OUR THOUGHTS ON:

Modification of Impact Fee for Vertical Wells

Energy & Resources

By John Kohler

The Public Utility Commission (PUC) has modified the impact fee provision of Act 13 for vertical gas wells to exclude these wells from the three-year minimum of the local impact fee. Initially, vertical unconventional gas well would be subject to the local impact fee at 20% of the impact fee of the horizontal wells under Act 13. Drilling organizations argued that the vertical wells should not be subject to the three-year minimum requirement because, unlike horizontal wells (subject to the fee based on the spud date), the vertical wells are subject to the fee due to the production of the well. For a vertical well to be defined as an unconventional gas well, the well must produce greater than 90mcf per day during any calendar month. The argument brought forward by the drilling organizations is that a vertical unconventional gas well may never produce greater than 90 mcf per day, but would still be subject to the impact fee during the three-year minimum period under the current law. The PUC agreed with the drilling organizations and has exempted the vertical unconventional gas wells from the three-year minimum impact fee requirement.

To be excluded from the fee, wells that were on the PUC spud list as of December 31, 2011 had to notify the PUC by August 15, 2012 that a particular well did not meet the gas quantity for any calendar month in 2011. The correspondence with the PUC must include the well identification, the location, and the monthly production data. For the reports for 2012 and thereafter, the producers must verify the production on the vertical wells on their annual Producer Well Report form filed with the PUC by April 1 each year.

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© 2018 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

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