Pennsylvania Legislation Authorizing Counties to Levy Unconventional Gas Well Fee Signed Into Law


On February 14, 2012, Pennsylvania’s Governor, Tom Corbett, signed into law legislation (House Bill 1950) authorizing counties to impose a fee on persons holding permits to sever natural gas for sale, profit or commercial use in the Commonwealth. The fee is imposed annually on each bore hole spud in the immediately prior year and applies only to wells drilled to produce gas from “unconventional” shale formations which require hydraulic fracture treatments or multilateral bore holes to produce gas at economic flow rates. The legislation takes effect immediately.

The fee applies to wells developed for the production of all types of hydrocarbon gases, including associated gas or casing head gas from oil fields, non-associated gas from reservoirs that do not contain significant quantities of crude oil, and gas produced from coal beds, shale beds and other formations, but does not apply to coal bed methane, or to wells used to recover gas from storage sites from which the gas did not originate.

The obligation to pay the fee arises when the drilling actually begins regardless of when the well is completed and applies regardless of whether and when the well produces any natural gas.4 Once the obligation to pay the fee arises, it continues annually for a period of 15 years unless the obligation to pay the fee is suspended because the well is capped or fails to produce more than 90,000 cubic feet of gas per day during any calendar month within two years, or the well is plugged.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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