It is a new day for federal energy policy.  President Donald Trump was sworn into office on January 20, following a week of Congressional testimony from his energy and environment advisors as they sought Senate confirmation.  In his inaugural address, Pres. Trump promised to “harness the energies, industries, and technologies of tomorrow.”  It seems clear that Pres. Trump considers oil and gas to be energies of the future. 
 
            Pres. Trump’s nominee to head the Environmental Protection Agency is Scott Pruitt, the current Attorney General of Oklahoma.  Mr. Pruitt has built his career suing the federal government to stop various regulations he sees as overreaching.  He promised in testimony that under his watch the EPA will work more collaboratively with industry and the states.  Former Texas Governor Rick Perry is poised to run the Department of Energy, and he talked proudly about his state’s oil and gas sector in his testimony.  Montana Congressman Ryan Zinke is the nominee for the Department of Interior, and he spoke about earning the trust of the states so that communities can see the federal government as a partner. 
 
            Perhaps most telling of the new perspective from 1600 Pennsylvania Avenue was the new policy statements immediately posted the White House website.  Pres. Trump erased Pres. Obama’s climate change plans, and replaced it with “An America First Energy Plan” that calls for utilizing America’s “untapped shale, oil, and natural gas reserves.”  He wants to “develop a positive energy relationship” with middle east allies, and says American domestic energy production is a central part of that effort.  This is highlighted by his appointment of former ExxonMobil CEO Rex Tillerson to serve as Secretary of State.  Mr. Tillerson has long supported a robust energy trade, including the export of oil and natural gas from the United States. 
 
So far, industry-supporting groups like the Marcellus Shale Coalition seem happy with where the President is headed, and if you want to get in on the action Cimmaron Land is ready to help with all your title and leasing needs. 

             Pennsylvania’s Democratic Governor Tom Wolf is coming back for another attempt at a severance tax.  This is arguably the defining fight of his political career.  His predecessor, Tom Corbett, sought to make peace with the industry as the shale gas boom took off and politicians from both parties started clamoring for a tax on natural gas.  Gov. Corbett instead supported a small “impact fee” on each well, and that fee became law back in 2012.  When Tom Wolf joined the campaign, he began calling for a 5% severance tax.  That is a tax on the value of gas as it is gathered (or “severed”) from the ground.  This became one of the biggest issues in the campaign, and presumably it wound up a political winner for Gov. Wolf.
 
            Gov. Wolf believed he could sell his tax by showing how it would benefit education.  After being sworn in, he began to campaign with an early 2015 visit to a school in one of the state’s poorest school districts, Chester County.  He argued for a tax of 5% of the value of gas at the wellhead, plus 4.7 cents per thousand cubic feet.  He estimated this could bring in around four times the revenue as the existing “impact fee,” and he said that the “lion’s share” of the estimated $1 billion in revenue would go directly to schools.  The effort ultimately failed, and a similar effort to push a 6.5% severance tax in 2016 also failed. 
 
            In recent days, Gov. Wolf has made clear that he intends to try again.  He will not say exactly what his proposed tax will be this year, but he says he is making a bigger push to sell the idea in communities far from drilling.  He is arguing, for example, that Philadelphia suburb counties like Delaware and Chester should support the tax because it will bring money into their school systems in a way the current impact fee is not.  That is because much of the impact fee revenue goes to the local community that is being “impacted” by the drilling.  Gov. Wolf points out that the Philadelphia suburbs are organizing against various pipeline projects and severance tax revenues could help garner more support for the industry. 
 
            Regardless of the tax situation, gas prices are expected to tick up slightly this year and the Pennsylvania-based experts at Cimmaron Land are standing by to help with all your leasing needs. 

             Ohio Gov. John Kaisich (R) broke out his pen and dealt with several recently-passed bills, most notably vetoing an energy bill that was passed by his fellow Republicans and would have included a $264 million tax break for the oil and gas industry.  Supporters of the bill say it was just a clarification of the way sales taxes were meant to be applied to the oil and gas business, but Gov. Kaisich disagreed and he took a shot at the industry in his formal message explaining his veto.  He said “the creation of an uneven playing field often leads to other industries pursuing special tax exemptions” and the “industry needs no additional tax breaks.”  At the same time, Gov. Kaisich vetoed a bill that would relax renewable energy standards.  This led to his critics like Sen. Bill Seitz (R-Cincinnati) saying that the governor was “appeasing his coastal elite friends in the renewable-energy business.”
 
            Meanwhile, the Pennsylvania Department of Environmental Protection announced it will be updating the way it handles erosion and sediment control permits.  The permit is needed for any oil and gas operations disturbing more than five acres of earth.  The process will change in response to a recent audit that found an expedited process established in 2012 was being used for applications that do not qualify.  The expedited process was intended to have limited applicability, and its overuse has been bogging down qualified applicants.  The agency says it will create clearer standards, improve training, and began regular evaluations of the program.  It seems the key goal will be to ensure that only high-quality applications are submitted and considered through the expedited process.
           
            Despite these challenges, many analysts expect an increase in natural gas prices and production in 2017.  If you are looking to expand your operations, Cimmaron Land can help you secure the acreage you need.

             Over the last few days we have seen some bad news from big names in our region.  Anadarko Petroleum, one of America’s biggest oil companies, announced that it would be selling off its Marcellus Shale operations.  The sale will include about 195,000 acres of natural gas fields and pipelines in Pennsylvania, a $1.2 billion value.  All of it is being purchased by a subsidiary of Houston’s Alta Resources Development, LLC.  Anadarko says the decision was about focusing its efforts in Colorado and Texas. 
 
            This is just the latest in a string of companies that have sold off their Marcellus assets to focus on other regions.  In recent months, Eclipse Resources sold $63 million worth of acreage in Pennsylvania, Chesapeake Energy sold its West Virginia operations to Southwestern Energy for $5 billion, and Gastar Exploration also sold its assets in West Virginia, earning $80 million. 
 
The big names cashing out are not necessarily a bad news story.  Alta Resources, for example, is a growing producer that is active across North America and could very well be more active than Anadarko was.  The day after announcing its purchase of the Anadarko assets, Alta Resources announced that it would purchase an interest in a Pennsylvania-based project owned by Mitsui and Co.  The company does not seem to be aiming to leave that acreage idle. 
 
            More importantly, drilling permits in the region are actually on the rise.  Pennsylvania issued 179 horizontal drilling permits between November 1 and December 16.  This is almost double the number issued over a similar period earlier in the year.  Ohio granted 43 permits in November and early December, almost all in the Utica shale.  That is also about double the permitting rates from earlier in the year. 
 
As the big names sell out it may be time for your company to buy in, and the Pennsylvania-based experts at Cimmaron Land are standing by to help with all your leasing needs.