Pro's and Con's of HB1684 lets hear your's

Pro's

transparency and trust between two parties

More money for Pennsylvanian land owner= more money into local economy

more jobs for Pennsylvanian

more taxes for improvements, Schools, Roads, The money stays here

rise in land values

 

Con's

 

Landowners angry distrust of OGC

Money leaves the state for Oklahoma to improve their state

gas company strangle grip (power) out of control

reduction in land values which is already happening

 

 

Feel free to comment

 

 

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Permalink Reply by wyalusing jim on March 19, 2014 at 1:26pm

unfortunately, you will be disappointed on this one, but you can hope all you want.

and the president is the commander in chief of the armed forces, he can take military action unilaterally. congress has the power to "declare" war, there is a difference. the framers of the constitution foresaw that congress would be slow to act, and in cases where national security was threatened gave the president the power to act on his own quickly. the wisdom in that, and whether all presidents have acted within their authority is debatable.

the biggest difference between the cases you cited regarding legislation and this is, that there are legally executed contracts involved here, and contract law is very clear in the constitution.

there is also quite a bit of case law to refer to here. in fact there were court cases after the 1979 gmra that sought to apply it retroactively to flat rate leases and void them. those cases were summarily dismissed by the courts citing constitutionality. the same will be the case now, if this law passes as it is currently written.

if we are not a nation of laws, lawlessness will certainly ensue.

wj

Permalink Reply by wyalusing jim on March 19, 2014 at 1:41pm

u2 matt, and we do not write laws nor decide their legality here on this forum.

we simply discuss and try to keep each other informed.

wj

2z248p19vqnh9Permalink Reply by 2z248p19vqnh9 on March 23, 2014 at 1:19pm

wj - we're ALL skrewed. Laws, no laws...the 'laws' are just there to somehow make us feel better...he who has the gold makes the rules. Don't have to like it - that's just the way it is.

20% now...30% tomorrow...100% good as yesterday....going, going, gone...

Matt Santiago - do you REALLY think that this will change? maybe for a snit of time...or it may all just be 'lip service' & it just keeps going on & on & on. You & I don't have to like (just live with it...).

Read something on one of the other posts - I think from Grayson somewhere... something about they are going to go to all NG for vehicles, compressors, +++ - there goes your 12.5%...they can drag things out & further out...and basically 'til they win -or- things go to nothing (and they still win...).

We presently have BOTH 'laws' and 'lawlessness' - both co-habitating at the same time - so where ARE we? - stuck in the middle with you! - you're right wj...20% can be quite a $$$ BITE...

As one light lights another, nor grows less - so nobleness enkindles nobleness. wj - ...simply discuss & TRY to keep each other informed...? We can discuss & stay 'informed' all WE want - but THEY have 'the upper hand'...and it's a darn'd shame, it is. As I read what you write - it's not 'negative', but rather what IS happening right before our eyes - and none of has to like it, but just see the woods for the trees. It ALL really stinks to high heaven! - it has become THAT evil. It is NOT right to think of yourself on the wrong end of 'the line' (fish that is on the hook...). Hook, Line, & sinker. Pan's HOT! - fish fry time! (and WE, being the 'fish'!)

Permalink Reply by Jon on March 19, 2014 at 1:29pm

The people that have 12.5% net get nothing compared to the people that 12.5%+ gross

Permalink Reply by wyalusing jim on March 19, 2014 at 1:37pm

my deductions on a 12.5% lease are approximately 20%.

so if my gross is $1000, my net is $800.

not exactly "nothing".

wj

Permalink Reply by Jon on March 19, 2014 at 2:31pm

some of the drills take out transportation expenses and other things, which take peoples checks down to nothing.

Permalink Reply by wyalusing jim on March 19, 2014 at 2:35pm

I pay transportation and gathering charges as well as marketing and my royalties are reduced by 20%.

there do seem to be a few extreme cases, but they do not seem to be the norm. and we do not know the facts of those cases either.

wj

Permalink Reply by Mark McGrail on March 19, 2014 at 12:31pm

Phillip,

Well said.

Permalink Reply by wyalusing jim on March 19, 2014 at 2:23pm

one of the "pros" that I see in this bill is the "first marketable product" language.

that may affect many leases already signed, but not those with "wellhead point of sale" language. it should eliminate chk selling to c.e.m.i. with leases that have later language than "wellhead" royalties.

one odd thing that this bill will do is that going forward, a 1/8 royalty will essentially become the same as a 15% with deductions unless pricing is high.

wj

Permalink Reply by Frank Walker on March 20, 2014 at 1:26am

I just want to re-post a thought here I posted earlier.  Many of you are familiar with the term "jury nullification", which of course if within another context entirely.  The power of landowners over Chesapeake is akin in that it overrides leases and all else, and sweeps aside the hold Chesapeake otherwise has over landowners who signed leases they should never have signed.  However and importantly, this power is not given to individual landowners.  And, indeed, acting individually landowners with bad leases are virtually powerless against the Chesapeake onslaught.  However:

If Chesapeake is shortchanging a sufficiently large number of landowners within any given municipality (means a township or a town, for example), the people living there can petition their leaders to pass law which will ban drilling within that (PA) municipality.  This has the impact of literally closing Chesapeake down.  Now consider:

As of today, in many instances, Chesapeake has been doing HBP drilling . . . and there's nothing wrong with that.  But in so doing Chesapeake is counting on ability to return to (whatever) pad and drill more wells when the market becomes favorable.  A drilling ban would impact that strategy a great deal.

The purpose of any drilling ban, of course, would be to force Chesapeake to re-negotiate leases such that the 12.5% PA minimum royalty is guaranteed to the landowner.  You might argue that 1684 will do that anyway so no need for a drilling ban.  I agree provided Chesapeake does not go to court and challenge 1684 in order to preserve their ongoing thievery.  If they do, landowners acting in concert need to SHUT 'EM DOWN!!

Finally don't lose sight of the fact that Chesapeake, as a company, is little more than a thug and a bully.  But even thugs and bullies respect overwhelming force and will yield in the face of such force.  Such a drilling ban as I'm mentioning cannot be challenged in court because it already has been approved by the PA Supreme Court.  And a 12.5% net royalty is a small royalty and not too much to ask.  The threat alone of being shut down might be enough to force Chesapeake to behave responsibly.  

Permalink Reply by wyalusing jim on March 20, 2014 at 2:14am

you did ok with that frank until you got to your conclusion, in which you said that chk would be forced to renegotiate.

in reality, if you read your lease (or any other), the force majeure clause would hold the lease in suspense ad infinitum.

sure, let's all shoot ourselves in the foot just to prove a point....not.

wj

Permalink Reply by Frank Walker on March 20, 2014 at 3:15am

The alternative I suggested would be a virtual Carrington event for Chesapeake.  Yes, of course they would moan and shout.  But during that time, with all their sunk costs for infrastructure, etc., just sitting there costing them money, and with no income on the margin, they would be dying.

Your mention of force majeure surprises me.  You're smarter than that, or so I thought.  Of course they would have the option of leaving existing leases in effect and just waiting.  The point is there would be no money for them during that interval.  Force majeure was last most vividly seen in NY, owing to the ban there.  But in NY the gas companies had, and have, virtually no sunk costs attributable to Marcellus production efforts!!!  It's not the same thing at all.

I believe PA landowners (most of us, anyway) want drilling.  But the reason we do is so we can collect our full and well deserved royalties.  When a gas company wants to harvest our gas and not pay fairly, it's time to shut 'em down!!

Finally, and just for the record so there is no misunderstanding, I do not consider a 12.5% net royalty to be fair.  It's ridiculously low.  Thus, in my view an even lower net royalty than that is patently obscene. 

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