IFO Projects 2021 PA Impact Fee Revenue Soars, Up 60% to $233M
In early 2021 Pennsylvania raised $144.85 million from its version of a severance tax, called an impact fee, based on drilling activity from 2020 (see IFO Projects 2020 PA Impact Fee Revenue Fell by $55.9M (28%)). It was the lowest amount raised since the impact fee was implemented in 2012. The state’s Independent Fiscal Office (IFO) is out with projections for how much revenue will be raised this year, based on drilling in 2021. The impact fee has soared to its second-highest level ever since it was launched in 2012!
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Yes we predicted it and yes we were right (self-praise stinks, we know). We told you last year when the Pennsylvania Dept. of Environmental Protection (DEP) went forward with an absurd increase in the fee to drill a new shale well–from $5,000 to $12,500 (250%)–it would vastly slow the growth of new shale wells being drilled in the state and fall far short of revenue goals DEP hoped would fund the oil and gas program. Yesterday the DEP confirmed we were right.
Olympus Energy (formerly Huntley & Huntley) drills in the Greater Pittsburgh region, in Allegheny and Westmoreland counties. The company plans to drill a series of new wells (and well pad) in Washington Township in Westmoreland County. However, there’s a snag. Residents along a proposed road accessing the site don’t want the truck traffic on their narrow (18-foot-wide) road. Olympus doesn’t want to use an alternate route due to a sharp turn. Someone else proposed building a new access road, but it would cross a tributary that flows into the Beaver Run Reservoir (lots of red tape). The town is planning a couple of workshop meetings to figure out a solution.
The experts at S&P Global Platts have hauled out the old crystal ball–the one that looks at natural gas prices in the near-term (next couple of weeks to a month), and they foresee a rise in prices coming very soon. According to Platts, a drop in U.S. natgas production combined with colder weather that forces the use of natgas for heating which leads to tighter supplies means the price of natural gas will rise. How much and when?
The 
Last week 18 permits were issued to drill new shale wells in the Marcellus/Utica, down from 24 the week before. Pennsylvania had the most new permits with 12, mostly in the northeastern part of the state in Lycoming and Susquehanna counties. Ohio had four permits evenly divided between Columbiana and Harrison counties. West Virginia had just two lonely permits, one in Lewis and one in Wetzel counties.
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