The Marcellus Shale Issue Today

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As introduced in a previous article, the issue of Marcellus Shale continues to occupy not only media outlets, but the topic has also reached the Governor’s desk and is the talk of many rural towns.  New information and rumors seem to appear daily, but on the political and environmental fronts, battle lines have been drawn.

Even before taking office, the Commonwealth’s new Republican Governor, Tom Corbett, promised that he would not add or increase taxes.  Though this conservative fiscal philosophy sounds simple enough, the recollection of the first President Bush’s “No new taxes” mantra and subsequent broken promise is fresh in many people’s memory.

Given the struggling state of the economy, it seems as if a tax on this new resource would be practical, as neighboring states have brought in hundreds of millions of dollars in tax revenue from Marcellus Shale.  Such a tax is feasible, as natural gas production companies themselves are even willing to be taxed on the state level as a purchase of political capital in exchange for limits on local regulations and zoning prohibiting drilling for Marcellus Shale.

Of course, if a tax were to be raised, who would see the revenues?  Though a large majority of Pennsylvania residents are in favor of such a tax, only a few are actually in the crossfire of the debate.  A clear answer to this media-proposed taxed has not been reached, although it is obviously against Governor Corbett’s campaign pledge and generally business friendly approach.

A compromise on this issue of taxation, however, is a good possibility.  Corbett and his newly- established Marcellus Shale Advisory Committee are considering an “impact fee.”  Such a measure would require drilling companies to sign over a portion of their profits to local communities that face the greatest impact from natural gas procurement.  These funds would be directly applied to rebuild roads damaged by heavy construction equipment and compensate for the use of the area’s infrastructure.   This compromise seems to be a viable way to protect local communities while maintaining the Governor’s promise, though its negative implications between drillers and local communities are interesting.

As the Governors debate taxes in Harrisburg, environmentalists have whipped the Southwestern part of the Commonwealth into a fury.  Eager to connect any negative environmental attribute to the Marcellus Shale wells, environmentalists and state officials alike are warning of the potential dangers of this activity.  The usual suspect environmental classes of migratory birds, amphibians, and wetland habitats, have already been brought to attention as potentially being affected adversely by Marcellus Shale drilling. Contextualizing these warnings though is the fact that, although natural gas is procured from Marcellus Shale using technology that many find new and unfamiliar, it is essentially less invasive than traditional petroleum wells.  Additionally, it should be noted that many of the animals that call Pennsylvania’s lush habitats home are experienced adapters and can handle the disturbances of drilling.

The environmental debates do not end with wildlife disruption.  Many landowners and rural residents are concerned with the natural gas extraction method of hydraulic fracturing.  This process requires a large amount of water being forced down the well, often laden with chemicals, and pressures the shale formations, causing cracks that allow the natural gas pockets to escape.  The major concerns over this process include the supply of the water, which normally comes from landowner’s wells, and the escape of the carcinogens into the water shed.  Pennsylvania regulations prevent landowners from selling their water, though they may include these clauses in their leases and certainly may prevent a company from accessing their water supply.  The second concern, over the pollution of the water table, is still on the table and will continue to be a controversial issue as Marcellus Shale becomes a household name and driving force in rural economies.

As the debates surrounding Marcellus Shale continue on many fronts, one should approach the controversy with a cautious course.  Landowners should make well thought out decisions, balancing the profitability of a Marcellus Shale lease on their property while weighing the potential environmental impacts.  On the broader level, it will certainly be interesting to see how first-year Governor Tom Corbett officially weighs in on the issue politically and economically.