PA Enacts Among the Lowest Natural Gas Drilling Fees in the Nation
Click here to read other Marcellus Shale reports and resources from PBPC.
On September 10, 2012, the Public Utility Commission reported that to date the commonwealth has collected $197.6 million in local Marcellus Shale impact fees and expects to collect $205.9 million in all. View the report here.
On February 8, 2012, the Pennsylvania Legislature enacted a Marcellus Shale overhaul that, among other things, gave counties the ability to adopt a local impact fee on shale drillers. All 27 counties with producing shale wells, along with another 16 that do not currently have active shale wells, have agreed to assess the fee.
The new law gives Pennsylvania one of the lowest drilling tax or fee rates in the nation. It sets a 15-year rate schedule for Marcellus wells that rises and falls from year to year based on the price of natural gas and the Consumer Price Index. In 2012, drillers will be assessed a $50,000 per-well fee, which will be due on September 1, 2012. In future years, payment of the annual fee will be due on April 1.
Across the country, 96% of natural gas is produced in states that have drilling, or severance, taxes. While some policymakers in Pennsylvania objected to a shale tax over worries about its impact on the industry, studies in Wyoming, Utah and other states have shown that tax rates have little effect on natural gas production. Rather, drilling decisions are made based on the location of reserves and the expected price of natural gas.
Pennsylvanians believe that gas drilling in the Marcellus Shale has moved too quickly and that public officials need to do a better job protecting their communities and the environment, according to the final report of the Citizens Marcellus Shale Commission.
The Commission heard from 116 testifiers at hearings held in August and September 2011 in Harrisburg, Philadelphia, Southwestern Pennsylvania, Towanda and Williamsport. More than 400 people from 48 counties attended the hearings, while another 110 concerned citizens submitted comments online.
The Pennsylvania Budget and Policy Center was one of the Commission's sponsoring organizations.
The Pennsylvania Budget and Policy Center has produced several reports on enacting a drilling tax on natural gas production in Pennsylvania.
In April 2009, PBPC released a comprehensive report on drilling taxes, titled, “Responsible Growth: Protecting the Public Interest with a Natural Gas Severance Tax.” It examined the potential costs of increased natural gas drilling on Pennsylvania taxpayers and the environment, how drilling taxes are structured in other states, and what lessons Pennsylvania can learn from them.
Since then, PBPC has produced a variety of research and policy papers on the drilling tax. You can access our reports and research below.
Drilling Tax Reports & Resources
Pa. Marcellus Shale Fee Among Lowest in Nation (Blog Post), February 2012
Gas Drilling Tax Impasse Costs Pa. $300 Million, January 2012
SB 1100: Out of Sync with Most Energy-Rich States, November 2011
Senate Drilling Fee Bill More Than Industry Asked For, November 2011
New PA Drilling Tax Bill to Fund State Priorities, September 2011
Drilling Deeper into Job Claims: The Actual Contribution of Marcellus Shale to PA Job Growth (Keystone Research Center), June 2011
Plan Would Mark Significant Compromise on Severance Tax, October 2010
Comparison of House, Senate Severance Tax Plans, October 2010
Fact Check on Severance Taxes and Marcellus Shale, October 2010
Responsible Growth: Protecting Public Interest with a Natural Gas Severance Tax
The Full Report, April 2009
Four-page Report Summary, April 2009
Press Release, April 2009
Marcellus Shale Forum
Testimony of Michael Wood on Marcellus Shale Fee before the Marcellus Municipal Co-op, a bipartisan group of township and borough officials convened by Rep. Jesse White, August 24, 2011
Testimony of Michael Wood on Marcellus Shale Advisory Commission Report before the House Democratic Policy Committee, July 2011
Testimony of Michael Wood on Natural Gas Drilling Tax before the House Democratic Policy Committee, February 2011
Testimony of Michael Wood on Natural Gas Severance Tax before the House Appropriations Committee's Subcommittee on Fiscal Policy, April 2009