American Oil and Gas Reporter - February 2015 - 109

ConventionSection: Pennsylvania Independent Oil & Gas Association

Low Gas Prices Undermine
Severance Tax Plan
By Dan Holder
CANONSBURG, PA.-Pennsylvania's
economic prospects seem to be as gloomy
as the Northeast winter season, and oil
and gas industry leaders say operators
have no choice but to wait out the bad
weather and fiscal storms.
As the Pennsylvania Independent Oil
& Gas Association heads into its winter
meeting, set for Feb. 24-25 at the Seven
Springs Mountain Resort in Champion,
Pa., operators are hearing calls for a severance tax from new Governor Tom Wolf
at the same time the commonwealth is
revising regulations governing natural
gas activities.
Despite the vast resource potential
held in the Marcellus Shale underlying
the commonwealth, PIOGA Chairman
Gary Slagel says this is a tough time for
the natural gas industry.
"Pennsylvania has a lot of unresolved
issues with the Wolf administration coming in and the governor's campaign statements about his desire to impose a severance tax," says Slagel, government affairs specialist with Steptoe & Johnson
in Canonsburg. "Given where we are
economically, from the industry's perspective it is going to be tough to move
forward and to think about anything
other than dealing with economic issues.
Certainly, a severance tax is an issue of
concern."
During his successful gubernatorial
campaign as the Democratic candidate,
Wolf proposed a 5 percent severance tax
on oil and gas production in Pennsylvania.
In his last year in office, outgoing Republican Governor Tom Corbett opposed
calls for severance taxes, arguing the industry already paid sales tax and corporate
and personal income taxes as well as impact fees. That impact fee was imposed
in February 2012 as part of Act 13, which
also rewrote the commonwealth's regulatory structure governing oil and gas
operations. State sources indicate most
of the $600 million in impact fees have
gone back to the communities with drilling
activity.
Slagel predicts any such revenues will

PIOGA Winter Meeting - Champion, Pa.
Tuesday, Feb. 24
8 a.m. Registration Opens
Exhibit Hall Meeting Room, Seven Springs
Mountain Resort
9-9:15 a.m. Introduction and PIOGA 2014
Review
Lou D'Amico, PIOGA President and Executive Director
9:15-10:15 a.m. Legal Review and Outlook
for 2015
Kevin Moody, PIOGA Vice President and
General Counsel
10:15-10:30 a.m. Break
10:30-11 a.m. Severance Tax Discussion
Lou D'Amico
11 a.m.-12:15 p.m. Product and Services
Showcases
Sunburst Room: 11 a.m. Fortis Energy
Services; 11:45 a.m. PIC Appalachia
Snowflake Room: 11 a.m. Profire Energy
Inc.; 11:45 a.m. MNF Services
12:15-1:30 Lunch
Banquet Hall
1:30-2:15 p.m. Air Quality Challenges in
2015: EPA and Methane
Ron Cusano, Schnader Harrison Segal &
Lewis LLP; Roy Rakiewicz, ALL4 Inc.
2:15-3 p.m. State Environmental Regulatory
Issues
PIOGA Environmental Committee
3-3:15 p.m. Break
3:15-3:45 p.m. "Combatting the Crazies:
Public Relations and Public Education"
Dan Weaver, PIOGA Director of Public
Outreach; Dave Mashek, Meinert/Mashek
Communications
3:45-5 p.m. Product and Services Showcases

be a key component in upcoming budget
discussions. Wolf projects his 5 percent
severance tax plan will generate $1.0 billion toward the commonwealth's projected
$1.85 billion deficit.
Several state legislators are advancing
their own severance tax proposals, with
one Montgomery County representative
seeking to impose a 3.5 percent tax on
oil and gas extraction and direct the revenues to the public school retirement system. A Southwest Pennsylvania Democratic senator wants to combine a severance
tax with the impact fee for an effective
5.0 percent tax rate and devote those

Sunburst Room: 3:45 p.m. Tensar International Corp.; 4:30 p.m. Guttman Energy
Snowflake Room: 3:45 p.m. Zweibel EHS
for Energy; 4:30 p.m. Community Bank
5-6 p.m. PAC Reception
Wintergreen Room
$50 Minimum Donation to Enter (Personal
Check or Cash Only)
6-7 p.m. Dinner
Banquet Hall
7-10 p.m. Monte Carlo Night
Alpine Room
Free to All PIOGA Attendees

Wednesday, Feb. 25
8 a.m. Registration Opens
Exhibit Hall Meeting Room, Seven Springs
Mountain Resort
8:30-9:30 a.m. Pennsylvania Legislative
Outlook for 2015
Dick Gmerek, Gmerek Government Relations
9:30-10:15 a.m. Federal, Legislative and
Regulatory Outlook for 2015
Samantha McDonald, Independent Petroleum Association of America
10:15-10:30 a.m. Break
10:30-11:30 a.m. The Impact Fee: The
Benefits
Bradford County Commissioner Doug
McLinko; Washington County Commissioner Diane Irey Vaughan; Joe Baran,
Bertison-George LLC
11:30-12:15 a.m. Condensate and Natural
Gas Liquids Safety Awareness
Wayne Nanderhoof, RJR Safety Inc.

funds to public schools. In addition, another legislative proposal calls for an impact fee targeting natural gas gathering
and transmission pipelines.
Hostile Environment
Such tax proposals contribute to the
hostility the oil and gas industry has seen
from the Wolf administration, says PIOGA
President Lou D'Amico.
"A Pennsylvania severance tax is a
center point of the whole administration,"
he asserts. "It was the biggest part of the
election discussions-having a severance
tax to fund education in Pennsylvania,
FEBRUARY 2015 109

American Oil and Gas Reporter - February 2015

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