by Anthony Hennen
State revenues from natural gas were high last year, and are expected to set a new record this year buoyed by rising prices and more drilling.
According to a new estimate from the Independent Fiscal Office, impact fees from natural gas wells will hit $275 million in 2022, $40 million higher than 2021.
The impact fee is levied on active wells and raises money for local governments and state agencies for infrastructure projects, emergency services, and environmental uses, among others.
The increase in impact fee revenue mainly comes from a rise in natural gas prices that meant higher per-well fees, with collections from new wells playing a smaller role; the IFO noted higher natural gas prices led to a $34.7 million increase, while new well production had a $5.7 million impact.
In total, the impact fees were assessed on 11,164 horizontal (fracked) wells and 11 vertical wells.
During the pandemic, Pennsylvania had its lowest impact fee revenue in recent years. In 2020, there were only $146 million in revenues. Strong growth in 2021 and 2022 surpassed revenues from 2018 and 2019. Production has increased every year since 2018, from 6,123 billion cubic feet to 7,600 bcf in 2022.
Last year’s IFO estimate slightly underestimated the impact fee, as The Center Square previously reported. With the new estimate, the impact fee has generated about $2.5 billion since 2012. Recent legislation, however, may limit which counties receive impact fee money. A proposed bill would forbid money going to counties if they ban natural gas development.
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Anthony Hennen is a reporter for The Center Square. Previously, he worked for Philadelphia Weekly and the James G. Martin Center for Academic Renewal. He is managing editor of Expatalachians, a journalism project focused on the Appalachian region.
