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Drillers pay nearly $200 million in 2011 impact fees

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BY ROBERT SWIFT (HARRISBURG BUREAU CHIEF)  Published: September 11, 2012    The Times Tribune.com\

HARRISBURG - Marcellus Shale drillers have paid nearly $200 million in impact fees for natural gas production during 2011, state utility regulators reported Monday.

The Public Utility Commission released the first report of impact fee revenue from thousands of wells in the Marcellus Shale formation since Pennsylvania's drilling impact fee was enacted in March.

The PUC received fees totaling $197.6 million as of Monday. The total revenue due is $205.9 million.

Read the Report HERE

Fifty-eight companies paid fees, including companies active in the drilling region of Northeast Pennsylvania. Drillers were under a Sept. 1 deadline to pay this first retroactive impact fee covering 2011. The fee is for "spud" wells, where drilling had actually started.

Drillers paid fees for 4,034 horizontal wells where a $50,000 fee is being collected and 419 vertical wells assessed at $10,000 or 20 percent of the horizontal well fee.

The fee can change each year based on the average price of natural gas.

The PUC reported that four drillers are disputing information about whether one of their wells is classified as vertical or horizontal or the well's exact geographical location. The four companies are Atlas Resources LLC, Energy Corp of America, Enervest OPR LLC, Penn Virginia Oil & Gas Corp and SWEPI LP.

The impact fee paid by Atlas could be affected the most by how the disputes are received. Atlas has paid $2.4 million so far. That fee could reach $4 million.

The PUC is responsible for collecting impact fee revenue and distributing the money, with 60 percent going to counties and local governments covered under impact fee ordinances and 40 percent to statewide uses.

The agency plans to release figures on how the revenue is distributed later this year after the well status disputes are resolved.

All 37 counties, including those in the Marcellus drilling region of Northeast Pennsylvania, have adopted the necessary impact fee ordinance.

Drafters of the impact fee law welcomed the PUC report.

"Local communities will see nearly $200 million in new revenue made available to them this fall," said Eric Shirk, spokesman for Gov. Tom Corbett.

"Approximately two hundred million dollars is a reasonable and responsible fee that will not chase this important job-creating industry out of Pennsylvania," said Drew Crompton, top aide to Senate President Pro Tempore Joseph Scarnati, R-25, Jefferson County.

The impact fee revenue is lower than what a modest drilling tax would bring in even at today's low gas price, said the Pennsylvania Budget and Policy Center, a Harrisburg think tank that advocates a statewide severance tax on natural gas production.

A Pennsylvania severance tax modeled after the existing one in West Virginia would have generated $500 million in revenue from July 2009 to last June, the center said.

The impact fee revenue yield is a reminder of the need to uphold local zoning uniformity in the impact fee law, said Kathryn Klaber, president of the Marcellus Shale Coalition, an industry trade group.

The state Supreme Court hears legal arguments Thursday on an appeal of a recent Commonwealth Court ruling that struck down a provision in the impact fee law limiting the ability of municipalities to control the location of drilling activity.

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1. Chesapeake Appalachia LLC $30,840,000

2. Talisman Energy USA Inc. $26,440,000

3. Range Resources Appalachia LLC $23,670,000

4. Swepi LP $15,300,000

5. Anadarko E&P Co. LP $14,950,000

6. Chevron Appalachia LLC $9,380,000

7. Cabot Oil & Gas Corp. $8,830,000

8. EOG Resources Inc. $8,050,000

9. EQT Production Co. $7,000,000

10. CNX Gas Co. LLC $5,700,000

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