A Pennsylvania gas rush was under way in February and March.
Counties in the state moved quickly to pass unconventional natural gas impact fee ordinances and file paperwork with the state before the April 16 deadline, thereby opening the availability of Marcellus Shale impact fee money.
Gov. Tom Corbett signed the impact fee, also known as Act 13, into law on Feb. 13. The law gives counties the option of assessing fees on each gas well in their jurisdiction. If all eligible counties pass the ordinances, the state expects to collect $180 million from gas exploration companies this year, according to the administration.
In most cases, the counties already have Marcellus Shale drilling operations, especially in the Northern Tier and southwestern counties, according to the state. Other counties are anticipating the future.
Even without the well “spuds” dotting the landscape, some counties could be eligible for fee money to cover infrastructure, services and environmental impacts, according to the state Public Utility Commission.
“We have some counties that are passing it as a just-in-case,” PUC spokeswoman Jennifer Kocher said. “They might not have wells, but they are seeing some activity and are passing it so they don’t have to do it later.”
At the end of March, at least 20 of Pennsylvania’s 67 counties, including some not in the main body of the Marcellus Shale formation, had passed impact fee ordinances, according to a survey by the County Commissioners Association of Pennsylvania. Many more were considering an impact fee.
The April deadline was the largest factor for counties passing the ordinances, said Doug Hill, the association’s executive director.
“Generally, the counties are recognizing they’re dealing with the impact and funds are available for those purposes. And that’s why they’re approving the ordinances,” Hill said. “I think they were well prepared to move fast and address the issue.”
Securing local compensation for drilling activities is an issue the association and counties have been wrestling with for more than a decade, he said. In the past, counties were able to tax the property of the operations. But that ended in 2002 when they lost a court battle. Independent Oil and Gas Association et. al. v Board of Assessment Appeals of Fayette County determined only the state had authority to levy taxes on drilling property, he said.
For that reason, the association has supported severance tax proposals from former Gov. Ed Rendell’s administration and the impact fee passed this year, Hill said.
But some counties are unsure about the future of drilling and are embracing the impact fee to cover their bases, he said.
In Central Pennsylvania, Dauphin and Perry counties passed impact fee ordinances without any drilling activity.
“We really don’t know if anyone’s going to come in and do drilling, but we’ve been advised to pass it because we’ll need it if they do come in,” said Paul Rudy Jr., a Perry County commissioner. The county approved an impact fee on March 26.
The county has some formations in its eastern half, according to maps from the Marcellus Center for Outreach and Research at Penn State University.
Dauphin County, too, has Marcellus formations in the mountains of its northern half. It approved an impact fee on March 28.
Dauphin and Perry don’t have to worry about drilling companies coming south, said Terry Engelder, a geologist at the Marcellus Center and a professor of geosciences at Penn State. He’s also one of the first people to conduct studies estimating the Marcellus Shale natural gas content at 168 trillion cubic feet or more.
Because of the pressure and heat exerted on the rocks in south central Pennsylvania, most of the gas has naturally burned up, making the shale economically infeasible for exploration companies, he said.
County officials said they’d rather be safe than sorry. If drilling companies decide to test the southern shale for production, the counties want to have money to mitigate the impact to infrastructure, county services and the environment, officials said.
“We’ve been advised it’s a possibility,” Rudy said. “In today’s world, possibilities become realities.”