Regulation - Proposed Permit Fee Increases For Marcellus Shale Drilling Open For Public Comment

Beginning February 14, the public can review and comment on a proposal that will better enable the Department of Environmental Protection to cover the increased costs and staffing needs for overseeing Pennsylvania’s booming natural gas industry.

 

DEP hopes to replace the $100 flat fee for drilling permits—a fee that has not been increased since 1984—with a sliding scale based on well depth and type. The change will help ensure adequate funding to cover program expenses for permit reviews and well site inspections.

 

“Pennsylvania’s oil and natural gas industry is booming with a record 7,924 permits issued and nearly 4,200 new wells drilled in the past year, yet the cost of a drilling permit has not changed in a quarter century,” Environmental Protection Acting Secretary John Hanger said. “Natural gas exploration, particularly in the Marcellus Shale, promises billions of dollars in investment and economic growth for the commonwealth. This proposed new permit fee structure will allow DEP to hire the staff to help balance this historic opportunity with our responsibility to closely monitor this activity to protect our land and water resources.

 

“Our goal is to establish a new permit fee that better reflects the true cost of providing timely review of new permits and inspecting well sites and drilling activities.”

 

The proposed fee structure sets the base permit cost for vertical wells up to 2,000 feet deep at $250, with increases of $50 for each 500 feet of depth from 2,000 to 5,000 feet. An additional $100 charge will be levied for each 500 feet of well drilled beyond 5,000 feet.

Horizontal wells up to 1,500 feet long would have a base permit cost of $900, with an additional $100 for every 500 feet of well bore drilled past 1,500 feet.

 

Permit applications for vertical wells with a well bore length of 1,500 feet or less for home use will have a flat cost of $200.

 

The fee increase will also allow the department to hire additional staff in Meadville, Pittsburgh and Williamsport to process permits and monitor drilling activities in the north-central and northeastern regions of Pennsylvania.

 

The state’s Oil and Gas Act established a $100 permit fee in 1984 and gives the department the authority to increase that fee to cover the cost of regulating the drilling industry.

 

That proposal is currently before the House and Senate Environmental Resources and Energy committees for review and approval and will be considered by the Independent Regulatory Review Commission at its March 19 meeting.

 

Click here for a copy of the proposed regulation.