This story has been updated with reaction from the Marcellus Shale Coalition
The Pennsylvania Public Utility Commission announced Tuesday that it will be distributing nearly $279 million in fracking impact fees charged to shale gas drillers in 2022, a bump over $234 million collected in 2021.
The lion’s share of the impact fees – established by Act 13 of 2012 – are paid either to counties and municipalities to offset the adverse impact of gas drilling and pipelines in their communities, or into the state’s Marcellus Legacy Fund, which the state uses to fund environmental and infrastructure projects.
The increase in revenue for 2022 is driven primarily by the rise in natural gas prices last year, according to the PUC, as well as by new wells drilled.
Pennsylvania’s fee is charged per well, but varies each year based on prices; the average natural gas price in 2022 was $6.64 per Metric Million British Thermal Units, as opposed to $3.84 in 2021, according to the PUC.
Additionally, 574 new horizontal wells were drilled last year – although this is a decline in drilling relative to prior years, according to Department of Environmental Protection data tracked by the Independent Fiscal Office.
This has accompanied a slowdown in Pennsylvania gas production overall, according to IFO and DEP numbers, despite a large number of unexplored gas leases outstanding.
With the distribution of 2022 funds next month, the state will have handed out over $2.5 billion to local governments since the inception of the fee system 11 years ago, according to the PUC.
Pennsylvania’s fee structure on drillers who extract natural gas and other chemicals by hydraulic fracturing – often called ‘fracking’ – has been a subject of debate, albeit not this budget year.
Former Gov. Tom Wolf repeatedly proposed changing the per-well fee to a true tax, charged by the volume of gas extracted. As far back as 2016, Wolf was projecting that a 6.5% fracking tax would bring in over a half a billion dollars annually while shifting the tax burden toward higher-intensity operators.
But this change never made it through budget negotiations with the legislature, and current Gov. Josh Shapiro did not propose changing the fracking fee system in his budget request for the upcoming fiscal year.
“Pennsylvania natural gas development has delivered national energy security, cleaner air, consumer and economic gains here at home and abroad,” David Callahan, president of the Marcellus Shale Coalition, an industry trade group, said in a press release. “The impact tax is yet another example of how the industry supports better quality of life for all Pennsylvanians.”Author: Zach Hoopes