The total impact fee revenue paid by Marcellus Shale drillers is projected to decline by a considerable amount this year, according to a recent report by a state research office.
The Independent Fiscal Office projects that impact fee revenue collected during 2015 could be anywhere from $15 million to nearly $34 million less than the $223 million collected in 2014. Exactly how much of a decline would depend on several scenarios outlined by the agency.
The revenue decline is attributed to lower natural gas prices and consequently fewer new wells being drilled. Meanwhile, older “stripper” wells with declining production are becoming exempt from the fee.
Marcellus drillers pay no severance tax on the gas they produce in Pennsylvania. Instead, under a 2012 law, they pay an annual fee based on the number of unconventional wellheads drilled and the wholesale prices of natural gas. Pennsylvania is the nation’s second largest natural gas producer, but the only major fossil-fuel producing state that does not levy a severance tax on natural gas production.