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Cost Of Shale Gas Drilling Permit In Pennsylvania Jumps 150%

Pennsylvania more than doubled as of August 1 the fee for all unconventional well permit applications, while shale companies call on state officials to find other mechanisms to fund the oil and gas program of the Pennsylvania Department of Environmental Protection.

The fee for all unconventional well permit applications is now $12,500—up from US$5,000 for nonvertical unconventional wells and US$4,200 for vertical unconventional wells. The increase is designed “to sustain the Program at current staff levels and operating costs,” according to the new rule. 

However, the rule and the decision to hike the fees by 150 percent were made on the basis of well permit analyses in the period 2014 through 2017, and were outdated even before the current crisis in the oil and gas industry, Laura Legere of Pittsburg Post-Gazette writes.

The state reviews the fees every three years, but Neil Shader, spokesman of the Department of Environmental Protection, told the Pittsburg Post-Gazette that “we will revisit the fee schedule accordingly.”

The Department of Environmental Protection of Pennsylvania – the state home to parts of the Marcellus and Utica shale gas basins – funds a large part of its oil and gas program with the fees for well permit applications.

The Marcellus Shale Coalition says that the fees for well permit applications in Pennsylvania are now the highest in the United States and called for the Department of Environmental Protection and the administration to “continue to strongly urge DEP and the administration to pursue a more sustainable and equitable funding mechanism for its oil and gas program,” as carried by Pittsburg Post-Gazette.

The department has issued just 523 permits to companies in the first half this year, the lowest number of permits since 1993, as the low natural gas prices and the pandemic-driven demand crash discouraged firms from rushing to secure well permits.

Gas production in the Appalachia shale basin is expected to drop by 210 million cubic feet/day between July and August, to 32.713 billion cubic feet/day this month, according to EIA’s latest Drilling Productivity Report.

By Charles Kennedy for Oilprice.com

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