Natural gas producers in Pennsylvania have paid most of the $202.7 million owed for 2012 under the drilling impact fee enacted under Act 13 for the Marcellus Shale, state officials said.

According to the Pennsylvania Public Utility Commission (PUC), all but three of 80 operators with impact fee bills last week had paid their obligations in full. Cabot Oil & Gas Corp., Chevron Appalachia LLC and SWEPI LP, a Royal Dutch Shell plc subsidiary, had paid most of their obligations, and PUC figures show that less than $20,000 remains to be collected. Spokeswoman Jennifer Kocher attributed the shortfall to disputes over the status of a handful of wells and said the issues would probably be resolved for the following tax year.

Using spud data reports provided by the state Department of Environmental Protection (DEP), the PUC determined that 5,324 horizontal and 284 verticals wells were subject to the impact fee for 2012. Chesapeake Appalachia LLC had the most horizontal wells at 743, followed by Range Resources Appalachia LLC (637), Talisman Energy USA Inc. (570), Royal Dutch Shell plc’s SWEPI LP (451), Anadarko E&P Co. LP (366) and Chevron Appalachia LLC (295). The most prolific drillers paid the highest impact fees. Chesapeake led the way with $27.4 million, followed by Range ($24.8 million), Talisman ($20.2 million), SWEPI ($17.2 million), Anadarko ($13.5 million) and Chevron ($11.4 million).

News of how much revenue the impact fee generated for 2012 came in the wake of an Associated Press story that claimed that Pennsylvania was potentially losing millions of dollars because the state had implemented an impact fee, not a severance tax. Gov. Tom Corbett’s energy adviser Patrick Henderson said the governor strongly disagreed with the assertions.

“The premise of their article is that gas production in Pennsylvania is through the roof, and yet impact fee revenue being collected is stagnant,” Henderson told NGI. “They don’t actually cite any states that are taxing production of gas. The states that they cite actually tax the value of the gas, and there is a huge difference between the two.”

Michael Wood, research director with the Pennsylvania Budget and Policy Center, said he doesn’t dispute that the impact fee was born from a political middle ground. “The issue for us, going forward, is how that compares with what a traditional severance tax would raise,” he told NGI. “As production increases, our estimates have shown that [an impact fee] doesn’t compare particularly well. The effective rate [from the] impact fee ends up declining over time as production increases; it doesn’t keep up with the amount of production.”

Act 13 was signed into law by Corbett in February 2012, allows PUC to collect the impact fees on behalf of local governments (see NGI, Feb. 20, 2012). The impact “fee” was conceived as an end-around to gain support from those opposed to the tax (see NGI, Feb. 13, 2012). Campaigning for office in 2010, Corbett said he would not support a severance tax. Last September, the PUC reported that producers had paid about $206 million in fees for unconventional wells drilled through 2011, an amount much higher than the $180 million that had been estimated (see NGI, Sept. 17, 2012).

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