Pennsylvania tightens rules for drilling in the Marcellus Shale

Energy Alert

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Pennsylvania Governor Tom Corbett has signed into law Bill 1950, a set of amendments to the Pennsylvania Oil and Gas Act that set forth new standards and requirements for natural gas drilling operations in the Marcellus Shale formation in Pennsylvania.

 

The bill, signed by the governor on February 13 and passed by the Pennsylvania Senate and House of Representatives the previous week, implements many of the recommendations the governor submitted to the Pennsylvania General Assembly in October 2011, which were based on analysis and investigation performed by the governor's Marcellus Shale Advisory Commission.

 

Among other things, the law permits local county governments to collect "impact fees" from companies engaging in drilling operations within county boundaries. The impact fees, which are designed to mitigate public costs associated with Marcellus Shale drilling, will initially be between $40,000 and $60,000 per well, with gradual reductions to be implemented yearly. The fee rates will also vary each year based on the price of natural gas and the rate of inflation. The Pennsylvania Public Utility Commission will be responsible for setting the fee rates.

 

Among the other significant changes the bill ushers in are the following:

  • an increase in well setbacks to 300 feet from streams, springs and other water bodies; 500 feet from buildings and private water wells; and 1,000 feet from public drinking water systems
  • an expansion of presumed liability for water contamination to cover gas wells up to 2,500 feet from the site of impaired water quality within 12 months of drilling
  • more stringent water quality replacement standards
  • greater authority for the Pennsylvania Department of Environmental Protection to revoke permits
  • an increase in bond amounts to up to $600,000
  • increased penalties for violations and
  • greater disclosure requirements regarding chemicals used in hydraulic fracturing operations

 

The impact fees take effect immediately. The remaining provisions of Bill 1450 are scheduled to take effect 60 days after the date the governor signed the bill into law, or April 14, 2012.

 

For more information about these new standards, please contact:

 

Lee Alexander

Michael Bolton

Robert Gruendel

Deborah Jennings

Jayne Anderson Risk

 

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