As part of my ongoing research into hydraulic fracturing I have been reading about the history of oil and gas exploration and development in Pennsylvania.
Recently, I encountered this interesting tidbit in Douglas Patchen, et al., Oil and Gas Developments in Mid-Eastern States in 1983, AAPG Bulletin, October 1984, 68: 1383-1399:
Upper and Middle Devonian black shale activity picked up at a near furious pace in 1983, with 85 wells reported during the year. These wells are primarily domestic wells, less than 1,500 ft deep, and drilled within 5 mi of the Lake Erie shoreline in Erie County. Most wells produce from the Upper Devonian Huron and Rhinestreet shales, but a few were drilled to and produced from the Middle Devonian Marcellus formation as well. Four new-pool discoveries, including 3 in the Ohio Shale of Erie County and 1 in the Marcellus Formation of Washington County, were reported in 1983. The Washington County discovery, Garrett Hill pool in Buffalo field, was not a large one. The discovery well, Gary Schodorf 1 Anna Johnson, was originally drilled to the Huntersville Chert, but was unresponsive to stimulation. After restimulation in the Marcellus, the well flowed only 15 MCFGD, but was put on line. Two other Marcellus wells drilled in the vicinty provided somewhat larger open flows, but the potential for economical Marcellus production does not appear to be encouraging.
Two questions immediately come to mind: First, are these wells also subject to the recent unconventional well impact fee? As I understand Act 13 of 2012, these and any similar wells may in fact be subject to the impact fee, even though they were drilled nearly 30 years ago.
CHAPTER 23 § 2302. Unconventional gas well fee. (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.
The language above seems quite unambiguous, regardless of when spudding occurred, an impact fee is to be imposed on every producer of unconventional gas wells, which Act 13 defines as wells targeting “a geological shale formation existing below the base of the Elk Sandstone or its geologic equivalent stratigraphic interval where natural gas generally cannot be produced at economic flow rates or in economic volumes except by vertical or horizontal well bores stimulated by hydraulic fracture treatments or by using multilateral well bores or other techniques to expose more of the formation to the well bore.”
Second, in that case, just how many wells have met these criteria over time? Given the many known data quality problems with the Pennsylvania Department of Environmental Protection’s information technology systems, this is a non-trivial question. However, there is ample evidence to suggest that a significant number of previously completed wells meet the definition of an unconventional well stipulated by Act 13. For instance, according to a recent report, more than 275,000 wells have been drilled within the area of the Marcellus formation, though just how many of them penetrated the Marcellus is not known. However, at least 16,894 wells had log curve data sufficient to map the area and thickness of the Marcellus. The number of these wells located in Pennsylvania was not reported, but appears to be significant.
In short, it appears that the wells drilled in 1983 (and presumably others before and after this date) meet the criteria specified by Act 13 and should therefore be liable for the unconventional well impact fee. Moreover, even a cursory inspection of the issue suggests that the number of past wells subject to the fee may potentially number in the thousands.