Shale gas drillers to pay higher permit fees

The Pennsylvania Department of Environmental Protection is raising the price of a permit to drill an unconventional gas well, starting Saturday.

The new rule sets a flat $5,000 fee for horizontal unconventional well permits and $4,200 for vertical unconventional well permits. The fee structure for conventional oil and gas wells does not change.

Under the old sliding fee scale based on the length of a well bore, Marcellus Shale operators typically paid $3,200 for a horizontal well permit and $2,900 for a vertical well permit, DEP said.

The rule change was posted this morning in the online version of the Pennsylvania Bulletin, which is officially dated June 14. The Pennsylvania Bulletin is the state’s weekly publication of rule makings and public notices.

The oil and gas industry generally supports the change, which DEP said will allow it to hire more staff and transition to electronic permits and mobile digital tools for inspectors.

The new rule also defines what it means to be a conventional well, following a suggestion by the Pennsylvania Independent Oil and Gas Association, a trade group based in Wexford, Pa.

In the past, a conventional well was defined by what it wasn’t — an unconventional well.

Now, it is “not an unconventional well, irrespective of technology or design.” The term specifically includes all oil wells; wells that produce natural gas from formations other than shales; wells that tap shales above the geologic layer known as the Elk group; wells that tap shales below the Elk group but don’t need to use hydraulic fracturing or directional well bores to produce economic amounts of gas; and wells used for geologic logging, monitoring, secondary recovery or disposal.

The definition has become controversial as companies increasingly adopt the combined tools of horizontal drilling and fracking to extract gas from shallower formations.

Laura Legere:

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