Amidst the boom happening lately in the U.S. shale industry, we can’t help but think some states are growing a bit envious of their neighbors’ good fortune.
We recently saw this firsthand with Montana and the oil boom happening next door in North Dakota.
Now we’re seeing it in the Northeast…
We’re less than a decade into Marcellus Shale development, and already Pennsylvania has witnessed undeniable success.
In fact, the Keystone State is absolutely flush with it:
Natural gas — which is still extremely cheap — now accounts for almost 20% of the state’s electrical generation.
Unlike Montana, which is kick-starting its own oil rush, both Ohio and New Jersey are forced to sit on the sidelines and watch Pennsylvania’s gas development flourish.
But despite the potential beneath their own soil, both are determined to stifle growth as best they can…
Whether it’s Ohio halting mineral lease sales, or New Jersey’s moratorium on hydraulic fracturing (I’m still scratching my head over that move, considering nobody is even drilling for gas in the Land of No Left Turns), it’s clear that neither state is willing to embrace this energy boom.
Pennsylvania, however, has a different strategy to developing the Marcellus: It’s grabbing this gas bull by the horns and pouring billions of dollars into state coffers — and that’s even after the U.S. Energy Department slashed reserves by 66%!
On February 7th, a new bill passed through the PA House and Senate that would place a 15-year fee on natural gas wells drilled in the state.
It’s about time. After all, every other major natural gas-producing state has a similar tax in place.
Depending on the price of natural gas, the state would make between $190,000 to $355,000 per well over a 15-year period.
That alone could bring in as much as $1 billion during the next five years.
Fact is, there has been a flurry of activity over the last four years…
Back in 2008, 195 Marcellus wells were drilled in Pennsylvania. In 2010, that number increased to 1,369.
And last year was another record-setting year for the Marcellus, with approximately 1,751 new wells! With current prices below $3 per Mcf, the state would’ve pocketed $542 million over the 15-year period from 2011’s activity alone.
We tend to agree with state Senator John N. Wozniak’s sentiment, “There is no sin in the word profit.”
Of course, we have a similar plan of action — only our gas profits can’t be hindered by the red tape of the Obama administration…
In fact, this project is already in motion for a select group of natural gas players to tap an even larger market than the United States.
We’ll outline this strategy to you next week.
Enjoy your weekend,
Keith Kohl
Editor, Energy and Capital
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