New Oil and Gas Well Permit Application Fees To Help Pay For Permitting, Enforcement

The Department of Environmental Protection has begun collecting higher permit application fees for all traditional vertical non-Marcellus Shale oil and natural gas wells drilled in Pennsylvania to help cover the cost of the agency’s permitting and enforcement work.

According to Secretary John Hanger, the new fees based on well length and type replace a flat $100 fee established in 1984.

Under the new structure, which went into effect October 26, vertical wells with a bore length up to 2,000 feet will now have a base permit cost of $250 with an additional $50 applied for each additional 500 feet of length.

“We have seen record growth in the number of oil and natural gas drilling permit applications over the past six years, and with the rapid development of the Marcellus Shale formation, we needed to establish a permit fee structure that will support the cost of permitting and inspecting both types of drilling operations,” Secretary Hanger said. “The money generated from the new permit fees is allowing us to hire new staff at our Pittsburgh, Meadville and Williamsport offices to better manage and monitor the drilling industry as it expands into new areas of the state.”

The new fee structure for traditional vertical wells follows new fees the department imposed for Marcellus Shale wells in April. Marcellus Shale wells employ a horizontal drilling technology and, as such, are not considered vertical wells.

Marcellus Shale and non-vertical wells have a base permit cost of $900 for the first 1,500 feet of bore, with an additional cost of $100 for every 500 feet beyond that length.

Through October 23, DEP issued 5,333 oil and natural gas drilling permits this year—1,516 of which are for the Marcellus Shale formation.

Of the 1,944 wells drilled in 2009, 403 are Marcellus Shale wells. The department has performed 10,365 inspections of drilling sites during that period.

Since 2005, DEP has issued 2,112 Marcellus Shale permits and there have been a total of 660 Marcellus Shale wells drilled.