Impact fee payments shrink as natural gas drilling falls
Low natural gas prices and scant new drilling sent Pennsylvania’s impact fee revenue from shale gas wells plummeting to the lowest level on record for the 2020 reporting year, according to Pennsylvania Public Utility Commission data released this week.
Companies operating Marcellus and Utica shale wells paid $146 million — about $54 million less than the year before. The annual fee was driven down by the lowest average annual price of natural gas and the fewest number of new wells drilled since the impact fee was established in 2012, the PUC said.
Impact fees are collected in April and distributed in July.
County and municipal governments that host shale wells will receive $71 million of the total revenue, while state agencies will get $24 million and the Marcellus Legacy Fund, which pays for environmental, highway and water projects throughout the state, will get $51 million.
In a sharp reversal prompted by
the pandemic and a mild winter, the local share of impact fee revenue was nearly cut in half from the 2018 reporting year, when the levy hit a record high.
About $33 million of the fees will go to Southwestern Pennsylvania counties and municipalities, according to an analysis by the Marcellus Shale Coalition, with Washington and Greene county communities receiving $21 million of the region’s share.
The impact fee is charged per well to compensate the state and local communities for the industry’s demands on roads, public services and the environment. Most gasproducing states implement severance taxes on natural gas that are based on price and production volumes, but those are secondary factors in calculating Pennsylvania’s impact fees.
According to a report last week from the Independent Fiscal Office, the total impact fee revenue relative to the market value of the gas produced in 2020 amounted to an annual average effective tax rate of 3.3%.
Companies pay lower impact fees for wells as they age, so the revenue relies on new drilling. This was the first year that fees from new wells were not enough to fully offset lost fees from aging wells, the fiscal office said. There were only 475 new wells subject to the fee in 2020.
The previous record low collection was $173 million for the 2016 reporting year.
The impact fee has raised $2 billion over the last decade.
Revenues are expected to rebound next year. The fiscal office said that the average annual price of natural gas on the New York Mercantile Exchange, a key benchmark for the impact fee, is projected to return to 2019 levels this year. If that holds true, impact fee revenue should be $21 million higher next year.
A “less likely but plausible” scenario would be an even stronger price recovery as the economy reopens and energy demand rises as the pandemic recedes. In that case, impact fee revenues could be $74 million higher next year, the office said.
A generation ago, the idea of catching a legal fish and throwing it back seemed strange. Catch and ... what?
Now catch-and-release has become common, especially among bass anglers. But a Canadian study published last year says that fishing tournament anglers should adopt better release policies.
Black bass — the largemouth, smallmouth and spotted relatives of panfish — don’t require pristine waters to be prodigious breeders. The need for stocking is rare. As long as there is suitable spawning habitat, not too many predators and lots of forage fish, bass generally need no help in sorting out the birds and the bees.
Research has long documented the mortality rate of bass that were caught and immediately released by sport anglers as 1-2%. In tournaments in which bass are caught, transported in a livewell and released near the weigh-in site, mortality has been estimated at 28% or higher.
The report acknowledges the conservationist ethic supported by tournament organizers and participants. Many bass tournaments, it said, are switching to some form of catch, weigh, video and release at the point where the fish was caught.
The researchers from Carleton University in Ontario studied stress placed on bass by conditions including water temperature, oxygen level, handling, air exposure, livewell structure, crowding of livewells and weigh-in systems.
“Despite the potential benefits to at-boat release tournaments, there are a number of possible avenues for research that can benefit individual fish and fish populations. For example, there continues to be the need for research in the area of fish care and livewell design,” stated the report in Fisheries Magazine, a publication of the American Fisheries Society representing professional
fisheries scientists.
Some of the study’s recommendations could be adapted by recreational weekend casters. Everyone enjoys a good fight, but the prolonged exercise of resistance can seriously deplete a fish’s energy. The report suggested that after a fight of several minutes or more, big bass should be allowed to rest alone in a livewell before being released at the point of capture.
Maintaining equilibrium between the water temperature at the depth a fish is caught and in the livewell can be critical. Some anglers attempt to help fish by dropping oxygenation tablets into the tank. Too much oxygen, said the report, can do as much damage as not enough oxygen.
There’s another consideration at this time of year. After eggs are fertilized, male bass fan them to prevent coverage by silt, guard the redds from predators and protect the fry. When an adult is pulled off the redd, a wide range of predators from gobies to bluegills to crayfish immediately begin stealing eggs. Anglers who want to help the bass they cherish should begin by protecting their progeny.
Lake Erie algal blooms
Expect another summer of relatively clear water on Lake Erie. The National Oceanic and Atmospheric Administration predicted Wednesday that harmful algal blooms would be smaller than average through July.
“Discharge of water from the Maumee River [in western Ohio] was below average in March and April, due to lower than average rainfall, which led to low phosphorus loads in early spring,” stated a media release. “While weather systems in early June are bringing rain to the region, there is still uncertainty in the weather models on exact amounts, placement and intensity of rainfall which leads to uncertainty in the discharge and the phosphorus load.”
NOAA said that by late June, normal rainfall was expected to return bringing less uncertainty in the amount of discharge.