Pennsylvania – Unconventional Gas Producer Impact Fees for Calendar Year 2016
February 3, 2017
The Pennsylvania Public Utility Commission has established the Unconventional Gas Well Impact Fee for Calendar Year 2016, which natural gas producers (using unconventional natural gas resources) are required to pay to the Commission on or before April 1, 2017.
There is no change in the Impact Fee from the prior calendar year. The Impact Fee is determined in accordance with Section 2302 of Pennsylvania’s Unconventional Gas Well Impact Fee Act, 58 Pa.C.S. § 2302. The base fee is determined based on the average annual price of natural gas pursuant to a 15-year schedule set forth in Section 2302(b). That price is adjusted, under Section 2302(c), if more wells were spud in the current year than the prior calendar year. In 2016 there were less wells spud than in 2015 and the average price for gas was within the same range, so there will be no increase in the base price of the impact fee for calendar year 2016.
|
Calendar Year |
2016 |
|
|
Unconventional Wells Spud |
484 |
|
|
NYMEX |
$2.56 |
|
|
(Ave. Annual) |
|
|
|
Year of |
Horizontal |
Horizontal |
|
Operation |
Well |
Well |
|
1st Year |
$45,300 |
$9,100 |
|
2nd Year |
$35,200 |
$7,000 |
|
3rd Year |
$30,200 |
$6,000 |
|
Years 4 thru 10 |
$15,100 |
$3,000 |
|
Source: |
47 Pa.B. 659, 805 (February 4, 2017) |
|
|
Notes:
Horizontal unconventional gas wells pay the yearly fee upon spudding plus two subsequent years. Fees after the first three years are based on production levels as defined in 58 Pa.C.S. § 2302(b.1).
Vertical well producing gas level above 90,000 cubic feet average in any given month during the current year are subject to 20% of the applicable horizontal well fee.
Under the Impact Fee Act, payment of the impact fee ceases upon certification to the Department of Environmental Protection (Department) by a producer that the unconventional gas well has ceased production and has been plugged according to the Department regulations. See 43 Pa.B. 7000, 7051 (November 30, 2013). |
The following tables show the number of wells spud, and the applicable Impact Fees in prior years:
|
Calendar Year |
2015 |
2014 |
||
|
Unconventional Wells Spud |
785 |
1,372 |
||
|
NYMEX |
$2.66 |
$4.42 |
||
|
(Ave. Annual) |
|
|
||
|
Year of |
Horizontal |
Horizontal |
Horizontal |
Vertical |
|
Operation |
Well |
Well |
Well |
Well |
|
1st Year |
$45,300 |
$9,100 |
$50,300 |
$10,100 |
|
2nd Year |
$35,200 |
$7,000 |
$40,200 |
$8,000 |
|
3rd Year |
$30,200 |
$6,000 |
$30,200 |
$6,000 |
|
4th Year |
$15,100 |
$3,000 |
$20,100 |
$4,000 |
|
5th Year |
$15,100 |
$3,000 |
—- |
—- |
|
Source: |
46 Pa.B. 543, 632 (January 30, 2016) |
45 Pa.B. 647, 736 (February 7, 2015) |
||
|
Calendar Year |
2013 |
2012 |
||
|
Unconventional Wells Spud |
1,205 |
1,347 |
||
|
NYMEX |
$3.65 |
$2.79 |
||
|
(Ave. Annual) |
|
|
||
|
Year of |
Horizontal |
Vertical |
Horizontal |
Vertical |
|
Operation |
Well |
Well |
Well |
Well |
|
1st Year |
$50,000 |
$10,000 |
$45,000 |
|
|
2nd Year |
$40,000 |
$8,000 |
$35,000 |
|
|
3rd Year |
$30,000 |
$6,000 |
—- |
|
|
4th Year |
—- |
—- |
—- |
|
|
5th Year |
—- |
—- |
—- |
|
|
Source: |
44 Pa. B. 569, 757 (February 1, 2014); |
43 Pa. B. 793, 944 (February 9, 2013) |
||
|
Calendar Year |
2011 |
|
|
Unconventional Wells Spud |
4,920* |
|
|
NYMEX |
$4.04 |
|
|
(Ave. Annual) |
|
|
|
Year of |
Horizontal |
Vertical |
|
Operation |
Well |
Well |
|
1st Year |
$50,000 |
$50,000 |
|
2nd Year |
—- |
—- |
|
3rd Year |
—- |
—- |
|
4th Year |
—- |
—- |
|
5th Year |
—- |
—- |
|
Source: |
42 Pa. Bull. 4837, 4996 (August 4, 2012 |
|
* All unconventional wells spud in calendar year 2011 or before 2011 were treated as if they were spud in calendar year 2011.
This Eckert Seamans Energy and Utilities Blog is intended to keep readers current on matters affecting businesses and is not intended to be legal advice. If you have any questions, please contact Carl Shultz at (717) 255-3742 – cshultz@eckertseamans.com – or Dan Clearfield at (717) 237-7173 – dclearfield@eckertseamans.com.
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