Pennsylvania Senate President Joe Scarnati last week proposed a fee on drilling for natural gas that he estimates would generate $675 million of new revenue during a five-year period.
The plan includes a base fee of $10,000 per well. The Pennsylvania Public Utility Commission would collect the revenue and adjust fees for increases in production volume and for changes in the price of gas, according to documents in Scarnati’s proposal.
Companies would pay for gas extracted in 2010 on Aug. 1 and Nov. 1, 2011. Fees for 2011 and subsequent years would be due on March 1 of the following year.
Pennsylvania has natural gas underneath its Marcellus Shale region. It is the only state that does not impose a levy for the extraction of natural gas. Democrats, including former Gov. Edward Rendell, have pushed for taxing companies that drill for natural gas. Republican Gov. Tom Corbett, who succeeded Rendell in January, has said he does not support imposing a levy in order to expand the industry in Pennsylvania.
Fellow Republican Scarnati said his plan will help protect the localities affected by natural-gas extraction.
“While I recognize that even though the language has been put into legislative form, this issue is still a work in progress,” he said in a statement. “My main objective with this bill is to ensure our local municipalities, where drilling takes place, receive a fee to assist with road improvements, water and sewage issues, as well as other community enhancements.”
Conservation districts throughout the state would receive the first $7.5 million of drilling-fee revenue annually, beginning in 2012. Of the remaining revenue, 60% would go towards local counties and municipalities and 40% would go to the state to help support the Commonwealth Financing Authority for environmental needs, the Motor License Fund for highway improvements, and the state’s Hazardous Sites Cleanup Fund.