The Pennsylvania Public Utility Commission (PUC) announced Monday that localities will receive a total of $108.7 million from the impact fees enacted under Act 13, the state’s omnibus Marcellus Shale law.
The PUC, empowered by Act 13 to collect impact fee revenue on behalf of local governments, said producers have so far paid $204.2 million into the state’s Unconventional Well Fund. After $23 million went to various state agencies for their regulatory duties, 60% of the revenue goes to local governments and 40% to the Marcellus Legacy Fund.
“The Marcellus industry continues to create jobs and prosperity for our state’s working families,” Gov. Tom Corbett said. “We are excited and encouraged by this growth, but we know that every leap forward has an impact. That’s why this impact fee is appropriate; millions of dollars will go directly to help the communities who need it.
“I’ve said it before, energy equals jobs; not just in the industry itself, but in various fields all across Pennsylvania. We’re ushering in a new industrial revolution, and we’re doing it responsibly with our world-class environmental standards and by providing the communities who are hosting and impacted by natural gas development with the financial resources they need to address those impacts.”
The PUC said counties with producing unconventional wells will receive $38.2 million, or 36%, of the total revenue for local governments. Municipalities with producing unconventional wells will receive $39.3 million (37%), while municipalities that are contiguous or within five linear miles of municipalities with producing wells will receive $28.7 million (27%).
All told, 35 of Pennsylvania’s 67 counties will receive revenue from the impact fee, along with 1,485 municipalities.
“Today’s announcement further underscores the fact that Marcellus Shale production is positively impacting every square inch of the Commonwealth,” Marcellus Shale Coalition President Kathryn Klaber said Monday. “These critical resources will help ensure that local governments are equipped to make the most of this historic opportunity.
“The natural gas industry’s work across the Commonwealth is indeed a true partnership with county and local governments. Importantly, these revenues are being directed to each of Pennsylvania’s 67 counties, regardless of where natural gas operations are taking place.”
According to PUC figures, Bradford County will receive about $8.38 million from the impact fee, making it the highest recipient among counties with producing wells. Tioga County will receive $4.76 million, followed by Washington ($4.25 million), Lycoming ($3.93 million), Susquehanna ($3.9 million) and Greene ($3.1 million) counties.
Meanwhile Philadelphia County, an exact overlap of the City of Philadelphia, will receive a $1.29 million disbursement from a Marcellus Legacy Fund. Allegheny County, home to the City of Pittsburgh, is to receive $1.04 million. According to Corbett’s office, the money can be used for various expenses, including:
Of the $23 million set aside to various state agencies for their regulatory work, $10 million went to the Marcellus Legacy Fund, Natural Gas Energy Development Program. Another $6 million was allocated to the state Department of Environmental Protection (DEP). Other state agencies receiving impact fee revenue include the PUC, the County Conservation Districts & Conservation Commission, Fish and Boat Commission, PA Emergency Management Agency, Office of State Fire Commissioner, and the Department of Transportation.
Last month the PUC reported that producers had paid most of the $205.9 million the agency estimated was owed under the impact fee (see Shale Daily, Sept. 12). Chesapeake Appalachia LLC paid the largest impact fee bill at $30.8 million, followed by Talisman Energy USA Inc. at $26.4 million and Range Resources Appalachia LLC at $23.7 million. The three companies, which have all paid their obligations, accounted for 39% of total fees.
Using spud data reports provided by the DEP, the PUC determined that 4,034 horizontal and 419 verticals wells were subject to the impact fee this year. These wells were spud in 2011 or earlier, but for the PUC’s fee calculation purposes the first year for all of the wells will be considered as 2011.
The PUC will set the rate for wells drilled this year on Jan. 31, 2013 using a tiered structure set according to the average price of natural gas on New York Mercantile Exchange for the last day of the preceding 12 months and adjusted for the Consumer Price Index. The payments for the 2012 fee are due April 1, 2013.
Act 13, which was signed into law by Corbett in February, amended Title 58 (oil and gas) of the Pennsylvania Consolidated Statutes (see Shale Daily, Feb. 15). The law gives Pennsylvania’s counties the choice to collect an annual per-well fee from operators. The fee is set annually based on the price of gas and declines over 15 years but is set at $50,000 for all unconventional horizontal gas wells drilled through 2011.
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