Righteous Royalty Anger: PA Town Votes to Block Gas Production
Residents in Wilmot Township (Bradford County), PA are mad as hell over shorted royalty checks–and they aren’t taking it anymore. Yesterday Wilmot Township’s three supervisors passed a resolution demanding, “production be discontinued from wells where landowners are having their royalty checks diminished to nothing or nearly nothing.” That is, they want to block natural gas production from existing shale wells drilled in a town smack in the middle of one of the most-drilled places in Pennsylvania. We’ve long chronicled the fight between landowners and some (certainly not all) drillers who are screwing them out of royalty payments by claiming inflated post-production costs. The issue first came to prominence with claims by landowners signed with Chesapeake Energy, who claimed Chessy had cut a sweetheart deal with its former midstream company (Access Midstream) whereby Access bumped up its charges for piping gas which Chesapeake claimed as an expense and deducted from royalty checks, and then Access turned around and invested big money into the old mothership company (see Chesapeake Shafting Landowners out of Royalties Mess Gets Messier). A group of Bradford County landowners were among the first to sue Chesapeake over the scheme (see Bradford County, PA Landowners Sue Chesapeake over Royalties). Several bills have been offered over the past few years to correct the situation by legislating that landowners get a minimum 12.5% royalty for any gas produced, regardless of post-production costs. The most recent effort, which has come the closest to passing, is House Bill (HB) 1391. However, the Marcellus industry has steadfastly lobbied against it (see PA Landowners, Drillers Fight over HB 1391 Minimum Royalty Bill). Exasperated landowners in Wilmot have had enough and have taken the symbolic (but likely unenforceable) step of telling drillers to turn off their spigots until they’re ready to conform to a 1979 PA law that guarantees landowners a 12.5% minimum royalty for oil and gas production…
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We scored a copy of a refreshingly honest (blunt) assessment of the Marcellus industry in Pennsylvania. The letter was written by the Marcellus Shale Coalition’s vice president of government affairs, James Welty. It’s dated August 29 and was written and sent to all Pennsylvania legislators in both the House and Senate. The legislators have been enjoying themselves on summer holiday break and are now returning to work, with just a couple of weeks left in the legislative session. The PA House is in session for 2 1/2 more weeks and the Senate for 1 1/2 weeks (final day is Nov. 15 for each). There’s not much time left to handle the people’s business in 2016. Welty’s letter to the legislators is a frank assessment of the current down market faced by PA’s shale drillers. Welty tells lawmakers that recently adopted Article 78a rules will mean drillers spend an additional $2 million per well to drill–a budget buster for many drillers. He also says PA has the highest effective tax rate on drilling in the country at 12.3%. Although PA doesn’t call it a severance tax, it essentially is a severance tax and costs more than any other oil and gas state, contrary to the lies by Democrats who lust for more money to give away. Give this frank assessment of our beloved industry a read–it’s worth your time to see how the industry characterizes the current landscape in PA…
In the past we’ve been pretty critical of the Pennsylvania Independent Fiscal Office (IFO). It claims to provide revenue projections for use in the state budget process along with “impartial and timely analysis of fiscal, economic and budgetary issues to assist Commonwealth residents and the General Assembly in their evaluation of policy decisions.” It’s been our observation the IFO is populated with partisan Democrats. However, we have to acknowledge lately their analysis work, at least with regard to the Marcellus industry, has been pretty accurate (see 
A great article in Investor’s Business Daily explores the link between shale gas and the “explosive expansion” of the U.S. petrochemical industry. Part of the petchem supply chain is finding a cheap source of ethylene, the raw material used in making all sorts of plastics products. Manufacturers get ethylene from ethane cracker plants. The article discusses that link, and the reasons why Shell chose to locate their new multi-billion dollar ethane cracker plant near Pittsburgh. As you can guess, economics play a major role in such a decision. Here are the specific economics that convinced Shell that PA is a good bet…
Imagine this: a backhoe sinks its bucket into the ground, scoops out some dirt, and the dirt is used to build a road. No big deal. Now imagine this, a very long drill goes down into the earth and digs out dirt. Because the dirt comes from deep down, some of it may be mixed with minerals not found near the surface, so a company processes the deep down dirt to remove any extra minerals, and the dirt is then essentially the same chemical composition as the dirt from near the surface–and it’s used to build a road. The dirt from deep down is called drill cuttings. Environmental Nazis repeat the magical incantation, “It’s been fracked!” and therefore they begin to hyperventilate that “fracked waste” is being used to build a road. Our example illustrates antis’ intellectual dishonesty about what drill cuttings are. When we spotted a story that a private hunting club in Lycoming County (Williamsport area) in PA will build a new road using processed drill cuttings, and the spin job done by the anti-drilling shills at the taxpayer-funded PBS StateImpact Pennsylvania, we had to laugh…
In June MDN reported on yet another new unlegislated law (called a “rule”) issued by the rogue federal Environmental Protection Agency (EPA) that bans the disposal of wastewater from oil and gas drilling via public wastewater/sewage treatment plants (see 
Recently a group of 12 Pennsylvania state representatives held a hearing in Armstrong County, PA on the topic of separate regulations for PA’s small conventional vs large shale drillers. You may recall that new drilling rules from the state Dept. of Environmental Protection (DEP) have been approved for shale drillers, called Article 78a, but not for conventional drillers, called Article 78 (see 
Last week MDN reported that Dennis Davin, Secretary of the Pennsylvania Department of Community and Economic Development (DCED) had gone on a roadshow to three counties that will be most affected by Shell’s ethane cracker plant planned for Beaver County (see 
The Donald is coming to Steel City to talk to frackers. Last Friday the Marcellus Shale Coalition, organizers and operators of the top notch Shale Insight conference and trade show held each year, announced that they had extended an invitation to both Donald Trump and Hillary Clinton to speak at this year’s event being held in Pittsburgh on September 21 & 22. The Donald said “yes” and Hillary said “no.” The Donald supports fossil fuels and their safe extraction and what they can do for America’s energy security. Hillary doesn’t. Need we say more? Oh, one more thing: MDN is happy to announce we will have a booth at this year’s Shale Insight. More on that in future posts. For now, here’s the exciting news that The Donald will address attendees at Shale Insight in less than a month…