How Frackers Are Screwing Landowners out of Royalities (Investigative Report)

[JPZenger]

http://www.salon.com/2013/08/14/unfair_share_how_oil_and_gas_drillers_avoid_paying_royalties/

Excerpt:

"But manipulation of costs and other data by oil companies is keeping billions of dollars in royalties out of the hands of private and government landholders, an investigation by ProPublica has found.

An analysis of lease agreements, government documents and thousands of pages of court records shows that such underpayments are widespread. Thousands of landowners like Feusner are receiving far less than they expected based on the sales value of gas or oil produced on their property. In some cases, they are being paid virtually nothing at all.

In many cases, lawyers and auditors who specialize in production accounting tell ProPublica energy companies are using complex accounting and business arrangements to skim profits off the sale of resources and increase the expenses charged to landowners."


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The Frackers are saying - I'm sorry we had to drastically shrink your royalty checks without explanation, but we needed to divert the money to pay for all of those TV commercials that tell everyone about the greatness of our company.

[Ednahilda]

1. Can't really say I'm surprised.

You know, when you lie down with dogs, you'll get up with fleas.

Still, if this becomes common knowledge, the gas drillers may find fewer landowners eager to sign away their property for "development".

[Curmudgeoness]

2. The biggest problem is

that the gas companies already have so many leases that they probably will not need to sign many more people up. They got out there and signed so many people before they even got started, then they paid big bucks to the first people so that everyone else would follow. Now they are going to force people with old leases to accept the terms of the old leases----with the blessings of the courts.

So now, they can screw everyone. What do they care if people get pissed now and make a stink.

And I agree with you----not surprised in the least.

[blue neen]

3. Yes.

If a lease on your property was signed, say, in 1903, over a hundred years ago when fracking didn't even exist, the bill Corbett signed in July lets the gas companies frack your property. If your neighbors are doing it, they can frack your property without your permission. They don't have to renegotiate the ancient lease. They don't have to do ANYTHING.

It's called forced pooling. Tom Corbett has sold out the Commonwealth of Pennsylvania, lock, stock, and barrel.

[Ednahilda]

4. I'm hoping that provision lands in court.

I haven't heard anything, but it would be a very good thing if it were to be challenged.

My suspicion is that the legislature may take a look at the royalty rules as well. A lot of screwed lease-holders live in republican-represented districts, too.

Corbett is the worst thing to happen to PA in a very long time.

[blue neen]

5. I contacted our state senator (Republican).

He actually said that he doesn't believe this is "forced pooling". He's known to be in with the oil and gas industries.

It's ridiculous.

[JPZenger]

6. Original definition of forced pooling was giving condemnation powers to frackers

The frackers originally wanted to have the power to force a landowner to give them access to mineral rights if all of the adjacent landowners had signed leases. That was the original definition of forced pooling. After that effort failed, they tried a quieter back door approach to re-interpret ancient mineral rights in a state law to allow them to be used to frack.

At the same time, there have been battles in PA. courts about the definition of "minerals" and whether various types of old leases can be interpreted to allow fracking. That case went up to the PA. Supreme Court recently, and I think the frackers lost. It is a rather complex matter that I do not fully understand. However, that loss probably explains why they got the state law changed.