No Fracking Way

FORCED INTO THE FRACKING POOL

by Dory Hippauf on July 3, 2013

poolThe Pennsylvania Legislature and Gov. Tom Corbett are about to bestow another Gift to the Gassers.  Senate Bill 259 is n Act amending the act of July 20, 1979 (P.L.183, No.60), entitled “An act regulating the terms and conditions of certain leases regarding natural gas and oil,” adding definitions; providing for payment information to interest owners for accumulation of proceeds from production, for apportionment and for conflicts; and making editorial changes.”

The PA House vote was 167 Yeas, and 33 Nays.   In the Senate the final vote was 48 yeas, and 2 nays.

The Prime Sponsor of SB 259 was Senator Gene Yaw.

GRANDPA’S OIL/GAS LEASE

NOTE: SB 259 WOULD ONLY IMPACT PEOPLE WITH EXISTING OIL AND GAS LEASES.   If you do not have a gas lease (old or new) you are not being forced to frack…..yet.

It was not uncommon, years and years ago, for someone to lease their land for oil/gas drilling.  This was in the pre-frack frenzy days, and it usually involved CONVENTIONAL WELLS.

The gas industry likes to tell the public it’s been fracking for over 60 years.  However, the so called 60 years of fracking refers to Vertical Low Press Low Volume Conventional wells and not the high pressure, high volume slick water horizontal fracking (also known as unconventional drilling) we are seeing today.

Sixty years ago, the technology for unconventional drilling did not exist.  Sixty some odd years ago when Grandpa signed a gas/lease he was expecting that at some point in time a conventional vertical well would sprout up on his land.

These old leases are causing problems with gas industry.   Old leasers have stopped today’s gas drillers from fracking their land by virtue of the conditions of the old lease contracts.   This has prevented the drillers from forming large contiguous pools of land from which to drill and frack.

With SB 259, the latest gift to gassers, old leasers can not deny access to the gas industry.   In essence, SB 259 forces them to frack.

FRACKED IN MORE WAYS THAN ONE

When Grandpa signed a gas/oil lease the going rate per acre was probably miniscule compared to the per acre rate today as was the royalty rate.   Conditions placed on a potential driller with regards to environmental impact were also minimal.

SB 259 prevents old leasers from renegotiating the terms of the old lease to update it for the current lease rates, royalty payments and other conditions which may impact the property.   Majority of the old leases contained no language specifically prohibiting forced pooling.

OLD LEASERS WILL GET ROYALTIES

Recently there has been some noise made by leasers over the “post production” deductions on their royalty checks.  The amount on the check is way less than what the leasers were told to expect by the landmen and gas corporation when they first signed the lease.

In some cases, leasers are being charged RETROACTIVELY for “post production costs” resulting in receiving a bill instead of a check.  To add salt into the wound, future royalty checks would be withheld until the retroactive post production costs are paid in full.

RELATED: FRACKING ROYALTIES and OTHER NEWS

Depending on the specific payment terms of the pre-frack frenzy lease, old leasers will probably be receiving bills instead of checks, but they and current leasers will have small comfort in now knowing where all those royalty payments are going.

According to Senator Gene Yaw’s web page: Senate Bill 259 (formerly Senate Bill 460 of 2011-12) Division Order for Royalties: Requires gas companies to list all deductions on royalty check pay stubs. Currently, the state of Pennsylvania does not require gas companies to list deductions from royalties paid to the landowner on monthly payments.

(Yaw makes no mention of being forced to frack on his SB 259 blurb).

Wonderful, so now leasers will know why they have tiny checks or bills from the gas corporations.

YAW and FORCED POOLING

SB 259 didn’t just suddenly spring up out of thin air.  It had been in the works as far back as 2010.

Forced Pooling still an issue in Pennsylvania | By Elizabeth Skrapits |TIMES-SHAMROCK WRITER | October 12, 2010

EXCERPT (emphasis added):

However, state Sen. Gene Yaw said that forced pooling has benefits. It benefits the environment, because it will reduce the number of well pads needed to extract gas, he said. Forced pooling also benefits those landowners who want to see gas extracted from their land, but whose neighbors are blocking that extraction from occurring because they don’t want to enter into a gas lease, he said.

However, he said, “I know a significant number of landowners are not in favor of forced pooling.”

Yaw said he is therefore proposing that there be forced pooling in Pennsylvania, but that the forced pooling could only occur on parcels of land on which there is already a gas lease.

Yaw explained that his proposal would come into play if a gas company, such as Chesapeake Energy, wanted to extract gas from a drilling unit, but another gas company had a gas lease on property in the middle of it, like a hole in the middle of doughnut, and did not want to sell its lease to Chesapeake.

Yaw said that under his proposal, the reluctant gas company would be required to allow Chesapeake to extract gas from underneath the property where it had leased the gas rights, and would be compensated by Chesapeake for the extracted gas. And the landowner of the affected parcel would still receive the royalty payments that he is due under his gas lease, Yaw said.

Yaw said that his proposal would solve 90 percent of the issues that forced pooling is trying to address, and at the same time not force people to have gas extracted from underneath their property.

“If people don’t want to lease, I’m not forcing them,” Yaw said. “We can solve a lot of the issues, and if people don’t want to have their land developed individually, they would still have all their property rights.”

But forcing people to frack is exactly what he has done.

Three months later, in January 2011, Yaw introduced a bill to force pool old leases.

Pennsylvania Senator Gene Yaw (R) is already under scrutiny regarding possible conflicts of interest.   Yaw is chair of the Pennsylvania Senate Environmental Resource and Energy Committee, and has proposed a number of bills to encourage even more natural gas drilling in the commonwealth.

Yaw owns land in rural Lycoming County, a hotbed of a whole lotta natural gas drilling, and has leased more than 100 acres to Anadarko Petroleum.   Yaw represents district 23, which includes all of Bradford, LYCOMING, Sullivan and parts of Susquehanna and Union counties.

Yaw has pooh-poohed the notion of a conflict of interest…….but don’t they all?

Makes you wonder how much of the privately held land in Loyalsock State Forest will be forced to frack under the terms of SB 259.

Although SB 259 will only affect current old and new leasers, it does make you think how long before everyone in Pennsylvania will be forced to frack.  All it would take is for Yaw or some other frack friendly legislator to write up a bill and ram it through in the dead of the night.

Yaw will be up for re-election in 2016.   Those living in his district may want to seriously find someone who will represent the people living in the district and not the out-of-state corporations.  Those who currently have Senators and Representatives up for re-election in 2014 should be doing the same.

© 2013 by Dory Hippauf 

{ 1 comment… read it below or add one }

TXsharon July 3, 2013 at 5:05 pm

This grants one set of citizens the power to dictate to other citizens what will happen to their property and what the compensation will be.

SECTION 2.1. APPORTIONMENT.

WHERE AN OPERATOR HAS THE RIGHT TO DEVELOP MULTIPLE CONTIGUOUS LEASES SEPARATELY, THE OPERATOR MAY DEVELOP THOSE LEASES JOINTLY BY HORIZONTAL DRILLING UNLESS EXPRESSLY PROHIBITED BY A LEASE. IN DETERMINING THE ROYALTY WHERE MULTIPLE CONTIGUOUS LEASES ARE DEVELOPED, IN THE ABSENCE OF AN AGREEMENT BY ALL AFFECTED ROYALTY OWNERS, THE PRODUCTION SHALL BE ALLOCATED TO EACH LEASE IN SUCH PROPORTION AS THE OPERATOR REASONABLY DETERMINES TO BE ATTRIBUTABLE TO EACH LEASE.

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