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Pennsylvania Impact Fee Revenue Set Record in 2013

Unconventional oil and gas companies operating in Pennsylvania paid $224.5 million in impact fees last year, representing the most collected since the fee was imposed in 2012, the Pennsylvania Public Utilities Commision (PUC) said Friday.

Including the latest figures, the impact fee, which charges a flat rate for all the wells drilled in the state no matter how much gas is produced, has collected more than $630 million in revenue since its inception (see Shale Daily, June 14, 2013; Sept. 12, 2012). The money is distributed to local governments and state agencies. The $224 million collected last year came from 6,489 unconventional wells that were under development.

The impact fee is included in Act 13 -- the state's omnibus oil and gas legislation -- signed into law by Republican Gov. Tom Corbett in 2012 (seeShale Daily, Feb. 15, 2012). It is not a production tax, but it effectively collects 2% of the value of all gas sold in the state.

The fee's critics believe it should either be replaced with or complemented by a severance tax, with many of Corbett's Democratic challengers currently floating such proposals ahead of this year’s general election and lawmakers continually wrangling over the issue (see Shale Daily, Jan. 28).

Marcellus Shale Coalition President David Spigelmyer said on Friday after the PUC's announcement that the impact fee continues to have a positive effect on the state's communities.

"It's also important to recognize that these figures are in addition to the Commonwealth's already substantial tax burden on job creators in the energy industry," he said. "According to the Pennsylvania revenue department, natural gas development has contributed more than $2.1 billion in recent years through tax payments to the state's general fund."

Development in the Marcellus Shale is only expected to increase in the coming years. Production already stands at more than 14 Bcf/d, and the Energy Information Administration projects that operators there could be producing 16 Bcf/d by the end of the year.

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