HARRISBURG -- When oil and gas drillers in Pennsylvania wake up on Monday, they'll be under new rules on how they deal with officials, where they can locate their operations and the price tag attached to wells.
Drillers will have to ante up fees based on their number of wells and the price of natural gas. Regulators will push those wells farther from buildings and streams, and have a greater authority to penalize operators or withhold future permits.
Those living within the Marcellus Shale region and beyond will be able to access more information about what's going on at drilling sites.
The changes come after years of often-raucous debate in the state Legislature and months of scrambling by agency officials tasked with carrying out the new law governing deep shale drilling.
Debate over creating a tax on gas extraction -- as other states have adopted -- began in 2009, under then-Gov. Ed Rendell. Those unsuccessful Democratic efforts to charge drillers for the resources they dig up from deep below the commonwealth continued over the past year, led this time by Republicans who re-branded the tax an "impact fee" and broadened it beyond raising revenue.
Democrats and some environmentalists said it did too little in revenue and protections, while Republicans touted it as a necessary step with more than 4,000 shale wells already drilled since the activity took off several years ago.
The final bill -- now Act 13 -- already has found its way into the court system, where some local officials are arguing that the overhaul is an overreach. That challenge earned a minor victory last week, when a state appellate judge granted a 120-day injunction on provisions that would pre-empt local zoning laws.
While that section of the statute remains on hold as the court challenge continues, the bulk of the 174-page law will proceed.
It's the fee that's stolen most of the spotlight, both as the bill was being debated and now as local governments and others begin to plan for spending their new dollars.
Step one has been for local officials in the 37 counties eligible to receive funds to authorize the impact fee. One-sentence ordinances noting their support of the assessment have been approved in 36 counties -- only Luzerne County has not voted on a fee ordinance, though officials could still do so by Monday's deadline.
Authorizing the impact fee could mean more than $5 million next year for Washington County and its 550 wells, which are poised to generate more than $23 million for state and local programs. Allegheny County will be looking at a check in the ballpark of $86,000 after payments of $50,000 for each of its eight horizontal wells and $10,000 for its sole high-producing vertical well are collected in September. The county gets only a portion of that total.
Getting those dollars, which drillers will pay to the state Public Utility Commission, will require new paperwork that the commission is still putting together. The burden is on operators to fill out reports indicating which wells are where and how much they're producing. Meanwhile, town officials must notify the commission regarding the size of their budgets, due to a related cap on how much they can receive from the impact fee.
"We need a lot of information from the parties before we can see any money exchanging hands," said PUC spokeswoman Jennifer Kocher, pegging December as the draft deadline by which they hope to have fee dollars distributed.
Local officials will have to file annual public reports on how they spend those dollars. It's difficult to calculate exactly how much any municipality will be receiving, since the formula is based on the municipality's portion of a county's population, miles of highway roads and proximity to well sites.
All that paperwork will mean job openings at the PUC -- the agency has advertised a couple of legal and fiscal positions, and several other openings are likely in the coming months.
But most of the changes go beyond the infusion of revenue, and will alter where drillers locate sites and what information they release to the public.
One thing that won't change are some of the rules for wells currently with permits. While any driller that applies to the Department of Environmental Protection on Monday will need to locate the well pad 500 feet from a private water well instead of the current 200 feet, the operator can finish drilling additional wells to be located on a currently permitted site.
But that operator with previous permits will need to increase the bonding amount paid to the state as insurance against catastrophic accidents significantly: Instead of covering an unlimited number of wells with a $25,000 payment, that maximum cost now rises to $850,000.
Another key change for drillers will be posting the chemicals used in hydraulic fracturing online, at FracFocus.org. Previously a chemical breakdown was submitted to DEP, but wasn't easily accessible to the public.
A landowner or neighbor now will be able to search by operator, locality or the specific name of a nearby well to find a list of what was used to break apart the shale and release the gas trapped inside.
That provision has drawn controversy for a section instructing drillers to turn over proprietary chemical information to medical professionals who need it to treat a patient, but also requiring doctors to keep the details of those chemicals confidential. The section, modeled after a Colorado law, has raised questions from physicians here, and a DEP spokesman said some discussions with medical professionals are still needed to clarify the law.
Other states and countries already have been looking to the new rules to assist with their own guidelines, say officials who conducted online training courses on the changes.
"We're looking at a law that is monumental in that it is the biggest step forward in oil and gas regulation in almost 30 years," said DEP spokesman Kevin Sunday. "It shows that we expect world-class standards from our operators."homepage - marcellusshale
Harrisburg Bureau Chief Laura Olson: email@example.com or 717-787-4254. First Published April 15, 2012 4:00 AM