The Pennsylvania Commonwealth Court decision that defined the threshold of low-producing “stripper wells” could cost state and local governments up to $16 million, with larger declines in future years—as production decreases as the wells age. The court’s decision determined the definition of a stripper well to be those wells that are:
“incapable of producing more than 90,000 cubic feet of gas per day during any calendar month.”
The court’s definition means that a company does not owe any impact fees on its wells that fall below the minimum production level in at least one month out of the year.
The Pennsylvania Public Utility Commission (PUC) requested that the governor clarify the definition of a stripper well per the court’s decision. As a result, Pam Snyder (D-Greene) introduced House Bill 1283. The legislation would change one word in the definition of a stripper well. The Bill would change the word any (which the court had decided to mean “one”) to every. Additionally, House Bill 1283 would be applied retroactively to any production after December 31, 2014.
Many in the industry argue that the interpretation and application of the law is lost among legislatures, and the money companies save from not paying impact fees on stripper wells can be invested in future capital developments, which will increase future natural gas production.