Analysts predict rise in oil and gas impact fees in Pennsylvania
Wednesday, January 26, 2022
Analysts expect higher 2021 oil and gas impact fees in Pennsylvania due to higher commodity prices, following a low point in 2020, according to State Impact.
The state’s Independent Fiscal Office expects drillers to pay about $234 million dollars in impact fees for 2021, which is nearly $90 million more than in 2020. If estimates are correct, it will make one of the highest payouts since the fee started 10 years ago.
The jump is largely due to increased prices. According to the Independent Fiscal Office, the average price of natural gas on the New York Mercantile Exchange in 2021 was $3.84 per million metric British thermal units (MMBtu). Because the price was between $3-$5, the impact fee schedule increased by $10,000 per horizontal well compared to 2020 levels
Learn more: State Impact > Analysts forecast rise in oil and gas impact fees after prices rose in 2021
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What is fracking?
Fracking is a slang term for hydraulic fracturing. Fracturing is a process by which highly pressurized fluid is pumped thousands of feet into the ground to fracture rock formations. The goal is to release the natural gas that’s locked inside the rock.
Is it safe?
What most concerns people about fracturing is ground water contamination. The worry is that fractures underground, caused by the process, will extending upwards and into aquifers, releasing gas and chemicals into the ground water supply. There’s been no confirmed reports of such a thing happening. Though surface spills and drill site blowouts can lead to localized environmental concerns.
Will my water catch on fire?
Flammable water is caused by the release of methane gas into a drinking water supply. Methane gas occurs naturally and can be released by any kind of drilling, including water wells. In Pennsylvania officials fined Chesapeake Energy $1 million for contaminating ground water with methane. It was determined that the company had not properly cemented it’s boreholes and gas migrated up the well, between rock and into aquifers.