Natural Gas Tax for Pennsylvania a Possibility

Submitted by Editor on Fri, 01/30/2009 - 12:17pm.

Lawmakers Call for Drilling Tax

A Pennsylvania industry task force, comprised of state Department of Environmental Protection and representatives of the natural gas industry, met this month for the first time to develop new rules for controlling wastewater pollution from drilling operations and methods to treat wastewater. They also discussed ways to streamline the permitting process.

The Marcellus Shale natural gas deposit has sparked an oil and gas well drilling boom in Pennsylvania, where more than 4,100 wells were drilled statewide last year. Hundreds of permits for additional well drilling are under review by DEP.

Heavy use of local resources has generated considerable discussion of the new activity, and the Chairman of the state House Environmental Resources and Energy Committee Camille “Bud” George (D-74), has suggested taxing these operations as a revenue source for local infrastructure and as an additional means to help balance the state budget.

While natural gas is a cleaner burning fuel, the drilling process uses a lot of natural resources and can be extremely harmful to the environment, including nearby water sources, if not executed properly.

The task force hopes to limit surface water discharges from wastewater treatment plants by encouraging reuse of the water used to fracture the shale; locate geologic formations capable of safe, deep, underground water storage; and evaluate new technologies for treatment.

Water use and wastewater disposal issues are already apparent from incidents in southwestern Pennsylvania.

The natural gas industry may have another hurdle, as some state legislators and fiscal watchdog groups are calling for a tax for mineral extraction. Across the nation, the handful of states that are not facing massive budget deficits are those that have an abundance of natural resources and tax for extraction of those resources. In fact, Pennsylvania is the only state under these circumstances that does not impose such a tax.

George suggested that Pennsylvania take a page out of the playbook of these other mineral producing states, like Texas, Arkansas and West Virginia, and tax natural gas extraction.

Now facing an acknowledged $2.3 billion budget deficit, Pennsylvania could benefit from taxing drilling of the Marcellus Shale deposit, which has been estimated to hold enough natural gas to meet the nation’s natural gas needs for at least 14 years (equivalent to 363 trillion cubic feet of gas).

“Giving the oil and gas industry a free pass to utilize commonwealth waters, treatment plants and highways and skirt responsible safeguards makes no economic or environmental sense,” George said.

Source: Energy Resources Group, Harrisburg, Pa.

El Paso Natural Gas - Good Carbs with California

The California Climate Action Registry (CCAR) announced that it has approved and registered the total emissions of El Paso Corporation (NYSE: EP) for all applicable greenhouse gas (GHG) pollutants in the U.S., making it the first natural gas company to obtain a complete CCAR approved GHG emissions inventory. The recognition covers emissions reported for 2007.

El Paso has been a CCAR member since 2006. In 2007, El Paso became the first company to earn CCAR's distinction of Climate Action Leader(TM) for its California emissions and the first organization in CCAR's history that submitted a certified inventory without a single error.

"The certification of our total U.S. emissions is a major milestone for El Paso Corporation," said Doug Foshee, president and chief executive officer of El Paso Corporation. "It is the culmination of a rigorous, three-year emissions inventory program that highlights our continuing commitment to being the neighbor to have. We believe natural gas will play a critical role in the nation's efforts to reduce greenhouse gas emissions, and El Paso will be at the forefront of the development of needed natural gas infrastructure and associated climate change policies."

"Once again, El Paso has demonstrated its national leadership on climate change policies and programs as it impacts natural gas. We applaud this achievement of reporting total U.S. emissions for all applicable emissions from El Paso's assets in the natural gas exploration, production, processing, transmission, and storage segments. El Paso is a pioneer in the area of carbon accounting for the natural gas industry and has served as a true and committed leader in addressing climate change," said Gary Gero, president of the California Climate Action Registry.

CCAR, a private nonprofit organization committed to solving climate change through emissions reporting and reduction, was originally created by the State of California in 2001 to protect and promote companies' and organizations' early actions to calculate, report and manage their GHG emissions. Emissions reports are certified by independent third-parties to ensure compliance with CCAR protocols and standardization across participants and sectors. Organizations that are willing to meet the accounting standards and third party certification requirements show their serious intent to address climate change. CCAR has been widely recognized as a gold standard for public reporting of GHGs.

El Paso's complete emissions report is available through CCAR's Web site at https://www.climateregistry.org/CARROT/public/reports.aspx

The California Climate Action Registry is a private nonprofit organization committed to solving climate change through emissions reporting and reduction. It serves as a voluntary greenhouse gas (GHG) registry for entity-wide emission inventories and also establishes protocols for GHG emission reduction (offset) projects through its Climate Action Reserve program. The protocols are created through a rigorous, transparent process and are widely regarded as among the highest quality standards for offset projects. The Climate Action Reserve also accredits and oversees independent verifiers and tracks the transactions of project offset inventories, adding confidence and credibility to the voluntary carbon market. The accuracy, transparency and integrity of all of the California Registry's standards have earned it the reputation as a respected and internationally recognized leader in climate change issues.

The California Climate Action Registry was originally formed by the State of California in 2001 and is headquartered in Los Angeles, California. For additional information, please visit www.climateregistry.org.

El Paso Corporation provides natural gas and related energy products in a safe, efficient, and dependable manner. El Paso owns North America's largest interstate natural gas pipeline system and one of North America's largest independent natural gas producers. For more information, visit www.elpaso.com.

Chespeake Natural Gas Moving Forward

HOUSTON (Reuters) - Shares of Chesapeake Energy Corp (nyse: CHK - news - people ) climbed more than 6 percent on Wednesday on news that the company plans to sell $1 billion in long-term debt to pay down bank debt, a move one research firm said showed the natural gas company had ample liquidity.

On Tuesday, the Oklahoma City, Oklahoma company announced a $500 million debt offering and on Wednesday a source familiar with the deal told Reuters the company had increased the note sale to $1 billion.

A company spokesman was not immediately available to comment.

Chesapeake ended 2008 with $1.75 billion in cash, below its target to have as much as $2.5 billion on hand, and said Tuesday it would take a $1.8 billion write-down on the value of its natural gas assets.

TransCanada Still Wants Alaskan Natural Gas Pipeline

By ANNE SUTTON , 01.27.09, 11:04 AM EST
AP

Alaska lawmakers worried about sinking prices for natural gas were told to take the long view when considering the economics of a pipeline tapping North Slope gas reserves.

TransCanada Corp. (nyse: TRP - news - people ) Vice President Tony Palmer, who is leading the company's effort to build a multibillion-dollar Alaska gas pipeline, said the project is moving forward as planned despite the economic downturn that has depressed energy demand and prices.
"This project cannot swing with the wind of gas prices month by month. They need to look at what long term gas prices are, and is this project economic in those long term forecasts?" Palmer said following a presentation to the House Resources Committee on Monday.

Many forecasters believe gas prices are about bottomed out, Palmer said. Monday's price of $4.50 per million cubic feet is roughly a third of where prices were a year ago. Palmer said prices are more likely to average $6 or $7 per million cubic feet.

Palmer said his company remains focused on factors that it can control: keeping construction and other costs down and staying on schedule, which will ultimately determine the cost of shipping the gas to market. If the cost of shipping remains under $3 per million cubic feet as planned and natural gas prices rise at least moderately, Palmer said producers and state government will do well.

Obama OKs California Tough Car Regulations: Natural Gas is Looking Good!

WASHINGTON – President Barack Obama opened an ambitious, double-barreled assault on global warming and U.S. energy woes Monday, moving quickly toward rules requiring cleaner-running cars that guzzle less gas — a must, he said, for "our security, our economy and our planet."

He also vowed to succeed where a long line of predecessors had failed in slowing U.S. dependence on foreign oil.

Starting his second week in office, Obama took a major step toward allowing California and other states to target greenhouse gases through more stringent auto emission standards, and he ordered new federal rules directing automakers to start making more fuel-efficient cars as required by law.

The auto industry responded warily. Reducing planet-warming emissions is a great idea, carmakers and dealers said, but they expressed deep concern about costly regulations and conflicting state and federal rules at a time when people already are not buying cars. U.S. auto sales plunged 18 percent in 2008.

And industry analysts said the changes could cost consumers thousands of dollars — for smaller, "greener" cars.

Obama on Monday directed the Environmental Protection Agency to review whether California and more than a dozen states should be allowed to impose tougher auto emission standards on carmakers to fight greenhouse gas emissions. The Bush administration had blocked the efforts by the states, which account for about half of the nation's auto sales.

The new president also said his administration would issue new fuel-efficiency requirements to cover 2011 model year vehicles.

Obama acknowledged the worries of automakers but said urgent action was needed nonetheless. He said, "Our goal is not to further burden an already struggling industry. It is to help America's automakers prepare for the future."

He said that U.S. imports of foreign oil have continued to climb, even as previous presidents pledged to reverse the trend. No more, he said.

"I want to be clear from the beginning of this administration that we have made our choice: America will not be held hostage to dwindling resources, hostile regimes and a warming planet," Obama said in the ornate East Room of the White House, where an audience of environmentalists cheered him on.

Underscoring environmental worries, a new report said many damaging effects of climate change are already all but irreversible, sure to last until the year 3000 and beyond. "It's not like air pollution where if we turn off a smokestack, in a few days the air is clear," said Susan Solomon, chief author of the international report and a climate researcher with the National Oceanic and Atmospheric Administration's Earth System Research Laboratory in Boulder, Colo.

Showing the early limits of bipartisanship, House Republican leader John Boehner said Obama's reopening of a key California ruling was dangerous. "The effect of this policy will be to destroy American jobs at the very time government leaders should be working together to protect and create them," he said.

Obama's order for an EPA review of California's case could shake up the auto industry — 13 other states and the District of Columbia have adopted California's standards, and others are considering them. If California gets a federal waiver to enact tougher emissions standards, the other states could then sign on.

Also, Obama directed federal transportation officials to get going on new fuel efficiency rules, which will affect cars produced and sold for the 2011 model year. That step was needed to enforce a 2007 energy law, which calls for cars and trucks to be more efficient every year, to at least 35 miles per gallon by 2020.

Obama also meant to set a tone with his promises: Science will trump ideology and special interests, attention will stay high even when gas prices fall.

It was a none-too-subtle admonishing of previous administrations, chiefly George W. Bush's.

"It falls on us to choose whether to risk the peril that comes with our current course or to seize the promise of energy independence," Obama said. "And for the sake of our security, our economy and our planet, we must have the courage and the commitment to change."

Obama put that peril he mentioned in stark terms. He said dependence on foreign oil "bankrolls dictators, pays for nuclear proliferation and funds both sides of our struggle against terrorism. It puts the American people at the mercy of shifting gas prices, stifles innovation and sets back our ability to compete."

Recent presidential history is littered with grand but broken promises about weaning a gas-guzzling country from foreign oil. As long ago as 1973, Richard Nixon wanted the nation to be energy independent by 1980. The U.S. now imports even a bigger share of its oil than it did then.

This time could be different, said Phyllis Cuttino, director of a global warming campaign for the Pew Environment Group.

"It is very telling that at a time when he's working feverishly to pass an $825 billion stimulus package, he took these concrete steps on day six," she said. "That speaks volumes to his commitment." Environmental advocates, she added, are "all going to be applauding him — and holding his feet to the fire."

Underscoring Obama's attempt to shore up America's environmental credentials, Secretary of State Hillary Rodham Clinton on Monday appointed a special envoy for climate change.

Going back to Nixon's time, the U.S. imported 36 percent of its oil and refined products, about half coming from the OPEC cartel. During the first 11 months of 2008, imports accounted for nearly 67 percent of the petroleum used each day in the U.S., according to the Energy Information Administration.

Robert Ebel, an authority on energy policy at the Center for Strategic and International Studies, said public sentiment about the new promises may be, "Here we go again." But Obama, given his popularity, a cooperative leadership on Congress and the nation's desire for a reshaped economy, could have a window.

"The memory of $4 a gallon gasoline is not that old, and the financial crisis is very much in people's minds," he said. "All these things put together will help."

Obama framed his energy plan as steady and pragmatic. Sounding much like President Bush did, he warned that there is no quick fix.

EU Must Spend for Russian Alternative

By Maria Golovnina

ALMATY, Jan 26 (Reuters) - Fear of angering Russia may stop Central Asian producers from committing gas supplies to Europe unless they receive solid EU guarantees that the Nabucco pipeline project is well worth taking that risk for.

The energy-rich region, seen by Moscow as part of its sphere of interest, is in the spotlight as an alternative source of energy after Russia's gas conflict with Ukraine deprived Europe of natural gas supplies for two weeks this month.

But analysts said Central Asian producers would be reluctant to make any promises on paper unless Brussels presented them with a set of concrete incentives and guarantees on Nabucco's timing, transit arrangements and financing. "All those countries that would contribute to Nabucco would have to jeopardise their relationship with Russia," said Tanya Costello, a director at Eurasia Group in London.

"I don't think Turkmenistan has enough commitment from the EU that it's really going to happen, that you can really consider taking that risk."

Many hope that this week's Nabucco conference in Hungary, due to be attended by European Commission President Jose Manuel Barroso, would help Europe come up with a more unified position.

EU External Relations Commissioner Benita Ferrero-Waldner toured the Caucasus region ahead of the conference last week, putting special emphasis on her meetings in Azerbaijan -- one of the potential big Nabucco suppliers.

"Azerbaijan intends to receive concrete proposals from participant nations on matters of Azeri and Central Asian gas transportation," Azeri Foreign Minister Elmar Mamedyarov told reporters in Baku ahead of the Hungary meeting.

Russia, however, has aggressively defended its geopolitical turf in the region, promising to raise the price it pays for Central Asian natural gas to European levels from this year.

Natural Gas Explosion in Gloucester

By Dan Peleschuk, Globe Correspondent and James Vaznis, Globe Staff
http://www.boston.com/news/local/breaking_news/2009/01/explosion_destr.html

GLOUCESTER -- An initial investigation has discovered a leak in an underground gas pipe in front of a house that exploded here this morning, a National Grid spokesman said at a press conference late this afternoon.

However, John Higgins, a National Grid spokesman, declined to directly link the leak as the cause of the explosion, which critically injured a 30-year veteran of the city's police department who resided in the Eastern Avenue home. The pipe with the leak was underneath the street, directly in front of the house.

"There was a gas leak, and we moved to make a repair," said Higgins, at the City Hall press conference. "It is now complete."

The state fire marshall's office and state police are now heading the investigation, while local agencies will be assisting.

While officials stressed the area is safe, National Grid crews will work throughout the night, scanning the area for any other potential leaks. Officials also announced the creation of a new hotline to report gas leaks: 800-231-5325.

The explosion occurred shortly before 8 a.m. at 76 Eastern Ave., near Route 128. Officer Wayne Sargent, 59, had just finished his shift and returned home, said Gloucester Fire Chief Barry McKay. He heard some noises from the oil furnace in the basement and decided to check it out. As Sargent walked down the stair case, while calling the oil company on his cellphone, the house exploded.

Sargent, who was conscious after the explosion, was flown by helicopter to Massachusetts General Hospital. In his short time there, his condition has been downgraded from "serious" to "critical."

The explosion damaged two neighboring houses, blowing out the windows to one house, and leaving the side of the other house substantially charred.

Earlier in the day, a National Grid spokesman more directly tied natural gas to the cause of the explosion.

"It appears that natural gas was the cause, but how it entered the house and how it may have ignited is under investigation," said David Graves, a spokesman for National Grid.

David Swift, who lives in the neighborhood, was buying coffee at Jeff's Variety, which is a few buildings away from the explosion, when he heard the blast. He said it sounded like a truck hit the building. He and four or five people ran over to the house and sifted through the debris to help the victim.

Sargent was standing in the basement of the house, he said.

"The house just disappeared from the street," Swift said. "I didn't think anybody would come out of that house after hearing that blast."

A sales clerk, Gayle Silva, said the explosion shook the store so much that tomato paste cans, cigarette packages, and other items fell off the shelves. She said she saw the house explode through a store window, as she was waiting on customers.

"It went up so fast. There were red flames everywhere," Silva said. "I've never seen anything like that before in my life."

Chief said the department had received a few calls in the last few weeks about the smell of gas in the neighborhood. Neighbors said natural gas crews had been working on the street in the last few weeks.

Graves said this morning that he did not have access yet to work crew records for that area so he could not confirm if work had been done in recent days.

Sargent was among eight officers commended earlier this month by the department after they safely apprehended a man who locked himself in his apartment and threw butcher knives at two officers, according to a story in the Gloucester Daily Times.

Sargent is a 1969 Gloucester High School graduate.

On Dec. 17, a house explosion in Scituate killed a man who was inside. The cause remains unclear.

The state fire marshal's office investigated but has not released any details. Police have said "human involvement" was a factor.


Globe correspondent Jenara C Gardner contributed to this report