PA Election Impact On Leasing

The people of Pennsylvania have spoken with their votes.  Republicans will shortly control the PA House, the PA Senate, and the PA Governorship.  I predict an impact on leasing, as follows:

The hand of the gas companies is strengthened with this election, virtually across the board.  Only the PA courts remain to restrain them, and court action often takes time, a lot of time.  But these elections will have an (almost) immediate salutary impact on gas company operations in the Commonwealth of Pennsylvania.  Regrettably for unleased landowners, some of what's good for the gas companies will be bad for them.  I leased my land for gas drilling several months ago.  This possible election outcome was not part of my thinking back then.  I had no way to know how things would play out.  But looking now at what I did, with the PA election outcomes finally known, I certainly am pleased to be leased.  With the Republicans soon to be so firmly in control across the board, being unleased is not where I would want to be. 

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Permalink Reply by Frank Walker on November 3, 2010 at 5:21am
You have to look at the options for unleased landowners beneath the new (incoming) administration vs. what they were prior to the election:

The Democrats had a voice before. Their approach was a very balanced one, but with the caveat that they were not going to shut down drilling as has happened in NY under the aegis of the much more radical Democrats in power there (they remain in power there, BTW). But here in PA the Democrats sought a middle path. One example is the version of the severance tax approved by the Democrat-controlled PA assembly. There was a provision to protect landowners from tax, regardless terms of their lease. I don't expect Republicans to protect landowners like that. Now granted, the Republicans likely won't pass any severance at all. But if the politics at some point forces them to pass a severance tax, I doubt it will be so landowner friendly.

Another issue is forced pooling, and more particularly the "multiplier" any such bill would contain. For landowners, 2X is preferable. But for the gas companies, and especially today with low gas prices, 3X or 4X is the Holy Grail. My opinion is gas companies are much more likely to achieve their goal under solid Republican PA government control.

There are any number of other issues, that might or might not result in new legislation, which place (unleased) landowners at odds with the gas companies. On any and all such issues I believe Republicans will be more likely to favor the gas companies than would Democrats. Leased landowners are in a better position because the terms of their relationship with (whatever) gas company, their Lessee, are already reduced to writing. And that writing, their lease, was agreed to prior . . . before the gas companies knew for certain their friends would be elected to office so overwhelmingly. The election outcome has strengthened the hands of the gas companies . . . and strengthened their negotiating positions.

Even leased landowners are confronting a bit of increased jeopardy after yesterday. For example, I don't expect the Republicans to enforce our PA environmental laws and regulations all that vigorously. And so long as drilling is not shut down, enforcement of environmental standards is a good thing for landowners . . . . the ones who live on their land, anyway . . . and the ones who might have hope of someday selling their properties. The market for property having tainted water is quite thin.

Anyway bottom line, this Republican sweep has been a wonderful victory for the natural gas drilling industry. For landowners that's only a good thing up to a point.
CarolynPermalink Reply by Carolyn on November 4, 2010 at 6:20am
and why is that I wonder, that being unleased is not where you would want to be? Because the almighty corporations will engage in forced pooling, eminent domain and all the other goodies that trample on the individual rights of landowners. ? Last time I checked this was still a free country where one has choices and is not forced to give up their land so some CEO can get billions in bonuses. Wow, so you think this is all a good thing; the people who got us into this mess for the past 8 years are now back in the saddle. Well let;s just wait and see because Republican or not, we all drink water and we all breathe air.
Permalink Reply by Frank Walker on November 4, 2010 at 7:52am
I'm not entirely clear on your message, Carolyn.

I think I agree with the first portion of your writing. I agree that with Republicans at the helm there is more jeopardy for the unleased from the standpoint of forced pooling, ED, and so forth . . . as you wrote.

The second portion of your writing appears to be pointing to national matters . . whereas my thread here is about gas drilling in Pennsylvania. But your writing is not clear enough for me to understand your message with certainty. I am having to guess what you are trying to say. And I'm not going to address USA politics, which is not the subject of this thread.

As fas as gas drilling in PA goes, I think Governor Rendell and the Democrats have done a pretty good job. But since virtually all of the environmental crazies are on the Democrat side of things, you always have the worry, with Democrats in charge, that they will go off the deep end and shut down drilling . . . like in NY. If all they want is for drilling to be done carefully and safely, under stern regulation, then I am with them. But when they go off the deep end and call for a moratorium, well, that's where they lose me and thousands of other landowners.

Drilling CAN be done safely. But safe drilling is more likely to happen when there is adequate oversight and regulation.
Permalink Reply by David Broscius on November 4, 2010 at 8:10pm
Im glad Im leased too. I dont want to stand in the way of progress and the good of the economy here in PA. Im happy to see people working here and able to support their families. I hope they build natural gas stations so I can buy a natural gas truck, that runs much cleaner and more efficient then gasoline. I can see that in the near future.
I wish we could tell the middle east they can keep their oil and bring our soldiers home.
Permalink Reply by Elnathan Cory on November 5, 2010 at 1:22am
It's time to make some money! I feel like an arab oil Sheik. Hmmmmmm, were did I park my natural gas powered limo? Oh yeah, next to my natural gas heated/cooled mansion that is next to the 10KW natural gas powered generating station etc. weeeeeeeeeoooooooooooo
Permalink Reply by Carol on November 5, 2010 at 2:11am
Mike,
Good comeback - I agree with you completely. I am so thankful that everyone got out to vote and put the Republicans back in power in PA. This is not only a great thing for the gas companies but also for landowners, mineral owners and the state in general.
I thought this website was called "gomarcellusshale" - I don't understand all of the negativity concerning the Marcellus drilling. I'm sure there are websites out there for all of those who oppose the drilling or think it's such a bad thing.
Glad to see people like you, Mike, on this website.

Carol
Permalink Reply by Carol on November 5, 2010 at 5:59am
I also have personal interests in this industry - as a landowner, mineral owner, and an employee in the industry. Those are three of the reasons I support the Marcellus Shale drilling in addition to it being a benefit to all of PA. In addition, I am a farmer, a hunter, and raise horses. I don't want anything bad to happen to our environment to endanger any of these activities but I am confident that our rules and regulations and proper business practices, by the gas companies, will protect our environment. Granted, there are risks, but there are risks in every industry. I don't understand the people who spend all of their time protesting - do they protest anything and everything that could provide benefits? I hope they all walk home to caves after their protests because, if not, I'm sure they are all utilizing something (cars, electricity, etc) that can harm the environment.

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