Kane eyes gas royalty check complaints

| Saturday, Feb. 15, 2014, 6:21 p.m.

HARRISBURG — Prompted by a state senator from Northern Pennsylvania, state Attorney General Kathleen Kane is reviewing whether her office has jurisdiction to investigate complaints into the costs that natural gas exploration giant Chesapeake Energy Corp. deducts before it pays royalties to the owners of land.

A Kane spokesman said on Saturday that her office is undertaking the review at the request of Lycoming County Sen. Gene Yaw.

Chesapeake Energy spokesman Gordon Pennoyer declined to comment on Saturday on the complaints and to explain which costs Chesapeake deducts.

Yaw said the deductions sometimes exceed the amount of the royalty check and that one landowner complained it is costing residents money to have gas extracted from their property.

“The words commonly used by landowners to describe what is happening are ‘cheating,' ‘stealing' and ‘fraud,' ” Yaw wrote.

In a separate letter on Thursday, Gov. Tom Corbett wrote to Chesapeake Energy's president and CEO, Doug Lawler, suggesting that he has complained to Lawler several times about the deduction of post-production costs.

“Deduction of post-production costs, in a manner which seemingly few if any other operators in Pennsylvania utilize, has caused a significant erosion of the trust and goodwill the natural gas industry has established with Pennsylvania leaseholders and local communities,” Corbett wrote.

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