DCNR – DRILL OR NO DRILL?

dcnr drillbitThe big shocker in yesterday’s news (6/13/13) was the announcement of Richard Allan’s resignation as Secretary of the Department of Conservation and Natural Resources.  According to news reports, Pennsylvania Governor Tom Corbett asked Allan to resign.

Being “asked to resign” is a polite way of saying “YOU’RE FIRED”.

The big question is WHY was Allan fired?  The Governor’s office is silent as to the reason.  Spokesman Kevin Harley would only say it was a “personnel decision.”

Two possible reasons are making the rounds:

1. The Philadelphia Inquirer reported it was after an email to his wife surfaced in which he used a racial epithet.

“…sources who spoke on condition of anonymity, said Corbett became aware of an email that Allan wrote to his wife, also a state employee, in which he jokingly uses a derogatory racial term for an African American.”

Allan’s wife is Patricia Allan, who is Policy Director for the Pennsylvania Department of Environmental Protection, also known as the Department of Energy Production and as Don’t Expect Protection.

2. DCNR’s leanings towards allowing gas drilling (and its related infrastructure) in Loyalsock State Forest recently grabbed the headlines when over 500 people showed up for the ONLY public hearing regarding Anadarko’s plans to frack the forest.   The hearing went well over the scheduled 2-hour time limit as more and more people lined up to express their concerns.

Of the two reasons, Anadarko’s drilling plans for Loyalsock seems to be most plausible.

Keep in mind Corbett’s polling numbers are not good, although Corbett says he is not concerned by polls.  In April 2013, a Quinnipiac University Poll reports a 47-38% DISAPPROVAL rating on job performance.  If the election were held today, Corbett would be a one-term governor.

Corbett said he isn’t bothered by the poll numbers because budget cuts have been painful and the economic turnaround they were meant to achieve hasn’t fully happened yet.

Not being concerned by polls is the usual response by a politician when their poll numbers are in the toilet.   READ: Dead Governor Walking | Esquire | By Charles P. Pierce | May 2, 2013.

ANADARKO CAMPAIGN DONATIONS AND LOBBYING

In 2010, Anadarko tossed about $5,500 into Corbett’s campaign coffers according to marcellusmoney.org.          Between 2008 and 2010 Anadarko donated a total of $26,500 to various legislators, predominately Republican Legislators.

Partial list (see Anadarko at Marcellusmoney.org  for complete list.)

anadarko campaign contributions

In the grand scheme of political campaign donations $26,500 is a drop in the bucket.   Not so much of a drop in the bucket is the lobbying money being spent.   Anadarko’s lobbying expenditures from the last quarter in 2010 through the first quarter of 2012 cha-chings at $120,750.

The Million Dollar lobbying club includes:

  • Dominion: $1,007,715
  • Chesapeake Energy: $1,258,585
  • Range Resources: $1,567,514
  • UGI Energy Services: $1,700,472
  • Marcellus Shale Coalition: $3,665,328

Was Allan’s firing because of Loyalsock and Anadarko hitting the headlines?  Did Anadarko tell Corbett to fire Allan?  Compared to the other heavy weights, Anadarko’s campaign “donations” and lobbying expenditures lag far behind.   Looking at these numbers, if Anadarko did pressure Corbett to fire Richard Allan, they probably weren’t the only drillers to do so.

While the news regarding Loyalsock is not good for Corbett, there is more than just one forest being fracked.

CAN’T SEE THE FOREST FOR THE DRILL RIGS

Below is a DCNR map of State Forest Land locating DCNR Oil & Gas leases, and privately owned Oil & Gas rights.

DCNR-MAP

DCNR States: Approximately 1.5 million acres of the 2.2 million-acre state forest system are underlain by Marcellus and other shale gas formations, making it a key venue for developing this important energy source in Pennsylvania.

Highlights from DCNR 2012 Shale Gas Leasing Statistics Fact Sheet:

  • Approximately 700,000 acres of the 1.5 million in the Marcellus gas play are available for natural gas development.
  • DCNR has issued three shale gas-specific leases totaling 138,866 acres. Together they have generated $413 million in “bonus-bid” revenue for the Oil and Gas Lease Fund
  • DCNR has approved 211 well pads and 842 shale gas wells since 2008 (2008, 21; 2009, 179; 2010, 284; 2011, 315 2012, 55). Each well pad can host 6 to 24 wells.
  • Approximately 276 wells have been drilled and are capable of producing natural gas. They have generated approximately $100 million in royalty revenue since 2008.

In January of 2010, DCNR opened bids for drilling 31,000 acres in state forest lands.  The drilling bids were done under former Gov. Ed Rendell’s administration.  Rendell did place a moratorium on drilling for about 700,000 acres in October 2010.  

READ: Why Rendell’s “moratorium” on forest drilling means very, very little | October 27, 2010

Specific Tract Bids:

  • Tract 1 Seneca 3,125/acre $23,253,125 total
  • Tract 737 Anadarko 4,111/acre $11,198,364 total
  • Tract 007 Seneca 4,625/acre $48,530,125 total
  • Tract 323 Exco 5,250/acre $24,354,750 total
  • Tract 426 Penn Virginia 3,750/acre $13,867,500 total
  • Tract 419 Chesapeake 2,437/acre $ 7,194,024 total

As you can see (do the math) – Seneca takes the lead with two track bids for a grand total of $71,783,250.   Anadarko places 4th ahead of Chesapeake Energy.  The 2010 Grand total for fracking our forests was $128,397,888.

Rendell officially left office in January 2011, Corbett was sworn in as governor and by August 2011 Corbett’s  Secretary of Economic and Community Development, Alan Walker, wanted to see more drilling in state forests.

Walker stated “Pennsylvania’s state forests could bring in “close to $60 billion” over the next three decades, ”That allows us to solve just about every economic problem we have that is hanging out there, including un-funded pension liability, infrastructure problems,”


ABOUT SOLVING JUST ABOUT EVERY ECONOMIC PROBLEM?

Corbett said in April 2013 he isn’t bothered by the poll numbers because budget cuts have been painful and the economic turnaround they were meant to achieve hasn’t fully happened yet.

Pension Liability problem?  Not Solved by drilling.   If the bill for the state and school employees’ pension systems’ $45 billion unfunded liability were called due, Corbett said it would require a payment of nearly $9,500 per Pennsylvania household.

Education Funding problem?  Not Solved by drilling.   Over 18,000 teachers have lost their jobs because of cuts.  According to data compiled by The Center for the Study of Education Policy at Illinois State University, Pennsylvania Ranked 46th Out Of 50 In Its Per Capita State Support For Higher Education in 2012. [Rutgers University, Budget Facts]

Every economic problem?  Not Solved by drilling.  Read: Assessment of Governor Corbett’s 2012-13 Budget Proposal by the Numbers

March 2011: Corbett calls for shared sacrifice.   In his first budget as Pennsylvania governor, Tom Corbett called for $1 billion in cuts state education spending and the elimination of hundreds of state jobs in a $27.3 billion proposal he said separates “the must-haves from the nice-to-haves.”

“If government is here to share the taxpayers’ wealth, then everyone needs to share in the sacrifice,” he said.

When Corbett talks about Shared Sacrifice he doesn’t put corporate tax breaks on the altar.  A recent bill passed by the PA House closes the Delaware loophole which will (supposedly) prevent companies operating in Pennsylvania from shifting profits earned in PA to other states, and forces them to pay their full share.

Supposedly this will generate $90 million in new revenue.  But where is the revenue really going?  To education?  Pensions?  Infrastructure? To every other economic problem?   NOPE.

It will be kicked back to corporations as tax breaks.

The money will be used to help fund the tax breaks needed to help business save money, which in turn will allow them to invest in their operations and create jobs said Rep. David Reed, R-Indiana (and the bill’s author).

Rep. Bryan Barbin, D-Cambria, questioned the long-term costs of the tax breaks.  “There is no evidence that corporate tax breaks will create new jobs”, he said.   Barbin calls it a shell game.  Meanwhile, the tax breaks could cost the state $800 million in lost revenue by 2025.

The bill calls for the corporate net income tax — which is levied on all companies with headquarters, land or equipment in the state — to drop from the current rate of about 10 percent to about 7 percent by 2025.

The bill is now headed for the PA Senate.  A similar bill died in the senate last year.

Has drilling solved every economic problem?  Money may not grow on trees, but if you sacrifice the forests and people to put up a drill rig it does make a very few people wealthy.   As far as drilling in state forests go, we’ll have to see if Ellen Ferretti, the now acting DCNR Secretary will protect the forest or the drill rigs.

Related:

©2013 by Dory Hippauf

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