The following words and phrases when used in this chapter shall have the meanings given to them in this section unless the context clearly indicates otherwise:

"Average annual price of natural gas." The arithmetic mean of the New York Mercantile Exchange (NYMEX) settled price for the near-month contract, as reported by the Wall Street Journal for the last trading day of each month of a calendar year for the 12-month period ending December 31.

"Company." An entity doing business within this Commonwealth and subject to tax under Article III, IV or VI of the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971.

"Commission." The Pennsylvania Public Utility Commission.

"Department." The Department of Environmental Protection of the Commonwealth.

"Eligible applicant." Any of the following:

(1) A county, municipality, council of governments, watershed organization, institution of higher education or nonprofit organization.

(2) An authorized organization as defined in 27 Pa.C.S. § 6103 (relating to definitions).

(3) A company, other than a producer.

"Fee." The unconventional gas well fee imposed under section 2302 (relating to unconventional gas well fee).

"Fund." The Unconventional Gas Well Fund.

"Highway mileage." The number of miles of public roads and streets most recently certified by the Department of Transportation as eligible for distribution of liquid fuels funds under the act of June 1, 1956 (1955 P.L.1944, No.655), referred to as the Liquid Fuels Tax Municipal Allocation Law.

"Municipality." A borough, city, town or township.

"Natural gas." A fossil fuel consisting of a mixture of hydrocarbon gases, primarily methane, and possibly including ethane, propane, butane, pentane, carbon dioxide, oxygen, nitrogen and hydrogen sulfide and other gas species. The term includes natural gas from oil fields known as associated gas or casing head gas, natural gas fields known as nonassociated gas, coal beds, shale beds and other formations. The term does not include coal bed methane.

"Number of spud unconventional gas wells." The most recent numerical count of spud unconventional gas wells on the inventory maintained and provided to the commission by the department as of the last day of each month.

"Population." As follows:

(1) Population of the Commonwealth and population of a county shall be determined using the United States Census Bureau's most recently released Annual Estimates of the Resident Population for Counties of Pennsylvania.

(2) Population of a municipality shall be determined using the United States Census Bureau's most recently released Annual Estimates for the Resident Population for Incorporated Places in Pennsylvania.

(3) Population of municipalities not included in the report referenced under paragraph (2) shall be determined using the United States Census Bureau's most recently released Annual Estimates of the Resident Population for Minor Civil Divisions in Pennsylvania.

"Producer." A person or its subsidiary, affiliate or holding company that holds a permit or other authorization to engage in the business of severing natural gas for sale, profit or commercial use from an unconventional gas well in this Commonwealth. The term shall not include a producer that severs natural gas from a site used to store natural gas that did not originate from the site.

"Spud." The actual start of drilling of an unconventional gas well.

"Stripper well." An unconventional gas well incapable of producing more than 90,000 cubic feet of gas per day during any calendar month, including production from all zones and multilateral well bores at a single well, without regard to whether the production is separately metered.

"Unconventional formation." 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.

"Unconventional gas well." A bore hole drilled or being drilled for the purpose of or to be used for the production of natural gas from an unconventional formation.

"Vertical gas well." An unconventional gas well which utilizes hydraulic fracture treatment through a single vertical well bore and produces natural gas in quantities greater than that of a stripper well.