DEP seeks to up cost of drill permits
Money would pay for oil, gas regulators
The price of a permit to drill a shale gas well in Pennsylvania will more than double under a proposal that state environmental regulators plan to present to an industry advisory board next week.
The increase — from $5,000 to $12,500 per well — is necessary to protect the state’s oil and gas oversight program from running a deficit beginning in the summer of 2019, according to a program cost analysis that the Department of Environmental Protection will discuss with its oil and gas technical advisory board on Feb. 14.
“The number of well permits submitted to DEP does not generate sufficient revenue to cover the costs of administering DEP’s oil and gas program,” the agency wrote.
Permit fees are paid once, at the beginning of a well’s life, but DEP’s inspection responsibilities continue until the well is plugged, usually decades later.
The majority of the oil and gas program’s funding comes from well permit fees, with fines and $6 million from the annual impact fees paid by shale gas companies making up the rest. It does not draw money from DEP’s share of the state general fund budget. The program’s annual expenses are expected to be $23 million this fiscal year.
Applications to drill tapered in recent years as the plunging price of natural gas forced Marcellus Shale companies to cut back on new drilling. Shale well permit applications rose slightly but remained low in the last fiscal year, and “permit volumes are not expected to rebound in the near term,” the agency wrote.
DEP has cut staff and reduced operating costs to conserve money until a reliable funding source is restored, the agency said. The number of people working in the oil and gas program declined from 226 to 190 employees, and operating and fixed asset costs were reduced 39 percent over the past three years.
Those cuts have strained the department, contributing to significant delays in processing some types of permits, especially in the southwest regional office where the number of staff reviewing well permits has been cut by 43 percent.
DEP officials have known since at least 2015 that they would need additional funding to prop up the oil and gas program, but the Wolf administration held off on proposing a fee