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Alle-Kiski Valley sees overall reduction in drilling impact fees

| Friday, June 14, 2013, 1:11 a.m.

The Alle-Kiski Valley's share of impact fees on Marcellus shale natural gas wells will decrease by about 6 percent this year.

According to figures released Thursday by the state Public Utility Commission, local communities are entitled to a total of about $1.45 million from the impact fees, a decrease of about $85,000 from 2012's inaugural disbursement.

Under state Act 13, every unconventional well that taps into deep shale gas is assessed a fee annually for 15 years that could range from as much as $60,000 to a minimum of $5,000. The amount collected depends on the number of years a well is in existence and the average cost of natural gas that year.

The largest fee is assessed during the year a well is spud, or first drilled.

There were only 1,357 spud wells last year statewide, compared to almost 5,000 in 2011. That contributed to the statewide impact fee revenue of $202 million this year being about $2 million less than the previous year, according to the PUC.

Also impacting this year's disbursement is that the average cost of natural gas has decreased, which knocked down the amount a spud well was charged from $50,000 in 2011 to $45,000 in 2012.

The law allows municipalities to use impact fees for a variety of purposes: maintenance or improvements to roads, water systems or sewers; emergency preparedness; environmental programs; tax reductions; planning; and employee training.

Washington Township still will collect the most money of any local community, due largely to drilling around Beaver Run Reservoir.

However, the township's $266,000 allotment this year is more than $100,000 less than it collected in 2012.

“It's a lot less than we expected,” said Washington Township Supervisor Joe Olszewski. “It will affect some of the things we'll do this year. We had planned on making a few major purchases, which might be put off now.”

But the added income will continue to help the township catch up on needed road work that had been put off, said supervisor Rich Gardner.

According to data from the state Department of Environmental Protection, only three new wells were drilled in Washington Township in 2012, compared to 18 new wells in 2011. That means only three wells could be assessed the maximum possible fee of $45,000 each. The most a pre-existing well could have been charged was $35,000.

Neighboring Bell Township, which also contains part of the reservoir property, saw a 50 percent increase this year to nearly $44,000. The township had five new wells drilled in 2012, in addition to four wells from 2011, according to the DEP.

More than $100K

Only two other communities will collect in excess of $100,000 in impact fees this year: Frazer will bring in about $102,000 and Manor Township about $108,000.

Frazer's slice of the pie almost doubled from last year. The DEP reported Frazer had nine spud wells in 2012, compared to five in 2011.

“We are thrilled,” said Supervisor Lori Ziencik. “We thought it would increase because we have had some drilling activity on two more well sites.”

Ziencik said this year's money will be combined with last year's $55,000 and used for a 3-mile resurfacing project on Days Run and Kurn roads. Ziencik estimated the project will cost about $250,000.

She said a new well site planned in Deer Lakes Park also is in Frazer, which could result in more revenue in the future.

“Hopefully, that pans out for next year,” Ziencik said.

Manor Township, which only had one new well drilled last year, will see a 16-percent decrease in revenue.

East Franklin and North Buffalo, two other communities that had revenue in excess of $100,000 last year, will drop below that threshold this year.

In all, about 20 local communities are expected to collect less this year, most of them in Westmoreland County which saw a countywide decrease in Marcellus fees.

Communities whose revenue will climb in excess of 30 percent this year include Burrell, Clinton, Fawn and South Buffalo townships.

Clinton Supervisor Mary Zacherl said she'll be cautiously optimistic, since the township received less than was initially projected last year.

The new money will be deposited in a special fund set aside for road and park improvements, Zacherl said.

Many local Allegheny County communities will collect more this year, but since few of them have Marcellus wells within their borders or even nearby, their total allotments typically are paltry compared to the townships in neighboring counties.

In the Alle-Kiski Valley, few Allegheny County communities will collect more than $1,000 each. Fawn and Frazer are the two biggest exceptions; Fawn is expected to bring in about $48,000.

Money without wells

Even communities that don't have any wells can benefit from the impact fees because the state uses a formula to divide the money between state agencies that have oversight of drilling activities or deal with environmental, transportation or recreational issues; counties that have wells; and municipalities that have wells or are located within five miles of wells.

That formula will allow cities like Lower Burrell and New Kensington to each collect nearly $30,000 this year, even though neither has wells that are assessed impact fees, according to the PUC.

Staff writer Jodi Weigand contributed. Liz Hayes is a staff writer for Trib Total Media. She can be reached at 724-226-4680 or

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