Pennsylvania Consolidated & Unconsolidated Statutes
Chapter 23 - Unconventional Gas Well Fee
Section 2302 - Unconventional gas well fee

(a) General rule.--The governing body of a county that has a spud unconventional gas well located within its borders may elect whether to impose a fee on unconventional gas wells that have been spud in the county.
(a.1) Passage of ordinance.--Within 60 days after the effective date of this section, the governing body of a county under subsection (a) may adopt an ordinance to impose an unconventional gas well fee. The governing body of a county must notify the commission and give public notice of its intent to adopt the ordinance.
(a.2) County ordinance.--The ordinance imposing a fee under subsection (a.1) shall be clear and in language that is readily understandable by a layperson and shall be in the following form:
The county of (insert name) hereby imposes an unconventional gas well fee on each unconventional gas well spud in this county.
(a.3) Prohibition.--
(1) A county subject to this section, in which the governing body does not adopt an ordinance imposing an unconventional gas well fee within 60 days of the effective date of this section, shall be prohibited from receiving funds under sections 2314(d)(1) (relating to distribution of fee) and 2315(a.1)(3) and (5) (relating to Statewide initiatives).
(2) The prohibition on receiving funds shall remain in effect until the county adopts an ordinance imposing an unconventional gas well fee. The prohibition shall expire and funds may be received for the calendar year following the adoption of an ordinance imposing the fee under this section.
(a.4) Alternate imposition.--
(1) If the governing body of a county does not impose an unconventional gas well fee under subsection (a), the municipalities in the county may compel the imposition of an unconventional gas well fee on each unconventional gas well spud in the county by adopting resolutions under paragraphs (2), (3) and (4).
(2) Following 60 days but not more than 120 days after the effective date of this section, if the governing bodies of at least half of the municipalities located in a county or municipalities representing at least 50% of the population of the county adopt resolutions to impose unconventional gas well fees on all unconventional gas wells spud in the county, the fee shall take effect. If a resolution is adopted, a copy of the resolution shall be transmitted to the governing body of the county and the commission. The governing body of a municipality that is located in more than one county shall transmit a copy of a resolution adopted under this paragraph to the governing body of each county in which the municipality is located.
(3) The transmittal of resolutions by governing bodies under paragraph (2) shall constitute an imposition of the fee in that county. The population of a municipality that is located in more than one county shall be determined separately for each county on the basis of the municipality's population within each county.
(4) Resolutions adopted under this subsection must be framed in the following form:
The (insert name) in the county of (insert name) hereby resolves to have the county impose an unconventional gas well fee on each unconventional gas well spud in the county.
(5) A municipality which is located in a county that does not adopt an ordinance imposing an unconventional gas well fee and which does not adopt a resolution under paragraphs (2), (3) and (4) shall be prohibited from receiving funds under section 2314(d).
(b) Components.--The fee adopted under subsection (a), (a.1) or (a.4) is imposed on every producer and shall apply to unconventional gas wells spud in this Commonwealth regardless of when spudding occurred. Unconventional gas wells spud before the fee is imposed shall be considered to be spud in the calendar year prior to the imposition of the fee for purposes of determining the fee under this subsection. Prior to adjustment under subsection (c), the fee for each unconventional gas well shall be determined as follows:
(1) Year one:
(i) If the average annual price of natural gas is not more than $2.25, the fee shall be $40,000 for the calendar year in which the unconventional gas well is spud.
(ii) If the average annual price of natural gas is greater than $2.25 and less than $3.00, the fee shall be $45,000 for the calendar year in which the unconventional gas well is spud.
(iii) If the average annual price of natural gas is greater than $2.99 and less than $5.00, the fee shall be $50,000 for the calendar year in which the unconventional gas well is spud.
(iv) If the average annual price of natural gas is greater than $4.99 and less than $6.00, the fee shall be $55,000 for the calendar year in which the unconventional gas well is spud.
(v) If the average annual price of natural gas is more than $5.99, the fee shall be $60,000 for the calendar year in which the unconventional gas well is spud.
(2) Year two:
(i) If the average annual price of natural gas is not more than $2.25, the fee shall be $30,000 for the calendar year following the year in which the unconventional gas well is spud.
(ii) If the average annual price of natural gas is greater than $2.25 and less than $3.00, the fee shall be $35,000 for the calendar year following the year in which the unconventional gas well is spud.
(iii) If the average annual price of natural gas is greater than $2.99 and less than $5.00, the fee shall be $40,000 for the calendar year following the year in which the unconventional gas well is spud.
(iv) If the average annual price of natural gas is greater than $4.99 and less than $6.00, the fee shall be $45,000 for the calendar year following the year in which the unconventional gas well is spud.
(v) If the average annual price of natural gas is more than $5.99, the fee shall be $55,000 for the calendar year following the year in which the unconventional gas well is spud.
(3) Year three:
(i) If the average annual price of natural gas is not more than $2.25, the fee shall be $25,000 for the second calendar year following the year in which the unconventional gas well is spud.
(ii) If the average annual price of natural gas is greater than $2.25 and less than $3.00, the fee shall be $30,000 for the second calendar year following the year in which the unconventional gas well is spud.
(iii) If the average annual price of natural gas is greater than $2.99 and less than $5.00, the fee shall be $30,000 for the second calendar year following the year in which the unconventional gas well is spud.
(iv) If the average annual price of natural gas is greater than $4.99 and less than $6.00, the fee shall be $40,000 for the second calendar year following the year in which the unconventional gas well is spud.
(v) If the average annual price of natural gas is more than $5.99, the fee shall be $50,000 for the second calendar year following the year in which the unconventional gas well is spud.
(4) Years 4, 5, 6, 7, 8, 9 and 10:
(i) If the average annual price of natural gas is not more than $2.25, the fee shall be $10,000 for the third through ninth calendar years following the year in which the unconventional gas well is spud.
(ii) If the average annual price of natural gas is greater than $2.25 and less than $3.00, the fee shall be $15,000 for the third through ninth calendar years following the year in which the unconventional gas well is spud.
(iii) If the average annual price of natural gas is greater than $2.99, the fee shall be $20,000 for the third through ninth calendar years following the year in which the unconventional gas well is spud.
(5) Years 11, 12, 13, 14 and 15:
(i) If the average annual price of natural gas is less than $3.00, the fee shall be $5,000 for the 10th through 14th calendar years following the year in which the unconventional well is spud.
(ii) If the average annual price of natural gas is greater than $2.99, the fee shall be $10,000 for the 10th through 14th calendar years following the year in which the unconventional well is spud.
(6) For purposes of this subsection, the fee shall be determined using the average annual price of natural gas for the calendar year in which the fee is imposed.
(b.1) Nonproducing unconventional gas wells.--If a spud unconventional gas well begins paying the fee imposed under this section and is subsequently capped or does not produce natural gas in quantities greater than that of a stripper well within two years after paying the initial fee, then the fee shall be suspended:
(1) The fee shall be reinstated for a calendar year during which the unconventional gas well produces natural gas in quantities greater than that of a stripper well.
(2) Each calendar year during which a fee is suspended shall not be considered a calendar year following spud for purposes of determining the amount of the fee under subsection (b).
(c) Annual adjustment.--Beginning January 1, 2013, the commission shall annually adjust the fee amounts under subsection (b) to reflect any upward changes in the Consumer Price Index for all Urban Consumers for the Pennsylvania, New Jersey, Delaware and Maryland area in the preceding 12 months and shall immediately submit the adjusted fee amount to the Legislative Reference Bureau for publication as a notice in the Pennsylvania Bulletin. The fee shall be adjusted by multiplying the annual fee amount by any percentage increase to the Consumer Price Index for all Urban Consumers for the Pennsylvania, New Jersey, Delaware and Maryland area, rounded to the nearest $100. The resultant product shall be added to the fee amount, and the sum shall become the new annual fee amount under subsection (b). The annual adjustment under this subsection shall take effect if the total number of unconventional gas wells spud in the adjustment year exceeds the total number of unconventional gas wells spud in the prior year.
(d) Restimulated unconventional gas wells.--
(1) An unconventional gas well which after restimulation qualifies as a stripper well shall not be subject to this subsection.
(2) The year in which the restimulation occurs shall be considered the first year of spudding for purposes of imposing the fee under this section if:
(i) a producer restimulates a previously stimulated unconventional gas well following the tenth year after being spud by:
(A) hydraulic fracture treatments;
(B) using additional multilateral well bores;
(C) drilling deeper into an unconventional formation; or
(D) other techniques to expose more of the formation to the well bore; and
(ii) the restimulation results in a substantial increase in production.
(3) As used in this subsection, the term "substantial increase in production" means an increase in production amounting to more than 90,000 cubic feet of gas per day during a calendar month.
(e) Cessation.--Payments of the fee shall cease upon certification to the department by the producer that the unconventional gas well has ceased production and has been plugged according to the regulations established by the department.
(f) Vertical unconventional gas well fee.--The fee for a vertical unconventional gas well shall be 20% of the fee established in subsections (b) and (c), except that the fee under subsection (b)(5) shall not apply.

Cross References. Section 2302 is referred to in sections 2301, 2305, 2308, 2314 of this title.