Looming severance tax worries Marathon

EAST LIVERPOOL – Marathon Petroleum Corp. might hold off developing its newly acquired property from the Columbiana County Port Authority until the state legislature decides whether to increase Ohio’s severance tax on oil and gas production.

Speaking at this week’s board meeting, port authority CEO Tracy Drake said Marathon officials have expressed their concern about the potential impact of proposals introduced in the state legislature raising the severance tax on oil and natural gas production.

Marathon operates a storage tank/transfer station next door to the port authority’s industrial park in Wellsville. The port authority agreed last year to sell 3.6 acres to Marathon for $2.4 million, which the company intends to develop into a truck staging area for handling up to 24,000 barrels of oil and natural gas bound for its terminal from drilling operations in the region.

Drake said Marathon officials indicated to him that while the company still intends to close on the property purchase, they are worried an “excessive” increase in the severance tax might result in some drilling companies pulling up and relocating operations to states with lower production taxes.

Drake said the company has indicated it may delay site development until the tax increase issue is resolved.

Meanwhile, Gov. John Kasich has said he will veto any tax increase bill he believes to be excessive and counterproductive to the state’s growing oil and gas industry.

In other action, Drake reported they are in a position to begin using the first $1.2 million from the $3.5 million in state funding received for improvements to the Wellsville industrial park located along the Ohio River. The money is in the form of a loan, which would be converted to a grant if the promised jobs are created.

The $1.2 million will be used for railroad siding. The improvements are specifically to help tenant Cimbar Performance Minerals, which is involved in a joint venture with Anchor Drilling Fluids to produce fluid on site for use in the drilling industry. The project is expected to result in the eventual creation of 20 more jobs.

Drake said the remaining $2.3 million is insufficient to cover the $3.5 million to $4 million estimated cost of installing a bulk cargo-handling conveyor system as part of the industrial park’s overhead crane system, which is used to unload cargo from truck, barges and rail cars.

State Rep. Nick Barborak, D-Lisbon, was asked to request $3.5 million for the port authority be included in the state’s capital improvements budget currently being drafted to pay for the conveyor system.

“We need the line item in the state budget to make that happen,” Drake said, adding that whatever is left over from the two funding sources would be used for other park improvements.

Drake also reported he is in talks with three local businesses he declined to identify that are interested in expanding but could leave if unable to do so. He is working to provide expansion assistance needed to keep these companies here.