Guest Post: A Possible Solution for the PA Royalty Issue
MDN is pleased to bring you another guest post from our very good friend Chris Acker. Chris is a geological engineer with an MBA. He grew up in the oil fields of Venezuela where his father, a petroleum engineer, was a drilling contractor for all the major players, onshore and off. Chris’ interest in energy economics and policy found him working for Exxon, Petroleum Industry Research Associates and Petroleos de Venezuela. He bought a parcel of land in the PA countryside twenty-five years ago and later semi-retired to work on antique pianos (see www.PianoGrands.com). A few years ago, it was established that Chris’ property in Susquehanna County sits atop one of the Marcellus shale’s most prolific areas. He leased with Cabot Oil & Gas and has a well sitting off his front porch not more than 200 yards away. Chris is now happily engaged once again in energy economics, with an emphasis, naturally, on gas. Chris is MDN editor Jim Willis’ right arm when it comes to scanning for stories, something Jim is profoundly grateful for. Chris sent Jim a note about the royalty issue, just a couple of paragraphs–and Jim found more wisdom in his few sentences than he has seen to date. So Jim asked Chris for permission to post his pearls of wisdom, and Chris decided to expand it. Below is a very thoughtful, intelligent, useful post on the royalty issue currently causing a schism between landowners and drillers in the Keystone State. We encourage everyone with an interest in this issue to read it. It contains a few new ideas we’ve not heard either side float–ideas that may help us find a way out of the current mess…
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Yesterday MDN reported the big story that Rice Energy is paying $2.7 billion to buy the assets of Vantage Energy (see 
The legal beagles at the Norton Rose Fulbright law firm recently issued a post on their Hydraulic Fracking Blog with updates on five important bills currently before the PA House and Senate that will affect the Marcellus industry (drillers, midstreamers and landowners)–with details for what’s in the bills and the status for each bill. Likely the most controversial of the bills is House Bill (HB) 1391, which would guarantee PA landowners a 12.5% minimum royalty regardless of post-production costs. That bill is due for a procedural vote today. Other bills are in bottled up in various committees where they may or may not make it out for a full vote. The PA House is in session today, tomorrow, and then Oct 17, 18, 19, 24, 25, 26, and Nov 14, 15. That’s it–just 10 more days in session before the end of the year. The PA Senate is in session today, tomorrow, and then Oct 17, 18, 19, 24, 25, 26. Just 8 more days for the Senate. So whatever is going to happen must happen quickly. Here’s a rundown on the five important bills, including HB 1391 (“Amendments to Oil and Gas Lease Act”), HB 2275 (“Changes to Environmental Quality Board membership”), HB 2277 (“Amendment to Oil & Gas Act related to bonding requirements”), HB 2319 (“Amendment to Oil & Gas Lease Act”), and HB 2361 (“Pennsylvania Turnpike Right-of-Way Act”)…
Last Friday MDN ran a guest post from an executive who works for a Pennsylvania exploration and production company (E&P, what we call a “driller” here on MDN). In the post, titled 
Contrary to irrational fossil fuel haters and the lies they spread about pipeline companies, those companies do listen and work with local communities and individual landowners to tweak the route of a proposed pipeline in an effort to minimize impacts. Case in point: PennEast Pipeline is a $1 billion, 118-mile, primarily 36-inch pipeline that will get built from Dallas (Luzerne County), PA to Transco’s pipeline interconnection near Pennington (Mercer County), NJ. It’s being vigorously opposed by anti-drillers including THE Delaware Riverkeeper, the Sierra Clubbers and others. Last Friday PennEast filed 33 changes to the proposed route with the Federal Energy Regulatory Commission (FERC), to accommodate landowners and communities. This is how adults behave, unlike the childish, petulant, spoiled children who run organizations like Riverkeeper and the Sierra Club. PennEast listened, reflected, and changed. The response from the antis? “You can’t build it. CAN’T CAN’T CAN’T CAN’T CAN’T.” There is no reasoning with people who are un-reasonable. Here’s a description of the changes PennEast made to the route through PA and NJ…
With apologies to Meghan Trainor, the second and final day at Shale Insight was “All about that Trump, bout that Trump–no Hillary.” However, as exciting as it was to hear The Donald (we’ll share the notes we took during his speech below), we heard an even better speaker yesterday: A young man (kid, really) by the name of Alex Epstein, author of the book “The Moral Case for Fossil Fuels” and founder of the Center for Industrial Progress. As we did yesterday, we will give you our highlights and impressions of sitting in on several of the days main sessions, followed by a plethora of links to stories from reporters who were there covering the event–mostly those there to cover the Trump speech. We also link to the full text of The Donald’s speech below. Buckle up! Here we go…
A Williams Transco Leidy pipeline ruptured in Lycoming County, PA in June 2015 (see 
The benefits of shale energy are almost too numerous to list. Contrary to the ninny nannies who spit and spout and preen about yelling the sky is falling if we frack one more well–the OPPOSITE is the truth. Shale is GREAT for America, in so many ways. Channeling our inner Donald Trump, “It’s very very great. So great you won’t believe how great it is. You’re gonna love it!” Here’s just one more way shale is great. A researcher from Clemson University (in South Carolina) poured over mortgage data for the state of Pennsylvania. As you know, not all of PA is blessed with being located in the Marcellus Shale–but much of it is. The intrepid Clemson researcher found in reviewing records from 2004 to 2011 that those with mortgages who live in areas where there is Marcellus Shale defaulted on those mortgages 58% LESS than the statewide average. That is, shale means there’s more money to pay bills, a mortgage being one of them. Might we say that the Marcellus can literally save the family farm? Yes, we can say it, and back it up with data! The Clemson researcher also found living in a shale region boosts your FICO credit score…
One of the interesting tidbits to come out of yesterday’s first day of the Shale Insight conference in Pittsburgh was an off-the-cuff remark from Pennsylvania Gov. Tom Wolf’s special assistant for infrastructure, Yesenia Bane, who said that Gov. Wolf is “willing to talk” with New York Gov. Andrew Cuomo to ask him to approve the Williams Constitution Pipeline project in the Empire State. Bane said Wolf has met with Williams and other stakeholders in the Constitution project, and apparently Wolf was impressed enough that he’s willing to add his own voice to those calling for an approval of the Constitution. Democrat on Democrat. Mano a mano. Should be interesting, if Wolf ever gets up the nerve to do it…
Canadian driller and midstream company Epsilon Energy had a shareholder rebellion in 2013 and threw out the sitting board of directors (see 
The Pennsylvania Dept. of Conservation and Natural Resources (DCNR) used to, once upon a time, lease a small fraction of the land under its oversight to allow Marcellus Shale drilling. And like any private landowner, the DCNR received bonus payments when leasing, and royalties when the gas began to flow. In fact, when Marcellus drilling had hit its peak in 2013, the DCNR received almost enough just from bonuses and royalties they were nearly self-funding (see