‘Stripper’ well ruling could cause $16 million drop in impact fees

By: Laura Legere

Published: April 12, 2017

A recent Pennsylvania court ruling that frees companies from paying impact fees on shale gas wells with low production in a single month could cut this year’s impact fee collection by $16 million, with larger declines in future years as production from older wells dwindles, public utility regulators said this week.

Pennsylvania Public Utility Commission Chairman Gladys Brown wrote to the governor on Tuesday to say that the agency plans to appeal the March 29 Commonwealth Court decision that defined the threshold for low-producing “stripper” natural gas wells.

The court decision “has significantly jeopardized the current and future fees generated by Act 13,” she wrote, referring to the state’s shale gas law.

The court found that the law’s definition of stripper wells — those that are “incapable of producing more than 90,000 cubic feet of gas per day during any calendar month” — means that a company does not owe impact fees on wells that fall below the minimum production level in at least one month of the year. The PUC had argued that only wells that fell below the production threshold every month were exempt from the fees.

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