Giving Away the Store: A Fact Check on Corbett/Ellis Marcellus Fee Plan

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By Michael Wood, Research Director, & Sharon Ward, Director

The average Pennsylvania Marcellus Shale gas well is projected to generate $16 million over its life.[1]

The Pennsylvania Budget and Policy Center compared four leading drilling tax and fee proposals before the General Assembly to determine the total tax revenue raised by each over the life of an average well. The effective tax rates for the plans ranged from 1.0% to 4.7%. Governor Corbett’s proposal would collect $160,000 over the 50-year life of an average well. A comparable well in Texas would raise $878,500 – five times more than Governor Corbett’s plan.

Plan Total Fee/Tax Revenue Effective Fee/Tax Rate
Scarnati: SB 1100 $505,000 3.1%
Quinn: HB 1700 $710,000 4.4%
Murt/DiGirolamo: HB 1863 $770,000 4.7%
Corbett/Ellis $160,000 1.0%

Other shale gas-producing states ask much more from drillers.

State Drilling Tax Revenue Effective Tax Rate
Arkansas $555,700 3.4%
Texas [2] $878,500 5.4%
West Virginia $993,700 6.1%

Don’t give away Pennsylvania’s future with a weak drilling fee/tax bill.


Footnotes

[1] The revenue estimate for Sen. Joseph Scarnati’s SB 1100 assumed 3.8 billion cubic feet of production per well. To compare plans over time, we used a constant estimated price of $4.28 per thousand cubic feet over 50 years.

[2] Texas provides a tax reduction for “high cost wells.” This projection assumes a 3.75% rate (50% high cost well rate) for the first 10 years of production, then returning to 7.5% in Year 11. Actual rate reductions would vary by well.

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