Some energy companies have expressed opposition to the permit fee increases, stating that Pennsylvania’s gas industry will be adversely affected. They dispute whether the increases are necessary to maintain staff for permit reviews, pointing to the 22% decrease in well permits and the likelihood that this decline will continue with the fee increases and Pennsylvania’s stringent regulatory oversight.
Pennsylvania proposes 60% increase in drilling fees
On September 14, 2013, the Pennsylvania’s Environmental Quality Board proposed changes to the structure of oil and gas well permit fees, including increased flat fees for unconventional well permits. The Independent Regulatory Review Committee is currently studying these proposed changes which would replace the current sliding fee structure based on wellbore length with flat fees. The current average fee for a Marcellus Shale well is $3,200. The proposed flat fees would be $5,000 for horizontal unconventional wells and $4,200 for vertical unconventional wells - an average fee increase of $1,000 to $1,800 per well or an average 60% increase per well. The Pennsylvania Department of Environmental Protection has stated that the permit fee increases are needed to maintain current staffing levels and to support permit reviews and other regulatory oversight obligations because of a 22% decrease in the number of new wells permitted since 2010.
Some energy companies have expressed opposition to the permit fee increases, stating that Pennsylvania’s gas industry will be adversely affected. They dispute whether the increases are necessary to maintain staff for permit reviews, pointing to the 22% decrease in well permits and the likelihood that this decline will continue with the fee increases and Pennsylvania’s stringent regulatory oversight.
This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.
Some energy companies have expressed opposition to the permit fee increases, stating that Pennsylvania’s gas industry will be adversely affected. They dispute whether the increases are necessary to maintain staff for permit reviews, pointing to the 22% decrease in well permits and the likelihood that this decline will continue with the fee increases and Pennsylvania’s stringent regulatory oversight.
