On July 2, Pennsylvania Governor Corbett signed Act 87 of 2012 into law imposing a moratorium on issuance of new natural gas well drilling permits for wells targeting the South Newark Basin, a formation that underlies parts of Southeastern Pennsylvania.
As has been reported in the press, legislators reacted to areport issued by the United States Geological Survey dated June 2012 suggesting that the South Newark Basin probably contains between 363 and 1698 billion cubic feet of natural gas. The legislators inserted the appended language in a bill addressing largely unrelated matters.
The amendment will prohibit new well drilling permits until the Department of Conservation and Natural Resources completes a study on the "resource recovery implications" and "fiscal implications" of natural gas development in consultation with the municipal governments. In addition, the moratorium continues until counties in the South Newark Basin can elect to impose an impact fee under the recent amendments to the Oil and Gas Act known as "Act 13."
The affected area lies in the Delaware River Basin. The Delaware River Basin Commission has imposed its own moratorium on natural gas development in the basin until it adopts regulations. The Pennsylvania Administration has been vocal about lifting that moratorium by having the DRBC adopt regulations. Accordingly, the Governor's signature on Act 87 is not obviously consistent.
Section 1607-E. Oil and gas operations in the South Newark Baskin.
Legislative findings -- The General Assembly finds and declares that:
- The United States Geological Survey issued a report in June of 2012, entitled "Assessment of Undiscovered Oil and Gas Resources of the East Coast Mesozoic Basins of the Piedmont, Blue Ridge Thrust Belt, Atlantic Coastal Plain, and New England Provinces, 2011.
- The report under paragraph (1) revealed a mean average of 876,000,000,000 cubic feet of total undiscovered natural gas resources in the South Newark Basin assessment unit.
- The unique geologic and geochemical characteristics of teh South Newark Basin evaluated in the report under paragraph (1) have not been adequately evaluated by the Commonwealth and are deserving of further study.
Well permits -- The Department of Environmental Protection may not issue well permits under 58 Pa.C.S. Ch. 32 (relating to development) to engage in oil and gas operations within the geographic boundaries of the South Newark Basin, as defined by the report under subsection (a), until all of the following has occurred:
- A study is completed by the Department of Conservation and Natural Resources, in consultation with the municipalities located in the South Newark Basin, evaluating the practical resource recovery implications of the report under subsection (a) and the fiscal impact of oil and gas operations on the South Newark Basin.
- Legislation authorizes the governing body of a county situated in whole or in part within the South Newark Basin that has spud a gas well located within its borders to elect whether to impose a fee on gas wells pursuant to 58 Pa.C.S.Ch 23 (relating to unconventional gas well fee).
- Expiration -- This section will expire January 1, 2018.