Governor Paterson has unveiled his budget proposal for the year beginning April 1. With nearly $1 billion of new taxes and fees, one can only assume it’s an April Fools joke. Some of this is targeted specifically at gas leases. As reported by ABC News:

A 3 percent tax on natural gas extraction from the Marcellus Shale formation in the Southern Tier and in central New York using horizontal wells, raising $1 million starting in 2011-2012.

This isn’t a lot of information, but it does imply a few things.

  • Since it says “gas extraction”, I take it to mean taxes on actual gas coming out of wells, as opposed to just leases themselves. Note that some lease contracts make the landowner responsible for these taxes. If you’ve signed a lease you should check on this; if you’re considering it, make sure you understand what the deal will be.
  • If they expect to derive tax income from gas drilling, it strongly suggests that they do intend to have wells drilled in 2010, and actively producing gas.
  • If they expect $1 million dollars in revenue from a 3% tax, the math says that they expect $33.3 million dollars of gas to be pumped in fiscal 2010.

Related info:
  • The tax people smell blood
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  • State gives favorable rates to gas companies
    New York State is leasing mineral rights to the gas companies for below-market prices. The Press & Sun-Bulletin tells us: Under long-standing policy, New York’s share of royalties from natural gas wells on state-owned land is fixed at 12.5 percent...
     
  • Governor signs bill
    After waiting until virtually the last possible minute, Governor Paterson has signed the horizontal drilling bill. PressConnects.com reports that he has signed it, while emphasizing the need for caution in evaluating the impact of developing the resources. His intention is...
     
  • Effect on real estate market
    The leasing of gas rights is bound to have some effect on the real estate market. The possibility of making a couple of thousand dollars per acre must increase the price of lots that the gas companies are interested in;...