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Scott J. Waldron, www.scottjwaldron.com

Pa. shale gas owners press for clear data on royalty statements

Property owners who collect royalty checks from shale gas drillers are not satisfied with scoring just one legislative victory last year that requires the companies to report well production information monthly.

“We think this was a huge improvement,” Jackie Root, president of the Pennsylvania chapter of the National Association of Royalty Owners, said as the change from six-month intervals began to show up in state reports in March. “We have a long way to go, though.”

Owners want uniform language on royalty statements and more help in guaranteeing that they are getting paid fairly for every cubic foot of gas flowing through wells in which they have a stake.

During a meeting last week in North Franklin — the association’s first town hall in Washington County — Root and fellow leaders asked about 35 landowners to press lawmakers for more changes.

Some have heard the call.

The state Senate in January passed a bill that would require companies to allow royalty owners to review production figures when requested. The legislation calls for royalty statements to include at least 10 standard pieces of information, such as total gas production in thousands of cubic feet, the price the company got for that gas and a unique identifier for each well.

The measure, sponsored by Sen. Gene Yaw, R-Williamsport, awaits action in the House.

“We seriously need to look at verification of these numbers,” said Rep. Tina Pickett, R-Bradford County, who sponsored the law that requires companies to report to the state how much gas and liquids each shale well produces monthly.

Energy companies have gotten complaints and lawsuits over claims of shortchanging royalty owners. Chesapeake Energy, the subject of a state investigation of royalty payments, settled one federal lawsuit; others are pending.

The change in reporting was a hit with property owners looking to reconcile monthly royalty checks with production amounts, Pickett, Root and others said. But shortcomings remain.

In related news, O&G royalty bills okayed by Pennsylvania state senate.

“It’s not an audit,” Root said, noting that companies self-report their data to a website maintained by the Department of Environmental Protection.

The DEP warns visitors to the site that it does not verify the figures and “makes no claims, promises or guarantees regarding the accuracy, completeness or timeliness of the operators’ data that DEP is required to post.”

The department has no set schedule of penalties that companies must pay if they file data late or fail to do so, said spokeswoman Amanda Witman.

“DEP is in the process of reviewing the penalty matrix to establish specific criteria for calculating penalties,” she said.

State College-based Rex Energy showed no production data for March on the DEP website nearly two weeks after the May 15 deadline for reporting. When notified by the Tribune-Review, the company said a technical glitch was to blame, and the data appeared on the site Friday.

DEP, as an environmental regulator, might not be the best agency to hold responsibility for an accounting function such as collecting and reporting the data, Pickett said.

“Maybe we need a niche subset within (the Department of) Revenue, someone who specializes in these numbers,” she said.

When asked whether his agency was the proper department for the task, acting Secretary John Quigley said, “We will abide by that unless or until the law is changed.

“I think the industry should meet its responsibility to report, and over time if there’s another course that needs to be discussed … that will be up to the governor and General Assembly.”

Such data collection falls to environmental regulators in other gas-producing states, Root noted. His priority is getting legislation passed that would bring uniformity to language and codes that companies use in royalty statements and reducing the fees they can deduct from payments.

 

This article was written by DAVID CONTI from The Pittsburgh Tribune-Review and was legally licensed through the NewsCred publisher network.

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