NEPA counties to raise millions or nothing under gas impact fee
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By Laura Legere (Staff Writer)
Published: February 13, 2012
Northeastern Pennsylvania’s Marcellus Shale boom counties stand to raise millions of dollars this year through an impact fee on the deep gas wells.
Other regional counties with a handful of wells may get little or nothing.
Once Gov. Tom Corbett signs natural gas legislation that passed the House and Senate last week, counties will have 60 days to adopt an ordinance to levy the optional fee.
Counties with active drilling that pass the ordinance will share with the state and their municipalities an estimated $180.5 million this year on the 3,850 vertical and horizontal shale wells that were drilled through 2011, according to state estimates. But only horizontal or producing vertical gas wells can be levied the fee.
Vertical exploratory wells that have never been hydraulically fractured and do not produce gas, like the two drilled in Lackawanna County and the eight drilled in Wayne County, will not be eligible for the fee.
“Our concern was that truly exploratory wells do not pay the impact fee,” said Drew Crompton, chief of staff for Senate President Pro Tempore Joseph Scarnati, R-Jefferson County. He added that the local impact of such wells is relatively minor and “quite frankly, we don’t want to discourage exploratory wells.”
On the other hand, the bill presumes that horizontal wells are not exploratory so even those not producing gas are eligible for the fee, he said.
That means Luzerne County’s two test wells, both of which are horizontal, will be subject to the $50,000 per well fee if the county adopts it, despite the fact that both were plugged after they showed little prospect of producing economic amounts of gas.
The bill allows fees to be collected for three years on horizontal wells with no production. After that, the fee is suspended for any well producing less than 90,000 cubic feet per day.
Crompton said the state recommends that counties with any shale gas wells pass the fee ordinance.
State lawmakers crafting the legislation broadened the fee eligibility from only counties with wells producing gas in an earlier draft of the bill to all those with unconventional gas wells that have been “spud” – the industry term for the start of drilling.
It is not entirely clear whether counties with “spud” wells that cannot be levied a fee, like Lackawanna and Wayne, will be allowed to share the money collected from the impact fee statewide.
Counties’ eligibility for the fee will be subject to a final determination by state environmental regulators, the governor’s office or the Public Utility Commission, Crompton said.
“Whether it covers everyone or not, we’ll have to see,” he said. “I think it will be interpreted that they should go ahead and vote on the resolution and hopefully make themselves eligible to receive, not a big part of the impact fee, but maybe some of it.”
Luzerne County will consider adopting the fee ordinance even if it stands to raise little from it, interim County Manager Tom Pribula said.
“All counties are basically revenue starved,” he said, “so if we have the ability to generate additional revenues it would be wise to do something.”
The county and its municipalities will share less about $51,000 of the $100,000 raised from the two wells – after the state’s share and distributions to other programs, like the Department of Environmental Protection, natural gas vehicle incentives and low-income housing support, are taken out.
In Wyoming County, where gas drilling has increased rapidly in the last year, commissioners are just beginning to review the impact fee bill, chief clerk William Gaylord said.
“There are a lot of questions to be answered,” he said. He did not indicate if the commissioners are inclined to adopt the fee ordinance.
“This has been talked about for years,” he said, “and they have never come out for or against it.”
If Wyoming County adopts the fee, its wells could raise $4.5 million this year. The county and its municipalities would share about $2.3 million of it, according to calculations based on state spud data.
Local and county governments in Susquehanna County, which ranks among the top gas producers in the state, are eligible for about $11 million of the $20.3 million its wells will raise this year if the county passes the ordinance.
Efforts to reach the Susquehanna County commissioners on Friday were unsuccessful.
llegere@timesshamrock.com