Wednesday, June 6, 2012

Penn. Marcellus News Update 6/6/12

Proposed Shell tax break in Pa. worth $66M a year
Gov. Tom Corbett, who has been criticized for cutting state spending for schools and social services, is advocating future tax credits worth as much as $66 million a year for a petrochemical refinery planned by Shell Oil Co. in western Pennsylvania to capitalize on booming natural-gas drilling in the Marcellus Shale region.

The Corbett administration is seeking legislative approval now to demonstrate its willingness to share the costs of the multibillion-dollar project, even though the credits would not become available until 2017. The credit would be worth nearly $1.7 billion over the 25 years they would remain in place.
Gov. Tom Corbett wants Pennsylvania to promise a 5-cent-a-gallon tax credit for Shell Chemical L.P. and other manufacturers using Pennsylvania ethane, a Marcellus Shale drilling-zone product the governor says could be the base for a new plastics industry.
Steve Kratz, spokesman for Corbett’s Department of Community and Economic Development, which gives out business subsidies and tax breaks when it’s not forcing cash-strapped city governments to pay their bondholders, called Monday to explain the thinking behind the idea, after columnist Peter L. DeCoursey posted an account of a "secretive" ethane-tax proposal in Corbett’s budget.
Defending a proposed $1.7 billion tax break for a planned petrochemical refinery in western Pennsylvania, Gov. Tom Corbett said Tuesday the facility would be a major step toward rebuilding the state's manufacturing sector.
"My whole goal is to grow good, sustaining jobs for the people of Pennsylvania, not just today but for decades to come," Corbett said in his first public comments about the tax proposal during an appearance on the R.J. Harris show on WHP Talk Radio in Harrisburg.
Citizens for Pennsylvania's Future (PennFuture) condemned the planned giveaway of $1.7 billion in taxpayer dollars that Gov. Tom Corbett promised to Royal Dutch Shell as an inducement to build a cracker plant in Beaver County to process the wet gas from drilling in the Marcellus Shale. Shell posted $7.3 billion in profits for the first quarter of 2012 (over $80 million per day) and had more than $10 billion in cash reserves as of January 2012.
"The governor's proposal violates his own belief that the free market, and not government, should pick winners and losers," said George Jugovic Jr., president and CEO of PennFuture. "Let's be clear -- by choosing to offer Shell a $1.7 billion dollar tax break while proposing to cut nearly $900 million to public education, the governor is choosing winners and losers and he has cast his lot with choosing to further help a multi-billion dollar corporation over the education of future generations of Pennsylvanians.
"The governor's proposal to give Shell tax credits worth $67 million a year for 25 years will mean that not one, but two generations of Pennsylvanians will pay be on the hook for his largesse," said Jugovic.
The first word that comes to mind as details begin to leak about what carrots were hung from what sticks to lure Shell to Beaver County to build a multibillion-dollar ethane "cracker" plant is "BLECH!" (as in "disgusting"). For Pennsylvania has been down this road before. Think Volkswagen, Sony, Kvaerner and Comcast, among others.
The proposed plant is designed to appropriately exploit the region's growing Marcellus shale natural gas industry. It's an exciting new industry with the greatest of promise -- for jobs, the economies of local communities, support industries and for companies such as Shell, which stands to make huge profits from the cheap and abundant shale gas byproduct.
So, why should Shell be offered an "incentive" package that, by one accounting, totals $67 million annually for a quarter of a century or nearly $1.7 billion? In fact, according to another accounting, not only would Shell end up not paying any taxes, taxpayers effectively would end up paying Shell -- and all with no guarantee of jobs created.
Jake Haulk, president of the Allegheny Institute for Public Policy, says Pennsylvania taxpayers should not be forced to invest in any project that should be able to forecast sufficient profits to justify building the facility. He sees the "incentives" as "little more than an insurance policy" against future "market vagaries."
Just as government has no business turning taxpayers into venture capitalists, "Taxpayers should not be in the insurance business," Dr. Haulk reminds us in an email.
Maybe there’s a case to be made for the tax breaks Corbett is offering Shell; and, if so, he should be out front making it.
Instead, on Tuesday he went on a local Harrisburg radio talk show to offer what’s believed to be his first public comment on the plan.
"My whole goal is to grow good, sustaining jobs for the people of Pennsylvania, not just today but for decades to come," Corbett said, according to an Associated Press report.
Few could argue against such a goal.
But if you’re pushing the largest government/business deal in the commonwealth’s history, you’d think there’d be a little more offered to the people who’ll pay for it.
IT’S WELL-KNOWN to most by now that Gov. Corbett doesn’t much like welfare programs. His recent initiative to deny food stamps to anyone with assets exceeding $5,500, the banishment of about 90,000 kids from the Medicaid rolls, and the elimination of cash-assistance grants for the disabled and others are among recent moves that makes his position clear.

There is an exception to his aversion to welfare, though: If you’re a corporation, you can get plenty of state aid, and you won’t be subjected to any kind of means test. That’s the only explanation we can figure for his recent proposal to give almost $2 billion in tax breaks over the next 25 years to the second-richest company in the world, Royal Dutch Shell.
OK, SO THINGS aren’t looking so good right now for flamboyant Oklahoma City oil-and-gas mogul and possibly now ex-billionaire Aubrey McClendon.
The CEO of Chesapeake Energy has federal securities agents asking hard questions about $1.3 billion in personal loans; famed corporate raider Carl Icahn is outside his doorstep; and McClendon has watched the company stock that’s the bulk of his fortune lose half of its value since August.
But not to worry: McClendon has a plan.
You could call it, "frack, baby, frack."
And a corner of Pennsylvania is ground zero.
Last month, McClendon told Wall Street analysts in a conference call that the troubled energy giant that bills itself "the world’s biggest fracker" plans to save itself by shifting from "a strategy of asset capture to a strategy of asset harvest."
Brian O'Neill's May 31 column ("It's Not Dirty to See Gas as Energy Solution") makes some false assumptions about natural gas and clean energy.
We still don't know which chemicals the natural gas industry uses when fracking. The industry continues to fight all safeguards aimed at making sure the public knows which chemical cocktail is being used for fracking -- claiming it's a "trade secret." Here in Pennsylvania, the natural gas lobby helped make sure that the latest law won't even allow doctors to tell their patients which fracking chemicals could be affecting their health.
Mr. O'Neill ignores the growth explosion in the clean energy industry. In the first quarter of 2012, one of the industry's best quarters ever, the United States installed 1,695 megawatts of wind -- up 53 percent from the same time last year -- according to the American Wind Energy Association.

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