Pennsylvania’s impact fee on natural gas wells yielded its highest payout in the seven years the levy has been collected – surpassing the previous record by roughly $25 million, the state Public Utility Commission (Puc) said last week.
The annual fee for 2018 levied on wells drilled into Pennsylvania’s Marcellus and Utica Shale plays took in $243 million, plus $8.9 million in back fees from companies that had withheld payments for several years while courts decided which low-producing stripper wells were exempt from fee payment.
The total, $251.83 million, is well above the previous record total of $225.75 million set in 2013, Kallanish Energy reports. Since initial collections began in 2012, the impact fee has collected and disbursed more than $1.47 billion.
The utility commission attributed the higher annual total to an increase in the number of wells paying the fee for 2018: 9,560 compared with 8,518 in 2017.
More wells were assessed fees because companies continue to drill new ones, with 779 unconventional wells drilled last year, according to the state Department of Environmental Protection.
But a state Supreme Court decision last year also forced more older, low-flowing wells to pay the fee because they produced more than 90,000 cubic feet per day of natural gas in at least one month of the year.
Payments are expected to be distributed this month.
The impact fee is assessed per well to compensate state and local communities for the industry’s demands on public infrastructure (such as roads and bridges) and the environment. Natural gas prices and production volumes are secondary factors in calculating the fees.
“Pennsylvania’s natural gas impact tax is working as designed … ,” said David Spigelmyer, president of the trade group Marcellus Shale Coalition, in a statement.
“Local governments rely on impact tax revenues to fund a host of priorities, including enhancing road and bridge infrastructure, flood mitigation and prevention, emergency response planning and equipment, and local parks, playgrounds and trails.
“Additionally, more than $450 million has been invested in statewide environmental infrastructure grants, including water and wastewater treatment systems, brownfield site remediation, flood mitigation and prevention, abandoned well plugging and other capital improvement projects.”
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