Possible Changes Coming to Landowners With Oil, Gas Wells WICU-WSEE Erie, PA. reports w/video

The first oil well was drilled in Crawford County in the 1800s. Now, nearly 200 years later, there's some worries about the future for those with wells on their property, especially for those who have had wells for many years.

"The problem is most of the oil leases prior to Marcellus, don't say anything about pooling," said Paul Yagelski of Rothman Law Firm in Pittsburgh. "Accordingly, they're going to be in this. They're going to be forced to come in this."

A "pool" is something that will allow energy companies to lump many landowners together. It's a new part of the Oil and Gas Lease Act passed two weeks ago. And as Yagelski explained, it's changing the way many landowners will receive their royalties from wells. Even those who have a pooling provision, could see a change.

"If those landowners in a pool cannot come to an agreement, the oil and gas companies will tell them what they're going to get."

Landowner Judy Shumaker called this bill a double-edged sword. She hates to see any freedom of choice be taken away, but knows how difficult it can be for a large group to agree. But, she also understands the need for local drilling.

"In our area, where the population is dense as opposed to areas out west, I think it might be necessary in order to have gas companies be successful."

   

 State Representative Brad Roae, (R) 6th District, said this bill could have a positive impact on the region, particularly when it comes to people receiving money that may not have before.

"This is probably one of the top growing industries in Pennsylvania. It's great that we have all this natural gas, right under our feet." 

The bill will officially take effect on September 7.

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This item has been discussed in several other GoMarcellus threads, but thanks to Mr. Goodfellow for opening a place to organize discussion of how to make it go away.  Some added background - The bill apparently started out as a restatement and clarification of minimum royalty and accounting requirements, then somehow a 2-sentence paragraph was added which provides (1) for forced pooling of producing vertical leases which didn't specifically prohibit it, and (2) for possible royalty apportioning changes in horizontal pools formed from older leases.

Here are some questions that were left unanswered in the NWPALG meeting:

1. Who, specifically, authored the new paragraph?

2. What is the expected dollar value of the new paragraph to energy developers?

3. What is the tax impact to PA and local government entities?

4.What is the expected dollar impact to the oil/gas wealth held by individual PA citizens?

Thanks and kudos to Mr. Roae are in order, since he seems to be the only legislator who actually read and thought about these questions (and voted against it as a result), but a wag of the finger to the whole legislature (and the press, and this forum so far) who steadfastly refuses to understand that there are actual and potential financial impacts to all 3 stakeholder communities.  I believe that when all the math is done (if ever), the wealth transfer of this bill will rank up there with recent laws that attempted to allow developers to confiscate private property for new development.

Mr Jenness , I agree wholeheartedly. This is a fundamental change in contract law. A lease being a contract that manifestly expresses the agreement between the parties. This statue " implies" that the parties contemplated the right to pool and unitize......remained silent and said, "what the heck, we will give it to a company for free". This changes the law and takes away any hope of renegotiating that old minimum royalty lease.....it was my experience  that companies were beginning to quietly pay for amendments to leases to add unitization.....Merry Christmas EQT, CNX,D&L,Range, Cabot and all !!!!!!!

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