Corbett: Shale gas fee could cap wells

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Pittsburgh Tribune-Review reporters Brad Bumsted and Timothy Puko cover the possibility of using funds from an impact fee to seal abandoned wells. PEC VP John Walliser provides insight.
August 5, 2011
By Brad Bumsted and Timothy Puko, TRIBUNE-REVIEW
Friday, August 5, 2011

HARRISBURG -- Gov. Tom Corbett on Thursday for the first time acknowledged a possible statewide use for money from a proposed impact fee on Marcellus shale natural gas drilling.

In an exclusive interview with the Tribune-Review, Corbett said that using some of that revenue to seal abandoned wells across Pennsylvania would make sense, as long as most of the money would reimburse municipalities for damage drillers cause and other associated costs.

"We have thousands of uncapped shallow wells, and they're an environmental hazard," the governor said.

Senate President Joe Scarnati, R-Jefferson County, sponsor of an impact fee bill, called Corbett's statement on capping shallow gas wells "a major breakthrough in getting this (impact fee) done."

"We've got a (gubernatorial) commission supporting an impact fee and the governor saying he sees a possible statewide component," Scarnati said.

Corbett said money from a proposal to sell Pennsylvania's liquor stores should go into a statewide transportation fund, noting that he said while campaigning that he favored the idea.

"I'll tell you where the money's not going to go: the general fund," Corbett said. "If you put it in a transportation trust fund, where it makes money and is used for roads, that makes abundantly good sense to me."

A bill to close more than 600 state stores and auction 1,250 retail licenses is pending in the House.

"The governor's input on where he'd put the money is significant to us," said House Majority Leader Mike Turzai, R-Bradford Woods, the bill's sponsor.

No one is sure how much money selling the state store system would raise. A consultant's study for Corbett is expected in about two weeks, the governor's spokesman, Kevin Harley, said.

"I am totally opposed to sale or privatization; just a one-time sale for a one-time revenue source," said Sen. Jim Ferlo, D-Highland Park, who favors legislation to allow the Liquor Control Board to "run like a business."

Bills are pending regarding drilling impact fees in the House and Senate when lawmakers return to session next month. Scarnati introduced a bill to levy a flat fee on wells and use money for local communities and a portion for statewide environmental programs.

Scarnati called the money for capping old wells a starting point for negotiation on a fee. Money for acid mine drainage should be included, he said.

"I'm encouraged by that. We still believe there needs to be a broader distribution (of revenue)," said Senate Minority Leader Jay Costa, D-Forest Hills. "I'm happy to see the governor is moving toward imposition of a fee or extraction tax."

Lawmakers pushed to provide a slice of the impact fee money for statewide environmental programs. Corbett previously said he would consider only a fee dedicated to covering costs incurred by communities.

"If you're looking for a statewide use of funds, capping shallow wells -- which we have across this state -- is a logical use," Corbett said.

The idea quickly found support from drillers and others.

"Addressing the decades-old challenge of capping abandoned wells, which date as far back as 1859, is certainly a worthwhile endeavor," said David Callahan, vice president of the Cecil-based Marcellus Shale Coalition, an industry group.

At issue are abandoned and "orphaned" wells, with no private company remaining to cap them.

"In many cases there is no known or financially solvent owner," stated a 2009 report by the Interstate Oil and Gas Compact Commission. Some drillers used tree stumps or other items to plug the mines in the 19th century.

The wells are a big problem, several environmentalists said. The state probably has more than 100,000 abandoned wells, said former state Department of Environmental Protection Secretary John Hanger. They can cause new gas wells to leak and buildings to explode, as well as cave-ins and water pollution.

"We don't have anywhere near enough money to fix the problem," Hanger said. "That would be one of many good uses."

Active drillers should be allowed to adopt some of those wells, according to recommendations from the governor's Marcellus Shale Advisory Commission. That would allow drillers to plug them without being subjected to liability, said John Walliser of the Pennsylvania Environmental Council.

"The Growing Greener program currently pays to cap wells when a company walks away from its responsibilities," said Bill Patton, a spokesman for House Democrats. "House Democrats support a bill to increase those bond requirements that make companies accountable and enact a severance tax to increase funding for Growing Greener and other statewide environmental programs that matter to all Pennsylvanians."



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