Royalty owners see fracking up close and like what they see

Thank you to all those who participated in the survey and made this oped possible.

Read below or at the Washington Examiner

By Keith Mauck

With most U.S. oil and natural gas drilling occurring on privately-owned land, it's the royalty owners who most directly experience the impact of drilling and fracking operations.

As the people who have leased land to drilling companies, they monitor the drillers' performance very carefully.

Despite the stories of burning tap water and other exaggerations proffered by environmental groups with a political agenda, the vast majority of royalty owners are supportive of fracking and energy development.

In a survey conducted among the 40,000 royalty-owner members of three websites --GoMarcellusShale.com, EagleFordForum.com, and GoHaynesvilleShale.com -- 71 percent were satisfied or neutral with respect to operations on their land. More than 90 percent said they would lease their property again if given the opportunity.

Furthermore, 75 percent of the respondents were satisfied or neutral over the timeliness and accuracy of their royalty payments from energy production companies.

Many of the royalty owners have described how these payments made it possible for them to pay their bills, improve their standard-of-living, and achieve life-long dreams.

For Paul and Meredith Steurnagel, for example, the monthly natural gas royalty checks were the answer to a prayer. The proceeds paid for completion of his college education and for the adoption of a baby boy for the couple.

“We would not be the family we are without the royalty money,” she said. “That may sound dramatic to read but it’s the truth.”

Royalty owners are a growing segment of U.S. landowners who are sharing in the nation's "shale gale," the term that refers to the extraction of oil and natural gas from shale formations.

The National Association of Royalty Owners estimates there are more than 8.6 million royalty owners in the United States who receive payments from oil and gas companies producing energy on their land.

Natural gas exploration companies alone paid an estimated $21 billion in lease bonus and royalty payments in 2010, when the last analysis was conducted.

Today, as America’s energy boom continues and more wells are drilled, the figure is likely far higher.

Questions have arisen, however, regarding the details of some royalty payments. Royalty owners frequently ask, “Am I getting paid what I am owed?” or, “Why was this deduction subtracted from my payment, and why does it vary drastically from month-to-month?”

This concern surfaced in the survey. Forty-eight percent of the respondents reported being dissatisfied or highly dissatisfied with post-production deductions from their royalty payments.

These sentiments reached a fever pitch in Pennsylvania recently where Gov. Tom Corbett called for an investigation into how one company, Chesapeake Energy, deducts various costs from royalty payments.

Last month, the Pennsylvania Senate passed three bills aimed at improving transparency on deductions and ensuring landowners are justly compensated for their resources.

As royalty owners can attest, oil and natural gas development is helping their families and increasing the nation's prosperity during the otherwise lackluster economic recovery.

The shale gale has created thousands of jobs, greatly increased U.S. energy supplies, and is improving U.S. energy security.

And America’s shale gas production helped to reduce carbon dioxide emissions by 12 percent between 2005 and 2012.

Yet many environmental groups continue to criticize domestic oil and gas production while ignoring the benefits.

As a nation, we should listen less to them and pay more attention to the royalty owners who witness first-hand the plusses and minuses of energy development every day.

Keith Mauck is publisher of GoMarcellusShale.com, EagleFordForum.com, and GoHaynesvilleShale.com.

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Permalink Reply by frank speaker on May 20, 2014 at 2:21am

If 71% were neutral or satisfied how many were neutral or dissatisfied? This is not an election, where one needs  50% + 1 to win. If 21% are dissatisfied that indicates serious problems.

Permalink Reply by Bill Barnaby on May 20, 2014 at 2:27am

That 31% is most likely people who got ripped off on their oil lease, which they should be upset, I imagine a few percent goes out to those people who are tired of the lies by the land men etc. Naturally a few also hate to see the world change around them (pipeline going in etc.).

Permalink Reply by Keith Mauck (Site Publisher) on May 20, 2014 at 2:35am

I've tried reconciling the 90% figure with the 71% figure. The threshold for being happy with it on your land is much higher than if it's not...I guess the NIMBY issue. I think Bill starts to get at some of the likely issues. Either way, a follow up survey seems to be in order to dig deeper. 71% is certainly higher that anti-crackers might hope.

Permalink Reply by frank speaker on May 20, 2014 at 2:53am

The threshold for being happy is not higher, but lower if its on your land I would think, because you're getting paid for it. If a person moved to the country for tranquility and then has to listen to hundreds of oil trucks go by he's going to feel mighty unhappy unless each of those trucks represent his wealth. The survey needs to poll all those affected.

Permalink Reply by Keith Mauck (Site Publisher) on May 21, 2014 at 3:23am

If you value money over the health of your family and importance of your property then I guess it could be lower. That's a fairly low level of confidence in fellow landowners. The problem with that reasoning is that you have to get into the heads of all those involved; because there is money & power coming out on both sides of this debate.

I don't think this is the proper, or most affective, venue to poll all those effective. That sounds like a job for a major media outlet or someone with some deep pockets. 

Permalink Reply by Paul Heckbert on May 20, 2014 at 3:00am

To Keith Mauck: the headline on the story "royalty owners like what they see" is not supported by the survey results that you cite "71 percent were satisfied or neutral with respect to operations on their land" because you didn't tell us how many people were dissatisfied or neutral. Was it above or below 71%? It would seem that you're misinterpreting the data if you're counting a neutral person as "liking what they see".

Could you give us the raw results of the survey please: reproduce the questions in full, explain how the survey was publicized and conducted, and give all the results in a table, so we can verify your conclusions? How many people responded to the survey? You didn't say, although you threw out a big number of questionable relevance: "in a survey conducted among the 40,000 royalty-owner members of three websites".

Permalink Reply by Keith Mauck (Site Publisher) on May 20, 2014 at 3:52am

Paul, as you may, or may not, know authors of opeds rarely title their own submissions; that goes to the editors of the respective publication. I believe, I would have given it a different title, i.e., "The Good and the Bad." In addition to the 71%, the 48% dissatisfaction on royalty deductions is terrible. I believe the editors were looking at the overall figure of 90% in giving it the title. That 90% figure tells me that when considering all the issues, the benefits outweigh the grievances. That's really the big conclusion.

I think you can cherry pick anything apart with this stat or that stat. The piece's focus wasn't only pertaining to people with drilling operations on their property. As I mentioned above, that could be a separate survey.

40,000 is relevant in that its the largest online gathering of people directly involved in shale plays. The opportunity to complete the survey went before all 3 sites. Before I answer how many people answered the survey, how many people do you think it takes to give credence to its findings?

Permalink Reply by Keith Mauck (Site Publisher) on May 20, 2014 at 4:02am

I think this is a helpful guide for generally accepted margin of error guidelines.

Permalink Reply by frank speaker on May 20, 2014 at 5:07am

This would be the margin of error only for a survey whose respondents were selected at rand om from the entire population studied. Your respondents were those who volunteered to answer so they don't represent the population as a whole within the margin of error.

Permalink Reply by Keith Mauck (Site Publisher) on May 20, 2014 at 6:44am

I believe if we start with the knowledge that the population studied is a narrowed cross section (mineral owners on our networks); the above margin of error can work.

The survey (and the oped) states what it represents and nothing more; a survey across our network of sites. That's the population studied and the survey achieves that purpose it seems to me.

I see your point in that if someone is really peeved about something they are likely to be more motivated to participate than if they are merely satisfied and if they are really thrilled about the theme of the survey, they are more likely to participate.

Permalink Reply by frank speaker on May 20, 2014 at 9:50am

I have to disagree that the oped states only what the survey represents and nothing more.  It seems to suggest that people who are supportive of fracking and energy development  and who haven't had a problem with activity on their land are sanguine about the issues concerning water pollution and conservation and other environmental issues. From talking to all my neighbors I know this not to be true. Yet these issues are put off as being from people with a political agenda, whereas those who have issue with their royalty payments have legitimate problems. It took plenty of political action to get the Pennsylvania  legislature to act to this point, and it will take a lot more to achieve more than mere window dressing.

You can count me as one of the 90% who would still sign a lease, and I certainly support energy development, but that does not make me at all comfortable with the impact of drilling and fracking operations as the article implies, nor have I been able to closely monitor these operations as the article states.

Permalink Reply by Keith Mauck (Site Publisher) on May 21, 2014 at 3:27am

What I meant by "represents" is that it covers the mentioned websites. Are your neighbors members of this website (if not please send them an invite).

Many times a survey leads to another survey (more questions) because you can't hit every topic in one survey, right? I see several potential follow up questions in your analysis. 

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