New Castle News


August 3, 2013

Our Opinion: New law gives drillers edge over landowners


Not all oil and gas leases are created equal.
Just a few years ago, such a lease was of limited value in Pennsylvania. Companies would pay relatively token sums per acre to landowners in order to obtain the rights to drill. The small payments reflected the fact there may not be much worth drilling under the land, and actual extraction might never even take place.
Recently, however, hydraulic fracturing has come to Pennsylvania. This is a technique that involves deep drilling and the fracturing of rock strata previously unreachable. It has opened up vast amounts of natural gas in the Marcellus Shale.
As a result, there has been a rush of sorts to sign oil and gas leases for available land, with payments in the thousands per acre commonplace — just to reserve the rights to drill.
The situation has given many landowners in the commonwealth a substantial source of revenue. But in other cases, disputes have arisen over old leases still in existence that had been acquired with nominal amounts of cash. These property owners may miss out on substantial revenue.
However, the fracking process of deep drilling requires large parcels of leased land to make such an undertaking viable. Typically, multiple adjoining properties must be covered by leases, something that current agreements address.
But old leases that are still in force don’t necessarily allow such multi-property drilling operations. This gives property owners some leverage in negotiations with drillers to either receive more payments or insist on other conditions during fracking operations.
That may no longer be the case. A new state law related to drilling activities appears to eliminate this bargaining chip for properties owners. Basically, if there is no language restricting the combining of leases into a single drilling operation, silence will now mean consent.
This represents a big benefit for drillers, while landowners are left in the lurch. Interestingly, this language was inserted into the bill with precious little public debate. Some critics contend most lawmakers didn’t even know they were approving it.

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