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Final bills address Marcellus lease issues

HARRISBURG — Marcellus Shale leaseholders would have more protection in dealing with drillers under two new laws signed Wednesday by Gov. Tom Corbett.

One measure will require Marcellus well drillers to file monthly production reports with the state Department of Environmental Protection, replacing a semi-annual reporting requirement.

The second measure will require drillers to provide “surrender” documents to a leaseholder once a lease expires or is terminated.

Both bills were sponsored by Rep. Tina Pickett, R-110, Towanda. and won final passage in the last days of the legislative session that ended Monday.

Having monthly production reports will aid leaseholders by giving them access to more timely information on well production, Ms. Pickett said Wednesday.

That should enable the leaseholders to determine if they are receiving proper value with royalty payments.

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The lease expiration bill is designed to clear up confusion about when gas leases expire. This is important if a landowner wants to sign a lease with another driller, said Ms. Pickett.

Under the bill, a driller must provide a document saying it surrenders all interests under a lease within 30 days of termination, cancellation or expiration. The document would be recorded by the county recorder of deeds.

Without a formal document, leaseholders can be left up in the air about their lease status if approached with another lease offer, said Ms. Pickett.

“They end up with no bargaining position,” she said.

The two bills will provide more accountability and transparency for leaseholders, said Rep. Matt Baker, R-68, Wellsboro.

However, another closely watched bill supported by gas leaseholders in Northeast Pennsylvania didn’t make it to the session finish line.

That legislation would have limited what Marcellus drillers can deduct in post-production costs from royalty payments. The bill stems from a wave of complaints from leaseholders in Bradford, Susquehanna and Lycoming counties about the business practices of Chesapeake Energy LLC.

Leaseholders have complained that the deductions have dramatically reduced royalty payments in some cases.

The farthest the bill got was a House floor debate last spring, when lawmakers from western Pennsylvania sought to amend it over objections from Northeast region lawmakers.

Ms. Pickett and Mr. Baker said efforts will be made to pass the bill next session.

“We need to get more support to get it done,” said Mr. Baker.