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A tale of two industries: Pa. natural gas thriving while subsidized solar struggles

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Politics,Beltway Confidential,Michal Conger

Natural gas drilling has earned Pennsylvania more than $400 million over the last two years, Gov. Tom Corbett announced Thursday morning. Revenue from the Marcellus Shale impact fee points to a thriving industry in a state that sits on one of the largest shale gas reserves in the country.

Shale drillers paid a $50,000 fee on 4,022 horizontal shale wells and $10,000 on 311 shallower vertical wells drilled in 2011 for total revenue of $204 million, according to the Pittsburg Post-Gazette.

Drilling from 2012 will bring in about $198 million, Corbett said. He attributed the slightly lower revenue to lower natural gas prices, according to a local ABC affiliate.  The fees are distributed among towns and counties, and regions with more wells receive more money.

“This is more exciting news for the Commonwealth, with literally every Pennsylvanian benefiting from responsible Marcellus development, even as commodity prices remain at historic lows,” said Kathryn Klaber, CEO of pro-drilling group Marcellus Shale Coalition, said on Thursday. “It’s also a stark reminder that these benefits should not be tempered by policies that discourage safe, tightly-regulated natural gas development, especially as it relates to local zoning.”

Natural gas is a profitable industry in Pennsylvania, producing $1.6 billion in local and state taxes in addition to impact fees, and about 243,000 jobs, according to the Marcellus Shale Coalition. An Oct. 2012 Standard & Poor’s report estimated could hold almost half of the current proven natural gas reserves in the U.S.

The same day Corbett announced the impact fee revenue, the Post-Gazette reported that a solar company that received millions in state and federal subsidies has shuttered its doors and can’t afford to pay its workers their severance packages. Flabeg Solar U.S. Corp. was awarded $10.2 million in stimulus money and $9 million from the state to produce one of the largest solar mirror facilities in the world. The factory was expected to produce clean energy and at least 300 jobs.

Flabeg stopped production in March. Company president Torsten Koehler told the Post-Gazette that “the overall slow environment in the industry” led to its closing.

Several former employees have sued in bankruptcy court for severance packages the company says it can’t afford to pay.

“Pennsylvania is committed to creating a vibrant solar industry because it is of strategic importance to our state’s future,” then-Gov. Edward Rendell said in 2009. “By the end of 2010, thanks in large part to the programs and policies we’ve enacted since 2003 with the help of the legislature, we expect that Pennsylvania will rank in the top five states for solar.”

There were 202 solar installation companies, 74 manufacturers, 17 retailers, 12 developers and 37 other businesses involved in solar work in the state in 2012, according to the National Solar Jobs Census 2012.

But solar energy hasn’t proved as profitable as government investors hoped. Pennsylvania’s solar market  was ”the only major state residential market to shrink year-over-year” in 2012, according to the Solar Energy Industries Association. The state dropped from 6 to 11 in new solar activity last year.

The solar industry hasn’t given up. Companies still in the state are hoping to be sustained by $7.25 million from the state’s solar subsidy program, which resumed temporarily in January.

Update, 2:15 p.m.: A spokesman for Flabeg tells The Washington Examiner the company didn’t use the $10.2 million awarded in stimulus funds because “to utilize the tax credits, sufficient profits are required that the tax credits can be applied against.”

An earlier version of this posting incorrectly stated Flabeg received $10.9 million, instead of $10.2 million.

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