June 27--HARRISBURG -- A bill that would forbid natural gas producers from paying leaseholders a smaller royalty than the state minimum 12.5 percent moved out of a House committee on Monday.
The Environmental Resources and Energy committee voted 20-7 to advance House Bill 1391 to the full chamber, where it is not likely to see action until at least the fall.
Natural gas producers commonly deduct a leaseholder's share of expenses involved in getting gas to market, but those deductions can shrink monthly royalty checks well below the state minimum royalty, which was established by a nearly 40-year-old state law.
In some cases, royalty owners receive nothing or end up with a loss from the monthly sale of large volumes of gas from wells on their land, the bill's sponsor, Rep. Garth Everett, R-Lycoming, said.
"I don't believe that anybody in Pennsylvania signed a lease expecting that they would have to pay the gas company to take the gas off their property," he said.
The minimum royalty requirement would apply to both existing and future leases for unconventional gas production from the Marcellus and Utica shales. Some gas leases require landowners to share in the costs of compressing, transporting and marketing gas after it leaves a well, while other leases are silent on the matter or prohibit it.
Critics of the bill say it is unconstitutional because it interferes with current contracts and gas companies have said they will file lawsuits to challenge it if it becomes law.
"This bill does nothing to help Pennsylvania workers or royalty owners other than ensure protracted litigation over the bill's constitutionality for years to come," the North Fayette-based Marcellus Shale Coalition said in a statement.
Royalty owners' advocates have made the bill a priority and were happy to see it advance. They say contract terms that allow post-production costs to reduce royalties below 12.5 percent are not valid under the law.
"It's nothing but theft and it's widespread," said Jackie Root, president of the Pennsylvania chapter of the National Association of Royalty Owners.
Mr. Everett said the full chamber is not likely to take up the bill until at least September. Legislators are expected to amend the bill when it is considered by the full House.
Laura Legere: llegere@post-gazette.com.
___
(c)2016 the Pittsburgh Post-Gazette
Visit the Pittsburgh Post-Gazette at www.post-gazette.com
Distributed by Tribune Content Agency, LLC.
DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer
Source: Equities.com News
(June 27, 2016 - 7:10 PM EDT)
News by QuoteMedia
www.quotemedia.com
