Deep Dive: PA Royalties Civil War Between Landowners & Drillers

civil-warFor the past few days MDN has chronicled what we’ve named a royalties civil war happening between Pennsylvania landowners and the Marcellus drilling industry in the state–two groups usually on the same side. The war revolves around royalty checks–and how meager they are (see Righteous Royalty Anger: PA Town Votes to Block Gas Production and Civil War: Bradford PA Escalates Fight with MSC re Royalty Bill). As we’ve previously explained, an oversimplification is landowners maintain that a 1979 PA law guarantees landowners a 12.5% royalty regardless of expenses involved in extracting the gas, and drillers say no, landowners must abide by the contracts they’ve signed and if those contracts allow post-production costs to be deducted before calculating a royalty, the rate may go lower than 12.5%–sometimes to zero and below. Chesapeake Energy is the primary offender, according to landowners. The issue is complex, but at its core is (according to landowners) about fairness. We’ve located two excellent bits of information, one an article, another an email, that explains both sides. The article is from the Houston Harbaugh law firm and does a great job explaining the landowners’ view of the issue, and their desire to pass House Bill (HB) 1391. The email was from the Marcellus Shale Coalition to members of the PA legislature, sent to them last June to explain why, in the opinion of the drilling industry, HB 1391 is unconstitutional and a bad choice. These two views clearly lay out the issues involved so everyone can understand why we are facing a civil war among the ranks…

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