Marcellus / Regulatory / Shale Daily / Utica / Northeast / NGI All News Access

Pennsylvania Impact Fees Decline on Lower NatGas Prices

The Pennsylvania Public Utility Commission (PUC) said late Wednesday that it collected about $187.7 million from the state's natural gas producers last year, or $35.8 million less than what it collected in 2014 as a result of the steep year-over-year decline in benchmark prices.

Since 2012, however, when the impact fee became law, the state has collected more than $1 billion from mostly shale gas producers. The PUC said earlier this year that shale producers would pay about $5,000 less per well in impact fees for the 2015 collection year (see Shale Daily, Feb. 1) . The fee is charged for all unconventional wells in the state during their first 15 years in operation, regardless of how much they produce.

It is calculated with a multi-year schedule based on the average annual price of natural gas. The average New York Mercantile Exchange benchmark price for 2015 was $2.664/MMBtu, down from $4.415/MMBtu in 2014, the PUC said earlier this year when it adjusted the fee.

Producers are required to submit annual payments to the PUC, which distributes them to affected counties, municipalities and state agencies, by April 1. The PUC said the "increasing age of many wells" also led to last year's decline.

County and municipal governments directly affected by drilling are set to receive a combined $101.8 million, while $67.9 million will be allocated to the Marcellus Legacy Fund, which provides financing for environmental, highway, water and sewer projects across the state. Another $18 million will be disbursed to state agencies.

Marcellus Shale Coalition President Dave Spigelmyer noted the more than $1 billion that's been collected since 2012, rather than focusing on the decline in collections, saying the impact fee is an "essential revenue source" that's helping to improve communities throughout the state.

In all, 7,750 horizontal wells were eligible to pay the fee in 2015, up from 7,175 in 2014. Little changed in that time among the top receiving counties and top-paying producers (see Shale Daily, June 11, 2015). Washington County, in Southwest Pennsylvania, will once again take in the most money from the fee at $5.7 million, followed by Susquehanna County in the northeast part of the state, which will receive $5.3 million. Bradford County rounds out the top-three receiving counties with $4.9 million headed its way.

Morris Township in Greene County, also located in Southwest Pennsylvania, will receive the most of any municipality in the state at nearly $900,000. Greene County's Cumberland Township received the most last year, bringing in a little more than $918,000.

Range Resources Corp. once again paid the most in impact fees, reporting $23.9 million in 2015, compared to $28 million in 2014. EQT Corp. pulled ahead of Chesapeake Energy Corp., becoming the second-highest payer at $16.4 million versus Chesapeake's $16.3 million.

There were 128 vertical wells eligible to pay the fee in 2015, as well, but vertical fees were also adjusted lower by about $1,000 on the drop in natural gas prices. 

ISSN © 2577-9877 | ISSN © 2158-8023

Recent Articles by Jamison Cocklin

Comments powered by Disqus