Governor Rendell: Natural Gas Severance Tax Needed to Continue Protecting Environment, Aid Impacted Communities

CHESTER COUNTY, Pa., Sept. 8 /PRNewswire-USNewswire/ -- A proposed severance tax on the natural gas industry could help to continue Pennsylvania's investments in important environmental projects well into the future and help affected communities deal with the impacts of drilling, Governor Edward G. Rendell said today while addressing a coalition of organizations dedicated to protecting the state's natural resources.

"The natural gas industry is up and running strong in Pennsylvania and has many of the world's largest energy companies backing it," Governor Rendell said, citing multibillion dollar deals by Exxon Mobil and Dutch Royal Shell, among others, to access Marcellus Shale natural gas reserves. "These gas companies are paying top dollar because they know they can earn record profits. Exxon Mobil reported a record $45.2 billion profit in 2008, and the company's most recent financial statement does not report any taxes paid to the IRS.

"The drilling industry must pay its fair share. It does so in every other major natural gas-producing state in which it operates, and it's time for it to do so here, too."

The Governor said a robust severance tax on natural gas extraction could replenish funds used to finance environmental improvement projects across the state, including measures that protect and clean Pennsylvania's streams and rivers.

"We have an obligation to make sure the drilling industry does business here the right way and in a manner that protects our environment and our natural resources," said Governor Rendell. "While a number of natural gas companies have acted responsibly, too many have not adhered to our rules and regulations, and that has created headaches and new challenges to communities where this industrial activity is taking place.

"We've seen fires and well blowouts that required attention by local emergency responders such as firefighters, police officers, medics and hazmat crews who were called on scene to manage the emergencies until gas company experts could further address the situations. We've also seen roads destroyed by overweight trucks servicing drilling sites, creating a very dangerous situation for motorists who drive in these areas.

"Pennsylvania needs a severance tax to fund programs that will protect our environment, help local governments handle increased demand for their services, and repair our infrastructure. If we do this right, a severance tax will be a very good thing for Pennsylvania's future."

At least 45 incidents required an emergency response by the Department of Environmental Protection in the last year. According to PennDOT, Marcellus drillers have bonded 1,722 miles statewide and of those, 1,067 miles, or 62 percent, have been damaged, with 380 miles needing significant repairs or reconstruction.

The Governor added that Pennsylvania is the only major natural gas-producing state without a severance tax. Even large producing states such Alaska and Texas have enacted such a levy.

He also pointed to a recent poll that found eight out of 10 Pennsylvanians support a severance tax on natural gas extraction.

To learn more about natural gas drilling in the state, visit www.depweb.state.pa.us and click on "Oil & Gas."

Media contact: Gary Tuma, 717-783-1116

SOURCE Pennsylvania Office of the Governor