State officials seek more oversight of gas drilling

PITTSBURGH - Saying the cost of natural-gas development could outweigh the benefits, Pennsylvania's two highest-ranking environmental officials built a case Monday for imposing more taxes and regulation on Marcellus Shale exploration.

John Hanger, secretary of the Department of Environmental Protection, told a gas-policy conference here that it was time for the state legislature to impose a production tax on gas operators - who, he said, "are almost laughing at their good fortune at not having to pay a severance tax."

John Quigley, secretary of the Department of Conservation and Natural Resources, said it was "folly" for the state legislature to rely on leasing public land for drilling to raise revenue. About 692,000 acres of the state's 2.1 million-acre forest system are already under agreement, and more will be leased next year.

"Quite frankly, the citizens of this state are being played for chumps," Quigley said.

The comments by Hanger and Quigley at the two-day Pennsylvania Marcellus Shale Policy Conference, sponsored by Duquesne University and the Pennsylvania Environmental Council, are part of a coordinated effort by Gov. Rendell's administration to build public support for the legislature to impose greater oversight on the industry.

"They're ratcheting up pressure on the industry to come to the table on a severance tax," Patrick Henderson, an aide to Senate Environmental Resources and Energy Committee Chairwoman Mary Jo White (R., Venango), said last week.

The Rendell administration is pushing ahead with a plan to impose a severance tax of about 6 percent on gas producers, as well as a package of regulations imposing stricter gas-well construction standards and water-discharge limitations.

In a region plagued by the environmental legacies of coal mines - Pennsylvania has 180,000 acres of abandoned mines and 5,000 miles of waterways polluted by acid-mine drainage - the officials found a friendly audience for their warnings about not being vigilant with extractive industries.

DEP's Hanger ridiculed the state's 1984 law requiring gas operators to set aside a "pitiful" $2,500 insurance bond to pay for plugging an abandoned well. It costs the state about $10,000 to seal off an orphaned well.

"The joke will be on us if we don't fix that," Hanger said. The small amount of the bond, he said, will give operators a strong incentive to forfeit it when they leave the state, rather than fix environmental problems.

"So far," Hanger said, "the industry has not given me a lot of warm and fuzzies about getting the bonding numbers to the right place."