Civil War: Bradford PA Escalates Fight with MSC re Royalty Bill
Yesterday MDN reported that Wilmot Township, located in one of the most-drilled counties in Pennsylvania (Bradford County) has taken the unusual step of demanding that drillers (in particular Chesapeake Energy) stop flowing natural gas from drilled wells unless/until they start paying landowners a minimum 12.5% royalty for the gas produced (see Righteous Royalty Anger: PA Town Votes to Block Gas Production). In August MDN reported that at the county level in Bradford County, the same issue has turned personal and somewhat nasty–with Bradford County Commissioners chairman Doug McLinko (a big pro-gas guy) blaming the Marcellus Shale Coalition and its leader David Spigelmyer for blocking a vote on House Bill (HB) 1391 that would rectify the royalty issue (see PA Landowners, Drillers Fight over HB 1391 Minimum Royalty Bill). McLinko called Spigelmyer a “reverse Robin Hood” last month. The fight continues and now escalates. Today, McLinko and the other commissioners in Bradford are set to vote on hiring a public relations firm to produce several short videos so the county can use those videos in a state and national PR campaign. McLinko says the MSC’s lobbying against royalty reform has cost Bradford County “probably $100 million” and the new campaign aims to get HB 1391, or something like it, passed…
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Yesterday MDN reported the story that Dominion Transmission has decided to lock out union members from working at their jobs in Dominion installations over a contract dispute (see 
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 
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…
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