An active year of drilling and high natural gas prices last year led Pennsylvania to collect the second largest amount ever in impact fee revenue from natural gas drillers.
More than $234 million will be distributed from the 2021 reporting year, according to the Pennsylvania Public Utility Commission, which released last year’s Act 13 data earlier this month. Of that, counties and municipal governments will receive $129 million when the funds are distributed in early July.
Act 13 impact fees are collected on new unconventional gas wells drilled or operating in the state in the previous calendar year and distributed to counties and municipalities with wells to offset the impact of drilling. Local governments typically spend the bulk of their impact fee revenue on public infrastructure projects or putting it away in their capital reserve fund.
Big year
This year’s distribution is nearly $90 million higher than last year’s distribution of $146 million from the 2020 reporting year. The average price of natural gas was $3.84 per MMBtu in 2021, compared with $2.08 per MMBtu in 2020, triggering a higher fee schedule this year. The average price in 2021 was the highest annual average since 2014.
Additionally, 518 wells were drilled in 2021, compared with 476 in 2020. Wells in the first year of production pay the highest impact fee.
About $25 million will go to state agencies, and $86 million will go to the Marcellus Legacy Fund, which provides financial support for environmental, highway, water and sewer projects across the state.
More than $2.2 billion has been collected since the program began over a decade ago.
“Generating $2.3 billion in essential funding for state and local governments across all 67 counties, Pennsylvania’s unique natural gas tax is an effective policy that yields impactful results,” said Marcellus Shale Coalition president David Callahan, in a statement.
Local impact
Washington County is slated to receive the most impact fee revenue at $7.6 million, followed closely by Susquehanna County at $7.2 million.
Bradford County will receive $5.8 million. Greene County will receive $5.4 million. Lycoming County will get $3.9 million. Tioga will get $3.3 million, and Butler will receive $2.4 million.
Center Township, in Greene County, will receive the highest impact fee revenue of any municipality in the state — nearly $1.3 million. Auburn Township, in Susquehanna County, will receive $1.2 million.
EQT Production paid the most in impact fees, at $39 million. Range Resources paid $29.6 million in impact fees in 2021.
Looking ahead
According to the state’s Independent Fiscal Office Impact Fee Update and Outlook report, 2022 could be another big year for impact fee revenues. The average price of natural gas so far in 2022 is $6.06 per MMBtu. It’s expected to go up from there in the second half of the year. That would put the fee schedule at the highest possible level.
On top of that, the Department of Environmental Protection’s spud data shows 251 new horizontal wells were drilled from Jan. 1 to June 14, which is 24 more wells than were drilled in the same time period last year.
(Reporter Rachel Wagoner can be reached at 800-837-3419 or rachel@farmanddairy.com.)
