Pa. Farm Bureau calls for passage of gas royalty legislation

Pennsylvania’s farm lobby is throwing its support behind a bill aimed at limiting the ability of gas companies to withhold royalty money from landowners.
As StateImpact Pennsylvania has previously reported, the state’s largest driller– Chesapeake Energy– has been widely accused of shortchanging landowners who have leased their property for gas development.
A bill currently in the state House would amend Pennsylvania’s 1979 Guaranteed Minimum Royalty Act. It’s an effort to protect landowners from royalty deductions known as “post-production costs”– the expenses incurred in processing and transporting gas.
From WITF:

Farm Bureau President Carl Shaffer says some members have explained how they’re losing money they say is legally theirs.
Jim Gore is a farmer in Bradford County, and has documentation revealing about a 15 percent reduction in his overall royalty check in 2013 for so-called post production costs.
The statements show Chesapeake Energy, the state’s biggest driller, has taken out the most — about 20 percent.
“That hurts. It really does. I don’t know how to go about trying to fight this and I’ve even looked through my lease and the addendums at the end of my lease say they can’t do this.”
Three other oil and gas companies own parts of the lease. Anadarko took out about 14 percent, according to the documentation, while the two others either took out no costs or actually paid Gore back for previous costs.
Armed with stories like Gore’s, the Farm Bureau is pushing for an amendment to state law that would guarantee a minimum of 12.5 percent of the money companies made selling gas, no matter the post production costs.
“12.5 percent should be right at the well head. Right where it comes out of the ground. I have no more control over it after that. That’s my whole point.”

The Pennsylvania Chapter of the National Association of Royalty Owners (NARO-PA) is also lobbying for the bill.
“We need to draft clear, concise, gas law that protects royalty owners, the people who are on the front lines of energy independence,” says NARO-PA Vice President Trevor Walczak.
The state’s main gas industry trade group, the Marcellus Shale Coalition, opposes the measure– arguing it would be unconstitutional because it alters terms of existing contracts.
“There is nothing improper about post-production costs that warrant government intervention in the contract negotiations of private parties,” MSC’s Vice President of Government Affairs Jim Welty wrote in a recent memo to legislators.
The bill was approved by the House Environmental Resources and Energy committee last month and currently awaits a vote in the full House.

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