Higher Energy Taxes Threaten Pennsylvania’s Energy Leadership, Jobs

Pennsylvania is one of the top natural gas producing states in the U.S., strengthening its position as a national energy leader, according to new data from the U.S. Energy Information Administration (EIA). The EIA reports that the Commonwealth’s natural gas production averaged a record 15 billion cubic feet per day (Bcf/d) in 2017, 3% higher than 2016. Pennsylvania, in fact, accounted for 19% of the country’s total natural gas production last year, making it a larger natural gas producer than any other state except Texas.

This increase in production across Pennsylvania comes as regional pipeline capacity is expanded, connecting more area consumers, manufacturers and power generators to clean, local natural gas. It’s this new pipeline capacity that, in a new report, IHS Markit credits as being “critical in driving the pace of regional production growth” throughout the Commonwealth.

Still, misguided policies – such as higher and additional energy taxes – threaten Pennsylvania’s energy production and the tens-of-thousands of good paying jobs it supports. Governor Wolf’s latest higher energy tax proposal will “reduce production” and sting all Pennsylvania “consumers through higher prices,” according to the non-partisan Independent Fiscal Office’s latest analysis.

Here are some key takeaways from the new data:

From the EIA:

The state issued 2,038 natural gas drilling permits in 2017, up from 1,352 in 2016.

On average, 33 rigs were operating at any given time in Pa. in 2017, as opposed to only 20 in 2016.

In 2016 and 2017 combined, Susquehanna, Greene, and Washington counties accounted for more than 50% of the total permits issued and more than 66% of the active rigs operating in the Commonwealth.

EIA forecasts natural gas production to continue to increase in the Appalachian basin, which would indicate a need for additional pipeline capacity.

From IHS:

Estimates that pipeline expansions entering service between January 2014 and February 2018 have provided 14.5 Bcf/d of new capacity for Appalachian gas to reach local and downstream markets, with about:

Four pipelines – TETCO, TCO, REX, and Rover – account for about 75% of the Appalachian Basin’s natural gas production growth from 2014 to February 2018.

Future production growth is likely to remain concentrated on pipelines adding connectivity to downstream markets directly or indirectly through coordinated expansions with systems exiting the region.

Rather than pursue higher energy taxes that, as MSC’s Dave Spigelmyer told SNL Financial, “harm Pennsylvania workers, consumers, job creators and small business,” Harrisburg must implement pro-growth, commonsense policies that encourage energy development and use, especially among the region’s manufacturers.