Money doesn’t grow on trees, and as a number of drill leasers are finding out, it doesn’t spew from gas wells either.
As was stated in REVOLT OF THE DRILL LEASERS, royalty checks are not all they were fracked up to be. Responding to complaints of tiny royalty checks, enormous post production costs, and the inability of some leasers to install their cement ponds, the Pennsylvania Senate swiftly held a hearing.
Senator Gene Yaw was joined at the hearing by Senators John Yudichak (D-14), Minority Committee Chairman, Lisa Baker (R-20), Kim Ward (R-39), Elder Vogel (R-47), Scott Hutchinson (R-21), as well as Representatives Garth Everett (R-84), Matthew Baker (R-68), Tina Pickett (R-110) and Sandra Major (R-111).
Yaw serves as Chairman of the Environmental Resources and Energy Committee and Vice Chairman of the Urban Affairs and Housing Committee. He is also a member of the Judiciary, Law and Justice, Agriculture and Rural Affairs, Labor and Industry and Rules and Executive Nominations Committees and the Majority Policy Committee. Yaw also serves on a number of Boards and Commissions including as Chairman of the Center for Rural Pennsylvania, a member of the Joint Legislative Air and Water Pollution Control and Conservation Committee and a member of the Environmental Quality Board.
Yaw holds gas leases with Anadarko and has been active in the controversy regarding fracking of Loyalsock State Forest. (See: FRACKED: LOYALSOCK STATE FOREST). His interest in quickly rectifying post production cost charges is obvious.
Not only are the royalty checks tiny, in some instances leasers are being charged retroactively for post production costs which has resulted in receiving a BILL in the thousands of dollars instead of a check.
Testifying at a Senate Environmental Resources and Energy committee hearing on June 27, 2013, Bradford County Commissioners Chairman Doug McLinko said, “Our constituents have shown us evidence of extraordinary post-production cost in Bradford County, with deductions of 40 and 50% all the way up to as much as 90%.” “…we have seen checks come with zero payment. We have seen retroactive charges being billed to land owners for tens of thousands of dollars where the property owners actually have a bill sent to them and they go without any royalty payments until it is paid in full.” Similar concerns were raised by the Pennsylvania Farm Bureau at the same hearing.
Chesapeake Energy seems to be the big gas corporation taking the biggest chunk our of royalty checks. However, April 2013, Chesapeake Energy sold much of its natural gas holdings in Pennsylvania to Southwestern Energy for a mere $93 million. Lease holders formerly with Chesapeake may be surprised to find out they now have to deal with Southwestern regarding royalty payments and post production costs.
WHAT ABOUT THE JOBS?
In the past when Pennsylvanians have gone to their local Senators and Representatives with complaints about contaminated water, excessive noise, air pollution and other drilling related issues the typical response has been to pooh-pooh the concerns and point out “all those jobs”.
Conspicuous by its absence at the hearing was the usual talking point about “all those jobs” being created by the gas industry. It doesn’t seem to occur to the legislators that royalty payments cost the gas corporations money which reduces their ability to create “all those jobs”. Post production costs also reduce corporate profits which would prevent the creation of “all those jobs:.
YAW SAYS SUE’EM
After listening to the testimony, Yaw says he’s not sure why more people aren’t filing lawsuits, and is doubtful there can be any quick legislative fixes.
“We could take action,” he says, “But that’s not going to solve the problems some of the people face now. I think they need to take action themselves. But the encouraging thing is I think there are avenues for them to pursue it. They’re not alone. They just need to be willing to do it for themselves.”
There you have it lease holders; you are on your own, welcome to the Sacrifice Zone.
EXPANSION OF SACRIFICE ZONES
This week the Pennsylvania House passed a forced pooling bill. The bill would allow gas corporations to drill on properties which have very old oil and gas leases. Leases which were signed long before the shale boom hit Pennsylvania.
The bill would give gas corporations the right to pool the land unless the old contract expressly forbids it, which the old contracts usually don’t.
Old lease holders want the opportunity to “renegotiate” the contracts in light of the “new” horizontal fracking technology to be used.
Geeeee….don’t they know that according to the gas industry, fracking has been around for over 60 years? And think about all those jobs that will be created by paying rates and royalties based on very old contract terms and recouping post production costs.
The SB-259 bill has been sent back to the Senate where it started. Sponsors of the original bill include Senator Gene Yaw.
MASSACHUSETTS FRACKING BAN
More than 11,000 residents of Massachusetts have called for a Fracking Ban after seeing what is happening in Pennsylvania.
Rep. Kocot (D-MA) and Rep. Provost (D-MA) introduced H.788, to ban fracking and the processing of its toxic wastewater in the commonwealth.
“In states like Pennsylvania, we have already seen fracking contaminate drinking water and make nearby residents sick,” said John Rumpler, senior attorney for Environment Massachusetts. “Residents looking at this track record have one message for their legislators today: keep this dirty drilling out of Massachusetts.”
Along the Connecticut River Valley, in the middle of the state, lies the Hartford Basin. In June 2012, the USGS stated:
Using a geology-based assessment method, the U.S. Geological Survey (USGS) estimated a mean undiscovered natural gas resource of 3,860 billion cubic feet and a mean undiscovered natural gas liquids resource of 135 million barrels in continuous accumulations within five of the East Coast Mesozoic basins (fig. 1; table 1): the Deep River, Dan River-Danville, and Richmond basins, which are within the Piedmont Province of North Carolina and Virginia; the Taylorsville basin, which is almost entirely within the Atlantic Coastal Plain Province of Virginia and Maryland; and the southern part of the Newark basin (herein referred to as the South Newark basin), which is within the Blue Ridge Thrust Belt Province of New Jersey (fig. 1). The provinces, which contain these extensional basins, extend across parts of Georgia, South Carolina, North Carolina, Virginia, Maryland, Delaware, Pennsylvania, New Jersey, New York, Connecticut, and Massachusetts.
(SEE: Western Frackachusetts?)
Boston and the surrounding suburbs receive much of their drinking water from reservoirs in the western part of the state. The largest of these reservoirs is the Quabbin Reservoir which is fed by many water sources from the surrounding communities which would include those in the Hartford Basin area.
The original project for creating the Quabbin Reservoir was enthusiastically supported by Boston lawmakers, and vehemently opposed by residents in Western Massachusetts who took their case to the Massachusetts Supreme Judicial Court. They lost the case, four towns were disincorporated, razed and flooded to form the reservoir.
Despite long term attitudinal divisions between Western Mass and Eastern Mass residents, it appears the threat to drinking water and destruction of the Connecticut valley is giving them common ground lest Western Mass becomes yet another sacrifice zone.
©2013 by Dory Hippauf
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