Pennsylvania communities looking for a financial shot in the arm got good news from the new impact fee levied on companies drilling for natural gas in the Keystone State. According to The Patriot-News, the Pennsylvania Utility Commission billed drilling companies nearly $206 million and has already collected $197.6 million. The Pittsburgh Tribune-Review reports that the total is nearly 14 percent higher than the $180 million lawmakers originally projected for the first year of the new fee on wells drilled by the end of 2011.
What companies paid the most?
According to the Pittsburgh Post-Gazette, Chesapeake Energy paid $31 million for the 624 gas wells it has drilled in Pennsylvania, but Talisman Energy paid $26.4 million and Range Resources contributed $23.7 million to the fee. Six companies are contesting their payments and an additional $6 million in payments are delinquent, but the PUC is working to rectify those unique situations as soon as possible, according to the PG report.
Is there one set fee for companies to pay?
The impact fee was set for two types of wells in Pennsylvania. According to the Associated Press, companies were required to fork over $50,000 for every horizontal well and $10,000 for every vertical well drilled before the end of 2011. The reason for the difference reflects the fact that vertical wells are generally shallower than horizontal wells, which means they produce less gas. The tiered system is meant to reflect the fundamental difference in the types of gas wells.
What happens to all that money?
The massive windfall of impact fee raised cash will be split between local governments and statewide programs after administrative costs are deducted, according to the Pittsburgh Post-Gazette. Local governments and municipalities, where the drilling is actually taking place, receive the bulk of the funds with 60 percent of the $200 million staying in drilling communities to help pay for roads, bridges, and other areas impacted by drilling activities. The money that stays with the state will be used for environmental projects, housing assistance, and other programs.
What happens to the unpaid money?
Basically, the PUC will run down the 58 drilling companies that still owe Pennsylvania money, and many of those companies have already addressed or are in the process of addressing the late or missed payments, according to the Associated Press. Since the second payment will be due on April 1, 2013, for all wells drilled in 2012, drilling companies are expected to stay on top of the impact fee payments.
Jason Gallagher is a longtime Pennsylvania resident. He has experiences in trends and developments in many regions from having lived in many parts of the Keystone State, and currently resides in the Pittsburgh area.