I would call or email your gas company and ask what they think it would be for your area?
Correct me if I am wrong but if your lease reads royalty at the wellhead, there
should be no deductions.
That's one way to look at it. Another way would be to say "these people paid me big money to come on my land and invested millions of their dollars to help me develop my natural gas resources, i think that it is reasonable that a small portion of the cost of preparing MY gas to be sold into a pipeline could be deducted from my sizeable royalty payment".
Does it mean that the landowner is going to get less? Yes.
Is it reasonable to ask for this to be negotiated into a lease? Yes.
Is it reasonable for a gas company to reject this change? Yes.
Is it unfair? Certainly not.
Unprocessed dry gas feeding directly into a sales market should have minimal (if any) deductions. The only expense I can see there is going to be compression, which when spread across a system of wells will be barely noticeable. As far as what is "fair"... well, that's very subjective.
I'm not trying to defend anyone, just trying to give an additional perspective. Yes, big gas and oil companies make large profits. If they didn't, they would not be in business. Gas drilling isn't an investment like gold or silver or some other sort of tangible commodity that retains worth. It's sold, it's burned, it's gone.. They need large profits in order to be able to continue to drill wells and keep the supply chain working. You want them to pay you top dollar for your gas rights, and you want them to invest tens of millions of dollars to develop your property, right? Where do you think that money comes from?
You can call it nickel and dime-ing, but I still don't understand how it would be considered unreasonable to think that a landowner should have to pay his or her fair share of the costs associated with preparing THEIR gas for market. The gas company has paid you to come on the land, they have paid to drill the well, they have agreed to give you a sizable royalty percentage.
That being said, it should not be an open loophole for gas companies to scam landowners out of their fair share.
I did not reply to Mr. Morris's question. I try not to comment too much on other companies leases and what the implication is, especially when I only have half of a sentence from it. I try not to get too close to what could be considered "legal advice".
You are the Lessor. The gas company is the Lessee. Are you sure that you didn't get those two mixed up?
Every lease is written differently, which is why I don't comment on what something means unless I have the whole lease in front of me. Some deduction clauses are more equitable than others. They can range from completely fair to highway robbery.
Most of the deduction clauses I have come across are basically net vs. gross.
For example, let's say that a well makes $100,000 in a month on a lease paying a 15% royalty with deductions. There are $5,000 worth of expenses involved with preparing that gas for sale. That means the landowner receives 15% of the NET ($95,000) instead of 15% of the GROSS ($100,000).
That equates to $14,250 per month vs. $15,000 per month. So yes, it is proportionate. The landowner is only paying 15% of the cost of preparing the gas for market.