Pennsylvania Gov. Tom Wolf on Jan. 31 proposed a tax on extracting natural gas to pay for his plan to spend $4.5 billion over the next four years to improve the state's infrastructure.
The state legislature, however, has refused to approve the tax over the past couple of years.
Wolf said Pennsylvania is the only state in the country without a severance tax on extracting natural gas.
Pennsylvania is the second biggest gas-producing state behind Texas. The state produces about 18 billion cubic feet per day (Bcf/d) from the Marcellus and Utica shale basins, which is a little over 20% of the nation's total gas production.
One billion cubic feet of gas is enough to supply about 5 million U.S. homes for a day.
"With every passing year our state is losing out on the opportunity to reinvest the benefits of these resources to stimulate out economy and move Pennsylvania forward," Wolf said.
The state's gas industry, however, said the tax is not necessary since the state already has a per well impact fee.
"Pennsylvania's tax on natural gas—the impact fee—generates hundreds of millions of dollars annually for critical infrastructure programs," said Marcellus Shale Coalition President David Spigelmyer, adding another energy tax will cost consumers and hurt jobs.
The proposed tax would increase if the price of gas rises and would start March 1, 2020.
The biggest producers in Pennsylvania include units of EQT Corp. (NYSE: EQT), Chesapeake Energy Corp. (NYSE: CHK), Cabot Oil & Gas Corp. (NYSE: COG), Range Resources Corp. (NYSE: RRC) and Southwestern Energy Co. (NYSE: SWN).
Wolf said he wants to spend the money on high-speed internet access, storm preparedness, disaster recovery, business development, energy infrastructure and transportation projects.
It was the 65th notice of violation the Pennsylvania Department of Environmental Protection (DEP) issued the project since construction began in February 2017.
The CEOs of Chevron and Exxon Mobil also argued that natural gas is the best way to help cut global greenhouse gas emissions while also increasing the availability of power across the developing world.
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