West Virginia is in competition with Ohio and Pennsylvania for an ethane cracker plant. That appears to be driving legislation to encourage industry to “Pick me, Pick me.” Per an AP report, The House suspended procedural rules on Monday to allow for an early vote on a bill to give big tax breaks on real estate and property taxes for 25 years to a cracker developer. The bill was passed over to the Senate chamber. To qualify a cracker plant must be cost at least $2 billion. That leaves the announced Aither catalytic cracker plant out; it is expected to cost about a third that price.
Ken Ward reviewed the question of whether or not big tax breaks for a cracker were justified back on December 19th. That post in Sustained Outrage referred to an analysis by the West Virginia Center for Budget and Policy that pointed out that industry already enjoys lower taxes in WV than in OH or PA. Our real estate tax rate is much lower than our neighboring states of PA and OH. Thus, even though WV imposes property taxes and our neighbors do not, the total tax burden in WV is lower than that of it’s neighbors. The industry will be holding onto an estimated $500 million dollars in lost taxes that our counties will not receive to fund education and other county government functions if the bill is finalized.
Chesapeake Shifts Rigs to Wet Gas Areas
Recent news shows that the drilling activity is shifting to areas of wet gas i.e. natural gas that has higher percentages of the heavier hydrocarbons such as ethane, propane and butane. Here is a map showing where the wet gas and dry gas are found in the Marcellus formation. Most of the wet gas is in the northwest corner of PA and the far western part of WV. But then there’s the Utica shale which is richer in wet gas. Here is a map of the Utica shale. Those who follow the shale gas news are aware that Chesapeake Energy is excited about the Utica opportunity. In fact today Chesapeake announced that drilling rigs will be shifted to areas of wet gas. Per Paul Gough of the web- based Pittsburgh Business Times:
That means the eight Chesapeake rigs in southwestern Pennsylvania and northern West Virginia will be cut to six and redeployed to the liquids-rich areas here; the 18 in northeastern Pennsylvania will be downsized to 12 rigs.
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