Good Weather, Great Turnout
On August 15, 2013 several thousand folks turned out for the Marcellus Shale Festival held at Stage AE on the North Shore across from downtown Pittsburgh PA. The weather was near perfect – mid 70’s, sunny, blue skies, and NO RAIN. The event included 2 town hall type panel discussions in the afternoon, several musicians and a screening of the new documentary FracNation.
Panel #1: Regional Job Impact; Shell Cracker Update
The first town hall breakout session was moderated by local KDKA radio personality Mike Pintek. The 5 panelists were:
Rich Fitzgerald – Allegheny County Chief Executive
Tim Murphy – U.S. Congressman from Upper St. Clair Township
Matt Pitzarella – Range Resources’ Director of Corporate Communications
Tim Solobay – State Senator from Canonsburg, PA
Jim Christiana – State House from Beaver County
All agreed on the large positive economic impact that Marcellus has had on our region. A few years ago, economists were estimating as many as 110,000 jobs might be created by the Marcellus gas boom. More recent estimates from state-funded studies estimate the impact at 200,000 direct and indirect jobs.
Those interested in entering the field were encouraged to check the job boards such as those at ShaleNET and the Marcellus Shale Coalition. The panelists expect our steel, glass, chemicals and other industries to become more competitive due to the abundance of low cost energy now available from the thousands of new natural gas wells in the region.
Shell Ethane Cracker Update
Someone from the audience submitted a question asking about the status of Shell’s proposed ethane cracker project. The panel said Shell’s original schedule was to not have the plant operational until about 2017. ZCA recently confirmed they expect to halt all operations at the zinc plant by the end of 2013. With a year to clear the site and 2-3 year construction schedule, the 2017 start-up date is still feasible.
Panel #2: Act 13 Impact Fee Distribution
The 2nd town hall breakout session was an update on PA government’s perspective that was moderated by Tara Howey, Govt Affairs Manager for WPX Energy. The 3 panelists were:
PA Public Utilities Commission – Krystle Sacavage
Robert Johnson – PA Governor’s Office in Pittsburgh, PA
Tyler Courtney – Board of Commissioners for Westmoreland County, PA
The PA Utilities representative Krystle Sacavage presented a series of slides showing how the PA Natural Gas Well Impact Fees are collected and how they distributed in accordance with Act 13 of 2012. The first year’s fees were collected by the state PUC in September 2012 and the 2nd year’s fees were collected in April 2013.
The base fee is $50,000 per horizontal well in year 1 with a declining schedule for subsequent years based on the expected production decline as wells age. There is also an adjustment made for the market price of natural gas that year to make the fee less burdensome when gas prices are low.
In 2012 the PUC collected $204 million, in 2013 they collected $202 million due mainly to the lower average price of gas. The first $25.5 million is distributed to certain state agencies to offset the direct impact of gas drilling. 60% of the remainder goes to county and local governments to be used in any of 13 specified purposes.
Those counties and municipalities with gas wells receive a larger proportion of the funds than those that do not. The remaining 40% goes into a Marcellus Legacy Fund to offset the long term effects of gas drilling. Payments are being made by the gas producers largely on the honor system but the PUC does cross-check their payments with the PA DEP’s lists of permitted and spudded wells. Extensive information is available on the PUC web site about the sources and uses of the Act 13 funds.
Robert Johnson commented that the Impact Fee is working as designed. The state estimates that 31,000 direct jobs have been created by the natural gas industry during the past few years with an average payroll of $82,000 per worker.
Tyler Courtney echoed Robert’s comments about the success of the Impact Fee program and complimented the PUC for quickly and efficiently collecting and disbursing the funds. He said Westmoreland County has received over $8 million to date from the fund and has been able to complete many road and other infrastructure projects that would have not otherwise been possible.
For more information:
For a copy of the ANGA handout from the event, see:
Related Article: Upstream vs. Downstream
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