Lebanon talks gas tax

High energy prices threaten to undercut the town of Lebanon's attempts to tax natural gas being produced within its borders. A 2005 bill introduced by Assemblyman William Magee D-(Nelson) that died in the Ways and Means Committee with the close of the last legislative session in December must be resubmitted this session. And Magee must find a senate sponsor for a companion bill.

"If I introduce it, I want to do it with the full intention of passing it," Magee said. "But we have to overcome opposition by the energy producers and other legislators. I have to be sensitive to the concerns that adding taxes would discourage energy production."

Magee sympathizes with town concerns over the damage to local roads done by drilling, seismic testing equipment and the trucks that haul gas from the compressor stations to the outgoing pipeline. The wells are connected to the compressor stations by a local pipeline network.

"The concern is legitimate because of the need for money to pay for damages to roads," Magee said. "But when energy prices are so high, some are reluctant to put another tax on it that would discourage exploration in New York state."

Lebanon sits atop a dome-shaped geologic structure that traps natural gas produced in the underlying Utica shale, according to Bruce W. Selleck, a geologist at nearby Colgate University. The sandstone structure lies between 2,500 to 3,500 feet below the surface and contains an estimated several million MCF. An MCF is a 1,000-cubic-feet unit, the industry's standard of measure.

Nornew Inc. now operates some 54 gas wells in Lebanon, 20 of which were drilled just last year. About $47,000 in property taxes from gas-producing properties was collected in 2006, only about 3.2 percent of the approximately $1.4 million in estimated 2005 production value, according to Selleck. But out of the property taxes collected Lebanon gets only about $9,400 with the lion's share going to the Hamilton School district and Madison County.

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