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 a report 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.

8  Section 1607-E. Oil and gas operations in the South Newark

9  Basin.

10  (a) Legislative findings.–The General Assembly finds and

11  declares that:

12  (1) The United States Geological Survey issued a report

13  in June of 2012, entitled “Assessment of Undiscovered Oil and

14  Gas Resources of the East Coast Mesozoic Basins of the

15  Piedmont, Blue Ridge Thrust Belt, Atlantic Coastal Plain, and

16  New England Provinces, 2011.”

17 (2) The report under paragraph (1) revealed a mean

18  average of 876,000,000,000 cubic feet of total undiscovered

19  natural gas resources in the South Newark Basin assessment

20  unit.

21  (3) The unique geologic and geochemical characteristics

22  of the South Newark Basin evaluated in the report under

23  paragraph (1) have not been adequately evaluated by the

24  Commonwealth and are deserving of further study.

25  (b) Well permits.–The Department of Environmental

26  Protection may not issue well permits under 58 Pa.C.S. Ch. 32

27  (relating to development) to engage in oil and gas operations

28  within the geographic boundaries of the South Newark Basin, as

29  defined by the report under subsection (a), until all of the

30  following has occurred:

20110SB1263PN2351    – 16 –


1  (1) A study is completed by the Department of

2  Conservation and Natural Resources, in consultation with the

3  municipalities located in the South Newark Basin, evaluating

4  the practical resource recovery implications of the report

5  under subsection (a) and the fiscal impact of oil and gas

6  operations on the South Newark Basin.

7  (2) Legislation authorizes the governing body of a

8  county situated in whole or in part within the South Newark

9  Basin that has spud a gas well located within its borders to

10  elect whether to impose a fee on gas wells pursuant to 58

11  Pa.C.S. Ch. 23 (relating to unconventional gas well fee).

12  (c) Expiration.–This section shall expire January 1, 2018.