Shale impact fee revenue rose in 2013, state reports

Shale drilling generated more than $225 million last year in impact fees that will go to counties and municipalities that bear the brunt of drilling activity, an 11 percent increase over 2012.

Rising natural gas prices were the primary factor in pushing up fee revenue between 2012 and 2013, according to the Pennsylvania Public Utility Commission.

The price of natural gas helps determine how much drilling companies will pay, said Jennifer Kocher, spokeswoman for the PUC. The average price of natural gas last year was $3.65 per thousand cubic feet, up from $2.78 in 2012.

Producers drilled 1,187 new wells in 2013, Ms. Kocher noted.

Each horizontal well — about 1,129 last year — requires a $50,000 payment. There were about 58 vertical wells drilled, with a smaller $10,000 fee. The impact fee for older wells is on a sliding scale.

In southwestern Pennsylvania, Washington County — where much of the area's drilling is concentrated — will be collecting the most revenue at more than $6.1 million. Following that is Greene County, which will collect more than $3.6 million. Allegheny County is expected to see nearly $1.4 million. Those figures do not include the amounts paid directly to municipalities.

Additionally, state and county agencies that oversee shale development will receive $17 million in funding for this round of impact fee revenues, including the Department of Environmental Protection, Pennsylvania Emergency Management Agency, the PUC, the Office of the State Fire Commissioner, and the Pennsylvania Fish and Boat Commission.

Since the impact fee was enacted in 2012, the state has collected about $630 million.

The revenue is in addition to “nearly $2 billion in corporate and personal income tax revenue paid by oil and gas companies since the onset of significant Marcellus Shale activity” seven years ago, according to a statement from the governor’s office.

However, the question of whether to enact a severance tax instead of an impact fee has been getting attention as several lawmakers, including Democratic gubernatorial nominee Tom Wolf, are proposing various extraction taxes on the oil and gas industry. Pennsylvania is the only ma­jor oil- and gas-pro­duc­ing state that doesn't have a severance tax.

Dave Spigelmyer, Marcellus Shale Coalition president, issued a statement supporting the impact fee: “These tens of millions of dollars in increased tax revenues are proof positive that this law is working.”

Under Act 13, the state's sweeping Marcellus Shale law, impact fee revenue can be used on expenses related to natural gas development, such as road repair, storm water and sewer system repair, emergency response preparedness and social services.

Stephanie Ritenbaugh: or 412-263-4910.

Join the conversation:

To report inappropriate comments, abuse and/or repeat offenders, please send an email to and include a link to the article and a copy of the comment. Your report will be reviewed in a timely manner. Thank you.

<--Google analytics Ends-->