Apocalypse Not: Severance Taxes and Industry Exit in the Marcellus Shale

Parth Vaishnav, Nathaniel Horner |

In this paper, the economics of a typical unconventional gas well in the Marcellus Shale from the point of view of a driller are analyized. Findings show that the replacement of the current impact fee with a 5% severance tax is very unlikely to deter firms from drilling new wells in the state, and it will certainly not inhibit the continued operation of existing wells.