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Pennsylvania Drilling Fee Hike Sought

Pennsylvania's Department of Environmental Protection (DEP) is taking comments on a proposal to change its fee for permits to drill for oil and gas in the state. The move was prompted by the state's "booming natural gas industry" in the Marcellus Shale.

DEP wants to replace the $100 flat fee for drilling permits, which hasn't been raised since 1984, with a sliding scale based on well depth and type, it said.

"Pennsylvania's oil and natural gas industry is booming with a record 7,924 permits issued and nearly 4,200 new wells drilled in the past year, yet the cost of a drilling permit has not changed in a quarter century," said DEP acting Secretary John Hanger. "Natural gas exploration, particularly in the Marcellus Shale, promises billions of dollars in investment and economic growth for the commonwealth. This proposed new permit fee structure will allow DEP to hire the staff to help balance this historic opportunity with our responsibility to closely monitor this activity to protect our land and water resources."

The proposed fee structure was published in the Pennsylvania Bulletin Feb. 14, beginning a 30-day comment period. Following review and possible revisions the proposal will be presented to the Environmental Quality Board for final approval later this year.

The proposed fee structure sets the base permit cost for vertical wells up to 2,000 feet deep at $250, with increases of $50 for each 500 feet of depth from 2,000 to 5,000 feet. An additional $100 charge would be levied for each 500 feet of well drilled beyond 5,000 feet. Horizontal wells up to 1,500 feet long would have a base permit cost of $900, with an additional $100 for every 500 feet of well bore drilled past 1,500 feet. Permit applications for vertical wells with a well bore length of 1,500 feet or less for residential use would have a flat cost of $200.

The fee increase would allow the department to hire more staff to process permits and monitor drilling activities in the north-central and northeastern regions of Pennsylvania, DEP said.

Earlier this month Marcellus Shale producers began lobbying against plans by Pennsylvania to impose a severance tax that would generate $107 million a year from natural gas production, according to the state's 2009-2010 budget (see NGI, Feb. 9). Wastewater from Marcellus Shale production also is challenging producers as well as DEP (see NGI, Jan. 19).

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