Impact fee on Pa. shale wells tops $209 million this year
Harrisburg Bureau
Pennsylvania shale gas producers paid $209.6 million in impact fees this year, the state Public Utility Commission said Thursday.
The total is $36 million more than the prior year, reflecting higher gas prices and an uptick in new drilling in the Marcellus and Utica shales last year.
But the final collection is about $10 million less than the state’s Independent Fiscal Office had projected in January, largely because of a higherthan-expected number of wells qualifying as low-flowing “stripper” wells that produce too little gas to have to pay the annual fee, said Mark Ryan, the fiscal office’s deputy director.
Pennsylvania’s Commonwealth Court adopted an expansivestripper well definition in a 2017 ruling — exempting more wells from paying the fee than the PUC had in the past.
The dispute over what counts as a stripper well is being considered by the state Supreme Court and was intentionally left out of the fiscal office’s earlier analysis.
PUC spokesman Nils HagenFrederiksen said 17 production companies disputed the status of 294 horizontal wells and 24 vertical wells this year because of the unsettled stripper well definition.
That led to a $6.1 million reduction in impact fees paid for
the year.
More than half of the total fees collected for 2017 — $114.8 million — will be distributed to county and local governments to offset the impacts to roads and services that drilling brings.
About $76.5 million will be dedicated to environmental, highway and sewer projects statewide and another $18.3 million will be distributed to state agencies, the PUC said.
Checks to local governments are expected to go out in early July.
Roughly $50 million of the fees will go to southwestern Pennsylvania counties and municipalities, according to an analysis by the Marcellus Shale Coalition, with heavily drilled Washington and Greene county communities receiving twothirds of the region’s share.
Center Township in Greene County, with 238 wells, is slated to receive $1.2 million — the highest impact fee payment of any municipality in the state this year.
Pennsylvania’s per-well impact fee is a unique type of assessment among major oil and gas-producing states. Other states implement severance taxes based on the volume and value of gas produced from wells.
Democratic Gov. Tom Wolf proposed implementing a severance tax in the state budget this year — as he has in every year of his tenure — but the idea is opposed by the industry and many Republicans in the GOP-led state House and Senate.
A severance tax was dropped from budget negotiations and is not included in the final budget bill passing quickly through the Legislature this week.
The impact fee has raised more than $1.4 billion since it was instituted in 2012.