PA Environment Digest

Share this:

DEP Sees ‘Very Significant Budget Gap’ In Funding Oil & Gas Regulation Program Due To Reduced Permit Fee Revenue

On December 5, DEP told the Oil and Gas Technical Advisory Board there is a “very significant budget gap” in the funding needed for the Oil and Gas Regulatory Program again this year and that how to fund the program will be a serious topic of discussion in 2025.

DEP pointed out, as of November 22, DEP received 469 shale gas permit applications in the first 47 weeks of 2024.

In August of 2020 when the last permit fee increase was put in place, DEP estimated it would need the revenue from 2,000 unconventional shale gas permits a year to adequately support the regulatory program for both conventional and unconventional oil and gas drilling.

DEP is potentially looking at permit application fees covering only 25% of what’s needed to fund the program for a year.

“You don't have to do very hard arithmetic to be able to figure out that that leaves us with a very significant budget gap,” said Kurt Klapkowski, DEP Deputy Secretary for Oil and Gas Management. “I would say that we're pretty close to the bone in terms of staffing and other things that we've been able to cut.”

Klapkowski noted conventional oil and gas well owners contribute very little to support the program.

The conventional oil and gas industry permit application fees rarely generate more than $46,000 a year to support a program that costs taxpayers $10.6 million to ensure conventional well compliance with state environmental laws and regulations.

He said DEP is getting fewer shale gas permits because the price of natural gas is low; well drillers are getting better at submitting permits only for the wells they plan to drill-- no extra ones; and horizontal well bore lengths are increasing so fewer wells have to be drilled to drain gas from a larger area.

[Note: DEP’s Oil and Gas Program regulates 88,516 active conventional oil and gas wells, but a total of 191,442 permits are held by owners, along with some of the related gas infrastructure.

[There are 13,316 active shale gas wells, but a total of 23,954 permits are held by well owners, along with some of the related gas infrastructure regulated by DEP.]

“The way that that got resolved last year was that there was a general fund appropriation of $11 million to the oil and gas program,” said Klapkowski.

“One of the things that we need to try to figure out, and we're starting to have these conversations internally around the budget, is what is the long-term solution here?” said Klapkowski. “What is the responsible funding mechanism that allows us to get to a point where we're not chasing these rulemakings [to raise permit fees]?

“The principle that I've had through my career at the agency has been that the regulated industry should pay for that oversight if at all possible,” said Klapkowski. “I'm not sure general fund appropriations are really the best way to go, but that's kind of where we are at this point in time.”

Visit the DEP Oil and Gas Technical Advisory Board webpage for more information on this meeting. Questions should be directed to: Todd Wallace at twallace@pa.gov or by telephone at 717-783-6395.

PA Oil & Gas Industry Public Notice Dashboards:

-- PA Oil & Gas Weekly Compliance Dashboard - Nov. 30 to Dec. 6 - Abandoned Shale Gas Wells Doubled From Last Year; Failure To Comply With Court Order To Plug Conventional Wells; Abandoned Waste Injection Well [PaEN]

-- PA Oil & Gas Industrial Facilities: Permit Notices, Opportunities To Comment - December 7 [PaEN]

-- DEP Posted 91 Pages Of Permit-Related Notices In December 7 PA Bulletin [PaEN]

Related Articles This Week:

-- DEP Sees ‘Very Significant Budget Gap’ In Funding Oil & Gas Regulation Program Due To Reduced Permit Fee Revenue [PaEN]

-- Baker Hughes: PA Natural Gas Drilling Rigs Up 1 To 16 From Last Week; 21 On Aug. 23

-- DCED PA Crude [Oil] Development Advisory Council Meets Dec. 12 To Discuss Road Dumping Oil & Gas Wastewater; New EPA Methane Emissions Reduction Program; Other Updates [PaEN]

-- What Will Shale Gas Leave Behind? DEP Issues 10 Violations To Big Dog Energy, LLC, Diversified Production LLC For Abandoning Shale Gas Wells; Violations For Shale Gas Abandonments More Than Doubled In 2024 [PaEN]

-- DEP: Horizontal Exploration LLC Failed To Comply With State Court Order To Plug 6 Conventional Wells In McKean County [PaEN]

-- DEP Issues Abandoned Well Violation To Oil & Gas Wastewater Injection Well With Nearly Full Storage Tanks, Expired EPA Permit In Venango County [PaEN]

-- Apply Now! DEP Conventional Oil & Gas Methane Reduction Well Plugging Grant Applications Due Dec. 16; $44.4 Million Available - Only 10 Applicants Applied For 77 Wells So Far [PaEN]