Corbett's betrayal has already started to hurt landowners.

http://triblive.com/business/headlines/4447866-74/eqt-gas-law#axzz2...

EQT Corp. has sued scores of landowners in Allegheny County for access to their properties under a recently enacted law that gives gas drilling companies the power to combine some neighboring parcels into drilling units without compensating owners.
The 69 individuals and one golf course in Forward named in the lawsuit are accused of blocking the company from conducting surveys on their land to determine where to drill for shale gas. It appears to be the gas industry's first attempt at using the controversial law.
“The fact that it's being used (to sue people) is disgusting,” said Robert J. Burnett, a Downtown attorney working with the National Association of Royalty Owners but not involved in the EQT case. The state “gave the drilling companies a weapon to beat down landowners,” he said.
EQT spokeswoman Linda Robertson said the company had been negotiating in “good faith” in Forward and still does, though it doesn't have to.
“Prior to the bill, we were working with landowners to obtain modifications and, although this bill means we no longer need to do that, EQT will honor those offers,” Robertson said. “It was determined that putting the issues before a court would be the most expeditious way to reach resolution.”
The golf course, Riverview Golf Course Inc., and lawyers for some of the defendants did not return calls.
The law, which the governor signed on July 9, gives drillers power to pool leased properties into one unit for wells that drill sideways, as long as contracts don't prohibit such combinations. Before the law, landowners could have demanded more money or better legal terms from drillers to include their properties in a pool.
The Forward contracts, like most old oil and gas leases, don't mention pooling and so the law makes it clear that Downtown-based EQT can combine them into units it needs without permission from landowners, the company claimed in its lawsuit filed July 22 in Common Pleas Court.
EQT is looking to cash in on land it controlled long before the shale gas boom. Its subsidiaries, including the old Equitable Gas Co., kept gas leases alive for decades by storing gas under the Mon Valley township, with one lease dating to 1899, the complaint said.
EQT lobbied for the law on pooling, according to state Rep. Garth Everett, who sponsored the legislation.
Most of the defendants started an alliance called the Monongahela Group, the lawsuit claimed. Its members refused to allow the company to do seismic testing unless it renegotiates their gas contracts. That “wrongfully” and “substantially impeded” EQT, lawyer Patricia L. Dodd of Meyer, Unkovic & Scott LLP wrote for EQT in the complaint.
Landowners rejected several offers, Robertson said.
EQT hasn't negotiated for months, said several residents and a lawyer working with Forward residents who aren't involved in the case. One of its offers was a one-page lease modification to allow land pooling. It offered no extra money, stating it would be for “mutual advantage,” according to the offer obtained by lawyer Steven A. Walton. Company officials stopped negotiating last fall, Walton and others said.
In November, an EQT vice president told the Tribune-Review at an industry conference that EQT wanted the state to pass the pooling legislation. The Legislature passed the bill the last weekend of June, as lawmakers rushed to meet a budget deadline before their summer recess. Gov. Tom Corbett signed it on July 9.
“Some of the Legislature didn't know better. They just kind of did whatever. If a lobbyist gives them something and tells them what to do, they'll do it,” said William Beinlich, one defendant and an organizer of the Monongahela Group.
He isn't bothered by the law and believes it won't be decisive in the case, he said. Many leases are ambiguous and may not back up EQT's claims, he said, declining to explain.


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Replies to This Discussion

Permalink Reply by Jim Litwinowicz on August 5, 2013 at 3:02pm

Somebody did post a day or two before the vote that this amendment was added but it was too late to have an affect.

Permalink Reply by Richard Droske on August 5, 2013 at 11:48am

Without compensating landowners? I think not. They can be forced into pooling for the public good but they do get compensation.

Permalink Reply by Rick on August 5, 2013 at 12:20pm

Richard, this is a different law. Not exactly forced pooling. Actually better than forced pooling for the O&G companies. They dont have to compensate AT ALL for this specific type of pooling.

Permalink Reply by wyalusing jim on August 5, 2013 at 1:03pm

no compensation at all?

haven't you heard of royalties?

wj

Permalink Reply by Rick on August 5, 2013 at 1:50pm

WJ, please read the last sentence i wrote. It is true that the O&G companies are not required to compensate you at all for the pooling under this bill.

Yes you would be paid royalties for the gas sold, but not for a lease modification to put your property into a pool.... (which they will not be required to obtain)

You knew exactly what i meant, wj. More semantics...

If you still dont understand what i wrote, please tell me and i will try to use simpler words... ok?

 

Permalink Reply by wyalusing jim on August 5, 2013 at 2:03pm

rick...simple question.

do you know of anyone who was compensated for adding unitization rights to their lease?

wj

Permalink Reply by Rick on August 5, 2013 at 3:12pm

WJ, yes I do... There are many HBP leases here in western pa, and there have been modifications to leases to allow unitization, or even changes in size of the unit. In one I am familiar with, a reasonable bonus (not as much as a fresh virgin lease) was paid along with other landowner protection clauses added and other things that the company requested. It was a true negotiation.... that was a few years ago though...but alas, those days are probably over with the passage of this bill...

The drilling isnt that far along over here, but they have already unitized and drilled property that was not previously unitized but HBP.

There are other issues on some of these old leases that may hinder the practicality of these larger horizontal drilling operations.... I'll bet they are hoping to craft legislation to wiggle their way around those issues also. Thats another reason that we need to be vigilant.

By the way, wj, this issue probably doesnt affect me, as I am HBP with a lease that may allow unitization... not exactly sure because looks like they made a mistake in that paragraph. But I hate to see another farmer or landowner get screwed over on some shady backroom deal that was quickly shuffled through... The O&G companies should have had the foresight to know that they might need unitization in the future... just the same as the O&G companies say that we should have had the foresight to prohibit it if we didnt want it in the future. After all, most of these leases were written after horizontal drilling was invented. They had better knowedge of the possibilities than we or any attorney here did at that time.

Permalink Reply by wyalusing jim on August 6, 2013 at 3:07am

how much were they paid for adding a unitization clause?

wj

Permalink Reply by Rick on August 6, 2013 at 4:18am

Wj, since it wasnt my bonus, i am not at liberty to pass that info along... sorry..

How much was your bonus payment for signing a lease and when? just curious what the situation is or was out your way...

Permalink Reply by wyalusing jim on August 6, 2013 at 8:28am

on which property rick?

wj

Permalink Reply by Frank Walker on August 6, 2013 at 10:43am

Rick, you wrote:

"There are other issues on some of these old leases that may hinder the practicality of these larger horizontal drilling operations.... I'll bet they are hoping to craft legislation to wiggle their way around those issues also."

Could you please provide even a brief mention of the "other issues" you had in mind.  I try to be watchful for things like that, and I'm interested to know what other nefarious and unfair legislation might lie ahead.  I completely agree with your thought legislation, even now, might be being crafted which could further injure landowners.  It would be nice to know a few specific areas where you have concern.  Landowners must stand together.  Thanks!

Permalink Reply by Rick on August 6, 2013 at 2:17pm

Well Frank, lots of old HBP leases allow house gas, I bet they will just deny that, and not want to alter the lease. Some say that the well site, and pipelines shall be mutually agreed upon. They will probably try to say that was only for the specific well that was already sited and drilled years ago, therefore no mention of future wells. Mine says I specifically laid out the access road... bet they wont like that.. Mine says absolutely no storage of equipment not being used in day to day operations. You think they will abide by that? Or do you think they will need to renogiate some terms? Who knows what they will do. I was thinking of building a couple of houses on my place. Do I need permission to do that or to subdivide? Can I choose wher to put those buildings? Will they tell me it wasnt there when we agreed upon the lease.. will they be in their way...

My whole point is that they will probably try to ignore the terms that hinder them, while holding us to the terms that benefit them. all while not negotiating a new lease or updating and old lease.

So far twice they have issues ruled in their favor... first was the "no deductions clause" and if you hadnt mentioned it in the lease, it is assumed you allow them. I believe my lease says "sold at the well head" but thats not possible from what i understand. The second one was this issue about not mentioning unit size in your lease, and that if it isnt prohibited, again it is assumed to be allowed. What else isnt mentioned in your lease that will be assumed to be allowed? Something will come up.

I'm sure if you look around your place, and at your old lease designed for vertical drilling, you will find something that you wish you would have prohibited. Can they put a pad on your neighbors property, and store a mountain of soil on yours? I dont have that prohibited. What about a compressor station? My lease doesnt prohibit it specifically. If they want one on my property, will they have to negotiate compensation and terms for it? Who knows. You know they wont want to. These old leases just dont fit and were never designed for the much larger and more disruptive operations of horizontal drilling.

One thing we really need to watch right now is this: The state supreme court said that there is not a clear definition for the words"minimum royalty" or it may just be "royalty" i forget. But the same snake who goes by the name of everett is on a comittee with other lawmakers to craft legislation defining those words... and if the deductions are allowed to take your payment below the 12.5% gross minimum, and what should constitute the gross price of gas. I bet he wiggled his way on the comittee so that he can get good terms for the companies' interests. They are working on this right now...

 

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