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Drillers' deductions

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Sunday, Nov. 3, 2013, 9:00 p.m.
 

Drillers' deductions

The editorial “Forced pooling? Change the law” (Oct. 9 and TribLIVE.com) is right. The 1961 law that allows “forced pooling” for Utica shale natural gas is trashing landowners' property rights, just as the 2010 Pennsylvania Supreme Court ruling in Kilmer v. Elexco has decimated the intent of Pennsylvania's 1979 Guaranteed Minimum Royalty Act to protect landowners from unfair or deceptive drilling company leases and guarantee them 12.5-percent minimum royalty payments.

However, the Supreme Court is allowing drilling companies to take almost unlimited deductions from royalties for post-wellhead costs (gathering, transportation, marketing, etc.), which are almost impossible for people outside the gas industry to fathom or verify. Rapacious, mostly out-of-state, drilling companies are now taking ever-increasing deductions, reportedly sometimes as much as 80 percent to 90 percent of royalties.

Landowners, mostly farmers, who leased their gas rights for shallow wells before anyone outside the gas industry ever envisioned Marcellus deep-well and horizontal drilling, are now locked into 12.5-percent leases from which greater and greater post-wellhead deductions are being taken.

Gerald S. Schiller

Frazer

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