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Corbett: Impact Fee Funds Could Cap Wells

Despite previous veto threats, Pennsylvania Gov. Tom Corbett said he would like to see some of the revenue generated from a proposed impact fee on Marcellus Shale development go toward capping thousands of abandoned wells in the state.

"We have thousands of uncapped shallow wells, and they're an environmental hazard," the governor told the Pittsburgh Tribune-Review during an interview Thursday. "If you're looking for a statewide use of funds, capping shallow wells -- which we have across this state -- is a logical use."

Eric Shirk, a spokesman for the governor's office, confirmed for NGI's Shale Daily on Friday that Corbett expressed those views. Corbett's comments Thursday, along with previous statements since March, seem to indicate that the Republican governor could go along with some type of an impact fee.

Last month the Marcellus Shale Advisory Commission issued 96 recommendations, including one that the state consider an impact fee (see Shale Daily, July 19; March 9). Corbett, who appointed the 30-member commission in March, said he wouldn't consider supporting an impact fee unless the commission recommended one (see Shale Daily, March 25).

Jan Jarrett, CEO of Citizens for Pennsylvania's Future (PennFuture), told NGI's Shale Daily that the group supports an impact fee.

"Call it what you will, a drilling tax or an impact fee, it's always been our position that a reasonable amount of revenue should be raised for a variety of purposes," Jarrett said Friday. "We believe some of the money should go toward capping abandoned gas wells. We think that's a good use, but we also think the uses should be broader."

The Marcellus Shale Coalition (MSC) also favored the idea. "Addressing the decades old challenge of capping abandoned wells, which date as far back as 1859, is certainly a worthwhile endeavor," MSC Vice President David Callahan told NGI's Shale Daily on Friday.

According to figures from the state Department of Environmental Protection (DEP), about 8,800 abandoned oil and gas wells have been identified as of September 2010. The DEP's Bureau of Oil and Gas Management oversees an orphan well program to locate and plug abandoned wells drilled by firms no longer in existence or traceable, which is funded through surcharges on permit applications for new oil and gas wells in the state.

The DEP said that from 2007 to 2009 it contracted for the plugging of 790 wells, with an average plugging cost of about $9,650 per well. Using those figures, it would cost the state about $84.9 million to plug all of the abandoned wells it has identified.

The process typically requires removing all of the pipe, cleaning the well bore and then filling it with a nonporous material. Critical portions of a well -- including coal seams, oil and gas formations and fresh groundwater aquifers -- require a cement plug to seal the zones off from each other.

DEP figures also state that as many as 350,000 oil and gas well may have been drilled in the state since the first was drilled near Titusville in 1859. Another DEP report from April 2000 cited an estimate from the Independent Petroleum Association of America (IPAA), which said that there were about 184,000 wells with an unknown status. If all of those wells were abandoned and needed to be plugged, it would cost Pennsylvania about $1.77 billion to do the job.

"There are a lot of them," Jarrett said. "We've had gas drilling in this state for a century. Before there were adequate regulations, and even afterward, companies just walked away from their responsibilities."

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