. My message was straightforward: Thoughtful oil and gas policies are necessary so that all Pennsylvanians benefit from affordable, environmentally sustainable energy. Mr. Spigelmyer’s message was the opposite: If Pennsylvania wants cheap energy, trust us and let the oil and gas industry do what it wants to Pennsylvania’s air, water, and land.
A stark difference, no doubt!
In fact, the show teased out a number of critical points central to the statewide debate on issues surrounding shale gas drilling.
It’s not a choice: Pennsylvania can have cheap and clean energy
If you listen closely to Mr. Spigelmyer’s comments—as well as the comments of his colleagues throughout the oil and gas industry—he’s offering Pennsylvanians a black and white choice. We can either grow the state economy through shale gas or incur economic catastrophe through environmental sustainability.
This could not be farther from the truth. Through common sense regulations and a state energy policy that looks to the future and not just the present, Pennsylvanians can have cheap energy as well as clean air, water, and land. It’s not a give and take. And one only needs to look to other leading states, such as Colorado, that are benefiting from regulated shale development while investing in zero-carbon renewable energy and energy efficiency. The catch is Colorado is benefiting from low energy costs similar to Pennsylvania but without the pollution. Pennsylvania can do the same.
Strong regulations needed to cut methane emissions
A big issue with shale development is the release and leakage of methane—a greenhouse gas 84 times more potent in its first 20 years than CO2. In fact, it is possible methane leakage eliminates the climate change benefits from electricity producers switching from burning coal to burning less carbon-intense natural gas.
Mr. Spigelmyer argues that his industry is taking the problem seriously for no other reason than to capture leaked methane and sell it. In other words, it is profits leaking out of their pipes. And industry has a point. The Pennsylvania Department of Environmental Protection (DEP) released data this week that found methane emissions from oil and gas drilling declining. This comes after similar findings from the U.S. Environmental Protection Agency (EPA).
But you need to crunch the numbers. The reality is methane emissions are decreasing in areas of natural gas production that are regulated. In particular, the EPA promulgated new rules in 2012 that required drillers to control methane leaks from fractured wells, otherwise known as green completions. Both the EPA and DEP found that the reductions were narrowly focused on these leaks. Other areas of production, such as pneumatic devices, dehydrators, and fugitive emissions, actually increased.
The lesson here is that regulations work. The oil and gas industry is responding to thoughtful methane regulations in a serious way, but not responding to other unregulated leaks. Broader and stronger methane emission regulations are needed to kick start industry into action.
The public must have a voice on regulating shale gas
For a decade, the oil and gas industry has had free rein in Pennsylvania and that time is coming to an end. In the interest of our environment, the sanctity of our public and private lands, as well as our climate, the state is proposing regulations to limit negative impacts stemming from drilling activity. Unfortunately, the oil and gas industry is doing everything it can to limit public engagement during the creation of these regulations. For his part, Mr. Spigelmyer did everything he could to not answer questions on this topic during the show.
As I said during the PCN Call-In Show, PennFuture is astonished and deeply concerned at industry's efforts to block the public’s voice. While the oil and gas industry believes the public is not knowledgeable enough to engage in technical conversations surrounding these regulations, I believe the public understands the issues surrounding drilling better than anyone. The drilling is occurring in their backyards, near their schools, and on their farms. The public interest should have every opportunity to engage the regulatory process.
A severance tax will build the bridge between shale gas and zero-carbon energy
Mr. Spigelmyer’s most vociferous criticism of Pennsylvania shale gas policy centered on Gov. Tom Wolf’s proposed severance tax. Under his predecessor, Gov. Corbett, a modest “Impact Fee” was levied on oil and gas drillers that charged a flat amount per well and shared the revenue with all counties of the Commonwealth. Gov. Wolf has proposed replacing the Impact Fee with a direct tax on the value of the gas being extracted from the well and using the revenue to not only invest in the counties, but also invest in stronger oversight of the drilling industry as well as clean energy programs.
The nut of the criticism is that the severance tax will cost oil and gas drillers more than the Impact Fee. In response, Mr. Spigelmyer and his industry colleagues argue that “capital will leave the state” if the severance tax is implemented—a threat that I believe is hollow. Pennsylvania is the only shale-producing state without a severance tax. In fact, Gov. Wolf’s proposal is similar to other state severance tax policies such as West Virginia. As industry’s argument goes, drillers would pick up and leave Pennsylvania to go to another state that has the very tax from which they purport to be running. Doesn’t make sense, right?
The truth is, Pennsylvania is one of the largest sources of natural gas in the world—many of the top producing wells are located in Susquehanna County. The oil and gas industry is not going to turn away from such production because of a modest tax proposal similar to neighboring states.
And we cannot talk about the efficacy of a severance tax in a vacuum. To fully understand how good of a deal the oil and gas industry is getting in Pennsylvania—and will continue to get even with a severance tax and thoughtful regulations—look no further than the $3.2 billion in annual subsidies that fossil fuels receive from Pennsylvania.
Matthew Stepp is director of policy for PennFuture and works out of our Philadelphia and Harrisburg offices. He tweets @MatthewStepp.
Matthew Stepp is director of policy for PennFuture and works out of our Philadelphia and Harrisburg offices. He tweets @MatthewStepp.
