Compromise Flat Fee Proposed For Marcellus Shale Gas Wells

HARRISBURG PA – Representatives of Gov. Tom Corbett and majority Republicans in the Pennsylvania Legislature worked through Sunday (Feb. 5, 2012) to reach a tentative agreement that would impose a fee on drillers who extract natural gas from Marcellus Shale, buried almost a mile underground across much of northern and western Pennsylvania.

The drilling fee is based on a sliding scale that depends primarily on the market price of natural gas and the rate of inflation, according to a story published Monday (Feb. 6, 2012) in the Philadelphia Inquirer newspaper. Minority Democrats, who would prefer a tax on gas extraction rather than collecting a flat fee, estimated fees would range from a low of $240,000 per well to a maximum of $355,000, to be collected over a 15-year period.

It’s taken months of wrangling for the parties involved to reach the compromise on what is being called a “local impact fee,” and which could be voted on as early as this week, The Inquirer said. One of the major sticking points in the talks has been how – and by whom – money raised by the fee would be distributed.

The agreement would allow counties where drilling occurs to decide whether to impose a fee. If a county declines to impose a fee, half its municipalities would have the option to force it to do so.

The Pennsylvania Public Utility Commission would collect and distribute the fee, according to the summary of the agreement. Sixty percent of the money would go to areas directly affected by drilling for things such as infrastructure and public-safety costs. The other 40 percent would go to statewide projects, many of them environmental, including repairs to green ways and recreational trails, protection of open space, and other beautification projects.

This article was originally published on the Polley Associates‘ blog
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