Bill proposes Pennsylvania State funding for Marcellus infrastructure

As Pennsylvania lawmakers debate requiring that natural gas drillers compensate communities for any damages to local roads, bridges and water supplies through a state severance tax on their production, they are also proposing that state tax dollars be used to develop infrastructure projects to support the industry, the Scranton times Tribune reports.

Marcellus Shale projects
make their debut in a capital projects bill approved last week by the Senate.
These bills, which are considered every two years, give authorized projects a
shot to compete for state aid. The state pays for selected projects through the
sale of bonds to investors. This measure goes back to the House for a
concurrence vote as the legislative session winds down. The projects bill is
moving as House and Senate leaders try to reach agreement on a compromise tax
rate for a severance tax.

Marcellus-related
projects added to the projects bill by the Senate include:

– Carbondale Railyard
Transload Facility, $5.4 million. The new railyard is being developed by
Honesdale-based Linde Corp. to serve the natural gas industry.

– New rail facility to
support shipping of products related to natural gas industry, Northumberland
County, $5 million.

– Five plants in
Clearfield and Elk counties to treat and recycle hydrofracturing wastewater
from Marcellus Shale drillers. Each requests state aid in the $4 million to $6
million range.

– Marcellus Shale
industrial building at former brownfield site, Clearfield County, $1.2 million.

– Marcellus Shale
enterprise center, Clearfield County, $10 million.

– Marcellus Shale
learning resource center, Westmoreland County, $2 million.

– Delaware & Hudson
Railway, build transload facilities and rehabilitate rail lines on this old
anthracite region railroad from the New York State line to Sunbury to accommodate
"new commodities and developing markets," $31 million. The railroad
extends through Lackawanna, Susquehanna, Wyoming and Luzerne counties where
natural gas drilling and exploration is occurring.

Hundreds of projects
representing a diverse range of economic sectors are listed in the capital
projects bill. The list would tap far more state aid than is available and
these bills are often derided as wish lists. But the projects often reflect
development ventures sought by local civic and business leaders. Lame-duck Gov.
Ed Rendell – or more likely his elected successor – will decide which
comparatively small handful of projects get a green light.

So far, few make any
direct link between the question of using taxpayer-funded borrowing to pay for
commercial projects that would benefit Marcellus Shale development when a
severance tax is not levied in Pennsylvania.

"Without revenue
from a severance tax, Pennsylvania taxpayers will be asked to pay for
drilling-related infrastructure and related public costs," said Chris
Lilienthal, spokesman for the Pennsylvania Budget and Policy Center, a think
tank that supports a severance tax. "Pennsylvanians should enjoy the
benefits of growth in the natural gas industry and not simply get saddled with
the costs."

These capital projects
are not sought by drillers, but by those looking to create an economic spinoff,
said Louis D’Amico, executive director of the Pennsylvania Independent Oil and
Gas Association.

"These are
industries that are looking to serve and be in support of the Marcellus Shale
business," added D’Amico, whose group opposes any severance tax as
crippling to drillers.

It’s difficult to
determine which senators sponsored individual projects, since they were added
to the bill as omnibus amendments. Sen. Robert Mellow, D-22, Peckville, a
supporter of a severance tax, added the Carbondale project, said spokeswoman
Lisa Scullin. Senate President Pro Tempore Joseph Scarnati, R-25, Jefferson
County, said he adds projects to these bills upon request knowing the merit
review of the project will come later. Scarnati, whose district covers Elk and
part of Clearfield counties where some of the proposed recycling facilities
are, said last week he doesn’t want a severance tax rate that would be punitive
to the industry.

It’s premature to discuss
state aid for Marcellus Shale infrastructure projects, said Gary Tuma,
spokesman for Gov. Rendell.