American Oil and Gas Reporter - October 2015 - 112

ConventionSection: Pennsylvania Independent Oil & Gas Association

No Severance Tax Becoming
More Likely Possibility
By Corinne Westeman

WEXFORD, PA.-Pennsylvania's legislative leaders continue to throw out
possible percentages for oil and natural
gas severance taxes. But with each new
number proposed, oil and gas industry
leaders say the case for no severance
taxes grows stronger.
Pennsylvania Independent Oil & Gas
Association Chairman Gary Slagel says
Republican legislators are adamantly opposed to any and all new taxes. So whether
Pennsylvania passes a severance tax likely
will come down to "whoever blinks first,"
describes Slagel, a government affairs
specialist at Steptoe & Johnson PLLC.
While these discussions were ongoing

as of late September, PIOGA leaders
verify they will discuss the progress or
outcome of the tax debates with members
during the association's 2015 Eastern Oil
& Gas Conference and Trade Show, Oct.
27-28 at the Monroeville, Pa., Convention
Center.
"Democratic legislators have proposed
various severance tax rates-so many, in
fact, that they cannot decide on which
rate is adequate," Slagel continues. "One
bill proposed a 3.2 percent severance tax,
the governor has offered 5.0 percent, and
we have heard numbers higher than that."
PIOGA President and Executive Director Louis D. D'Amico says that even
a 3.2 percent severance tax would have
lasting negative impacts on an industry

Eastern Oil & Gas Conference and Trade Show
Monroeville, Pa.
Monday, Oct. 26

8 a.m.-5 p.m. Exhibitor Setup, Monroeville
Convention Center
5-7 p.m. Exhibitor Appreciation Reception

Tuesday, Oct. 27

9 a.m.-5 p.m. Trade Show & Registration
Open, Monroeville Convention Center
10 a.m.-12:45 p.m. Product & Service
Showcase Sessions, Convention Center
North Hall, Amphitheater
Dereck Servert, Western Environmental
Liner
Ryan Hall, Shalewater Solutions LLC
Matt Murdoch, Alert Plus LLC
Amy Hopkins, Morris Knowles & Associates Inc.
1-5 p.m. Conference General Sessions, Convention Center South Gallery
Conference Open & Welcoming Statement,
Lou D'Amico, PIOGA President and
Executive Director
Industry Executive Panel, Participants
TBA
"Mergers & Acquisitions, and Analysis
of Results of Marcellus & Utica Wells,"
Tim Knoblock, James Engineering
"Overview of Natural Gas Supply and Demand," Matthew Hoza, BTU Analytics
"Natural Gas Migration Incidence and

Mitigation," Timothy Erikson, Moody
& Associates Inc.
5-7 p.m. Networking Reception, Doubletree
Hotel Confluence and Oxford Ballrooms
7-11 p.m. Halloween Themed Mixer

Wednesday, Oct. 28

9 a.m.-3 p.m. Trade Show Open, Monroeville Convention Center
9 a.m.-Noon Conference General Sessions,
Convention Center South Gallery
Representative Mike Turzai, Speaker of the
Pennsylvania House of Representatives
"The Economic Benefit of Oil and Natural
Gas in Pennsylvania," Bernard Weinstein,
Southern Methodist University
"Pooling and Unitization in Pennsylvania,"
John Carroll and Justin Weber, Pepper
Hamilton
"Market Dynamics Influencing Future
Pricing of Natural Gas and Oil," Tim
Bigler, Direct Energy
12:30-2:15 p.m. Product & Services Showcase Sessions, Convention Center North
Hall, Amphitheater
Joe Mitchell, LevelCon
Joe Black, Geostabilization International
Brittany Rouse, Park National Bank
3 p.m. Trade Show Closes & Exhibitor
Breakdown Begins

112 THE AMERICAN OIL & GAS REPORTER

that he worries is already in "crisis mode."
"State representatives have claimed
the industry 'will continue to thrive' if a
3.2 percent severance tax is enacted, but
nothing is further from the truth," D'Amico
states. "This tax will raise only a tiny
fraction of what its proponents claim,
and will lead to even more job losses and
negative economic impacts in gas-producing counties. It was a bad idea when
the governor proposed it, and it is an
even worse idea today."
D'Amico points out that Pennsylvania
production and service companies already
have laid off thousands of workers because
of low prices, which he confirms have
been as low as $0.85 an Mcf at one Pennsylvania natural gas transmission hub.
Additionally, he says, in early September
there were only 35 rigs operating in the
state, down from a high of 112 in 2011.
Taxation, Misrepresentation
In September, Governor Tom Wolf's
administration made comments about a
potential stopgap budget initiative the
general assembly was considering. D'Amico says the governor misrepresented his
proposed 5.0 percent severance tax in
general, and its probable impact on the
oil and gas industry, if passed.
"Governor Wolf went out of his way
to refer to a natural gas severance tax six
times in his statement criticizing the potential development of a stopgap spending
bill by the general assembly," D'Amico
says. "He continues to extend the baseless
claim that the commonwealth is 'letting
oil and gas companies off the hook at the
expense of our children and our schools,'
when there is no basis in fact for such a
claim.
"Pennsylvania's natural gas industry
pays the same taxes as every other business, along with an impact fee paid by
no other industry," D'Amico continues.
"The answer is not another special tax
on an industry that is slumping from low
prices, excessive regulation, and competition from dozens of other energy-producing states."
Overall, Slagel says the governor and
legislators' misrepresentation of severance

American Oil and Gas Reporter - October 2015

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