Representatives from three of Pennsylvania’s natural gas industry groups said Tuesday they are opposed to any severance tax on natural gas production.

The one-hour telephone conference with news and gas industry media comes a month before governor-elect Tom Wolf, who campaigned on enacting a severance tax on natural gas producers, takes office.

Earlier this month, the Pennsylvania Budget and Policy Center, acting at Wolf’s direction, calculated a 5 percent severance tax could deliver $1 billion in revenue.

Natural gas industry executives quickly disputed the number, arguing the calculations were based on old numbers and said that because of lower prices being paid for natural gas, and the fact that Pennsylvania operators receive less because of their inability to get gas to pipelines, the actual revenue collected would be far less.

The PBPC then revised its estimate, stating that in 2015-16 a 5 percent severance tax would yield $675 million at a natural gas price of $2.67 per thousand cubic feet, an amount it said would be 2.5 times the estimated $270 million generated by the current impact fee.

“Assuming a middling estimate of $3.48 MCF, an estimate derived from the U.S. Energy Information Administration price forecast discounted for Pennsylvania’s lower gas prices, it would raise $881 million, more than three times the estimated impact fee,” the policy center wrote in a Dec. 9 release.

During Tuesday’s news conference, David Spigelmyer, president of the Marcellus Shale Coalition, and Lou D’Amico, president of the Pennsylvania Independent Oil and Gas Association, said that an impact fee enacted in 2012 is working, and they believe any severance tax would lower investment by the industry in the state, and result in reduced job creation.

“We need to look at opportunities and opportunities lost,” said Spigelmyer, whose group represents hundreds of drilling and supply chain companies doing business in Pennsylvania. He said the state could realize far greater revenue by allowing gas companies to continue to invest in the Marcellus play here, create more jobs and contribute further to the nascent manufacturing renaissance in the state.

“If you put a (severance) tax in play, you’re going to see a lot less investment.”

“This is the only extractive industry being targeted for a severance tax,” D’Amico added.

“Our industry has been a rare bright spot in the U.S.,” said Stephanie Catarino Wissman, executive director of the American Petroleum Institute’s Pennsylvania chapter. In Pennsylvania, she noted, natural gas has added $34.7 billion to the state’s economy and saved school districts $45.5 million in annual energy costs. According to Wissman, the impact fee has delivered more than $630 million to communities since 2012, including $234 million in 2014. The industry also pays $2.1 billion in state and local taxes.

While the average per capita income in the state is $48,785, Wissman said, the average for oil and gas industry employees is $78,898.

Spigelmyer said gas industry groups met in August with Wolf to discuss the implications of a severance tax, with many gas companies explaining what would happen if such a tax were enacted.

During a question-and-answer period with media, the group said stories of 5 percent levies on operators in other states are inaccurate.

On Tuesday, state Sen. Jim Brewster, D-Allegheny/Westmoreland, said he will introduce a plan for a 5 percent levy that would support education, but retains funds that are currently generated from impact fees. Under the plan, shale drillers would be able to credit current impact fee expenses against their severance tax liability. The current impact fee equates to an estimated 1.8 percent tax over the life of a gas well, he said in a news release, adding that the plan would help to keep the industry competitive.

But when the industry panel was told of Brewster’s proposal, they were cold to the idea.

D’Amico noted that states that have a severance tax also offer a capital recovery period for money a company spends on equipment for drilling. In West Virginia, he said, drillers pay a severance tax but are not charged sales tax on items they buy to use around or on the drilling pad.

When asked whether drillers would leave the state if a severance tax were enacted, the executives said they wouldn’t exit, but would invest less capital in drilling here.

D’Amico acknowledged that even if all gas rigs were removed tomorrow, there would still be ample gas production, given the high number of wells that have been drilled but are capped while they wait for pipeline infrastructure necessary to carry the gas to market.

But the tax would hinder future gas well development, Spigelmyer said.

“There will be fewer rigs, fewer jobs and fewer opportunities that would squander” the economic progress that the natural gas industry has made to date, he said.

This article was published December 16 by the Washington Observer-Reporter.