The Wolf administration is once again attempting to impose excessive costs on the gas industry—and consumers—by proposing triple-digit-percentage increases in fees for authorizing well development.
Pennsylvania charges more for gas-well permits than almost every other leading U.S. energy producer. Yet, the administration wants to increase fees for modern horizontal wells by 150 percent and vertical wells, the kind that have been drilled since the 19th century, by nearly 200 percent.
The new permit fee for all gas wells would be $12,500, up from $5,000 for horizontal wells and from $4,200 for vertical wells.
For horizontal wells—the kind that have unlocked the riches of the Marcellus Shale deposit in Pennsylvania and neighboring states—the increase would represent a 12,400-percent hike since 2010 and cost the industry an additional $15 million a year, according to the Marcellus Shale Coalition. These costs are likely to be borne by workers in the form of reduced compensation or consumers through higher energy bills.
The coalition’s analysis finds Colorado and New Mexico charge nothing for permits; Oklahoma, $175; Arkansas, $300; Texas, between $500 and $750; and Ohio, between $500 and $1,000.
West Virginia charges $10,000 for an initial well and $5,000 for additional well pads. However, the charge also covers earth disturbance activities. Pennsylvania requires a separate erosion and sediment control permit starting at $600.
A fee increase of this magnitude would serve to make Pennsylvania gas producers less competitive with other states. Those concerns were reportedly echoed by state Senate Republicans in letter sent last week to the DEP.
In addition to the impact fee imposed on drillers, companies have paid billions in taxes. Yet, DEP relies solely on fees and fines to support industry oversight. There is little wisdom in increasing energy costs in a state already known for exorbitant taxes and an inability to control spending.
Federal tax reform recently triggered lower utility bills for Pennsylvania consumers. Now is not the time to erase these gains with onerous fees.