The total impact fee revenue paid by Marcellus Shale drillers is projected to decline by a considerable amount this year, according to a recent report by a state research office.
The Independent Fiscal Office projects that impact fee revenue collected during 2015 could be anywhere from $15 million to nearly $34 million less than the $223 million collected in 2014. Exactly how much of a decline would depend on several scenarios outlined by the agency.
The revenue decline is attributed to lower natural gas prices and consequently fewer new wells being drilled. Meanwhile, older "stripper" wells with declining production are becoming exempt from the fee.
Marcellus drillers pay no severance tax on the gas they produce in Pennsylvania. Instead, under a 2012 law, they pay an annual fee based on the number of unconventional wellheads drilled and the wholesale prices of natural gas. Pennsylvania is the nation's second- largest natural gas producer, but the only major fossil-fuelproducing state that does not levy a severance tax on natural gas production.
Pennsylvania receives less than one percent of its state collections from the impact fee, according to recent study by the U.S. Energy Information Administration.
The impact fee revenue goes to support a wide range of projects that minimize the impact of drilling activities in Northeast Pennsylvania and other Marcellus regions.
Susquehanna County Commissioner Alan M. Hall described the fee as having a "huge impact" on his county in testimony before the Senate Environmental Resources and Energy Committee earlier this year.
"The loss of Act 13 funding would mean deteriorating conditions throughout the county with roads, bridges, infrastructure, lost jobs and large tax increases throughout," he said.
Other impact fee revenue goes to support the Marcellus Legacy Fund, state agencies, a state housing fund and county conservation districts. The purpose of the impact fee is to offset the cost of impacts of drilling activity, not to be a revenue generator per se, said Sen. Gene Yaw, R-23, Williamsport, the Senate environmental committee chairman. He said local officials in the drilling regions have been careful not to become overly dependent on impact fee revenue. They have used the revenue for specific purposes such as upgrading equipment, said Yaw.
The impact fee took in $204 million retroactively in 2011; $202 million in 2012, when the law was enacted; $225.7 million in 2013; and $223.5 million in 2014, according to the Independent Fiscal Office.