Leaders of Pennsylvania’s oil and gas industry are used to clenching their fists when Gov. Tom Wolf talks about their sector.
A recent missive from Harrisburg instead prompted a round of head-scratching among those working in the field.
The announcement this month that a water treatment company that aims to serves oil and gas producers was setting up a headquarters in the heart of shale country included a line that spurred some debate.
Neptune Solutions Co.’s “recent decision to place their headquarters in Washington County proves that the industry is showing no signs of slowing down,” read the quote attributed to Wolf.
To say this view of the industry’s status differs from that of producers and analysts would be an understatement.
Wolf’s news release followed two weeks of quarterly financial reports indicating the very opposite of what his quote portrays. Faced with the lowest gas and oil prices they have seen in years, companies are slowing or in some cases halting their drilling programs. Some are laying off workers. Contractors that rely on drillers are closing offices.
Through the first seven months of this year, companies have drilled 42 percent fewer wells in Pennsylvania than during the same period last year.
“Given these clear and widely-reported facts, it’s alarming and out of touch with economic reality that Governor Wolf stated just days ago ‘that the industry is showing no signs of slowing down,’” Dave Spigelmyer, president of the Marcellus Shale Coalition, said in a response to a draft of environmental rules for drilling that the state announced the following week.
Wolf spokesman Jeff Sheridan said growth in gas production over the past several years backs up the governor’s statement. Companies continued to pull record amounts of gas from shale wells through June, despite the low prices.
“Exploration and production companies across the Marcellus play are achieving this tremendous production growth by improving the efficiency and targeting of their drilling operations,” Sheridan said. “As the price of natural gas improves and pipeline capacity comes online to take gas to market, we expect to see capital investments and future growth.”
The industry and Wolf’s administration have not agreed on much since he took office this year on a promise to increase taxes on drilling.
Gas producers and their advocates frequently have cited the low prices as evidence this is the wrong time to increase taxes above the per-well impact fee they’ve paid since 2012.
Money from that fee accounts for less than 1 percent of Pennsylvania budget revenue as a whole, much lower than 39 percent Wyoming gets from severance taxes, the Energy Information Administration reported Friday.
According to the Wyoming Tribune Eagle, though, the governor there is considering tapping a rainy day fund. It seems oil and gas revenue is showing signs of slowing down.