Unfair Share: How Oil and Gas Drillers Avoid Paying Royalties

by Abrahm Lustgarten
ProPublica, Aug. 13, 2013

"Don Feusner ran dairy cattle on his 370-acre slice of northern Pennsylvania until he could no longer turn a profit by farming. Then, at age 60, he sold all but a few Angus and aimed for a comfortable retirement on money from drilling his land for natural gas instead.
It seemed promising. Two wells drilled on his lease hit as sweet a spot as the Marcellus shale could offer – tens of millions of cubic feet of natural gas gushed forth. Last December, he received a check for $8,506 for a month’s share of the gas.

Then one day in April, Feusner ripped open his royalty envelope to find that while his wells were still producing the same amount of gas, the gusher of cash had slowed. His eyes cascaded down the page to his monthly balance at the bottom: $1,690.  Chesapeake Energy, the company that drilled his wells, was withholding almost 90 percent of Feusner’s share of the income to cover unspecified “gathering” expenses and it wasn’t explaining why."

Read the article here.

Dr. Janette Barth: To Frack Or Not To Frack

Published on Apr 16, 2013

Recorded Tuesday, April 9, 2013 at Grace Episcopal Church, Elmira, NY

Dr. Jannette Barth is an economist with Pepacton Institute LLC in Croton-on-Hudson, a research and consulting organization. Since 1974, Dr. Barth has been estimating regional and local economic impacts in the United States and the United Kingdom. As an example of her work, Dr. Barth was retained to estimate economic impacts of the 9/11 terrorist attacks. Former positions include Chief Economist, New York Metropolitan Transportation Authority, and Consultant, Chase Econometrics/Interactive Data Corporation. Barth has lectured and written extensively on the economic impacts of shale gas development, including a recent peer-reviewed article in the journal, New Solutions.

Decisions related to fracking should be considered with the safety and well-being of Elmira and surrounding area residents in mind. We encourage you to attend this key presentation to hear leading experts discuss the economic, health, environment, and socio-cultural effects that the gas industry has on communities. Those who attend will have an opportunity to address questions and concerns directly to the presenters. The forum offers a rare opportunity for Elmira and area residents, elected officials, and spiritual leaders to become more informed so that they can better answer the question for themselves: To frack or not to frack.

Natural Gas Drilling: Resource Curse?

"When it comes to long-term economic development, there’s ample
evidence to suggest that counties where drilling occurs will be in
worse shape down the road, and that even during the drilling and
producing phases, there will be a few winners and likely a whole lot
of losers, especially among lower-income individuals. Furthermore, the
areas targeted for drilling are often the ones already struggling
economically, which means less wealthy individuals and communities may
become further impoverished."

I have heard quite often, particularly from Bradford County (PA) residents who love gas drilling, that I should mind my own business, since I don't live in the county.  They say gas drilling is the best thing that ever happened to them.  They think it is selfish of me to want to block their economic advantage for the sake of environmental and health concerns.  This article may cast some light on just how advantageous gas drilling will turn out to be, especially for poor, rural areas even though people there may see gas drilling as a way to prosperity in the short term at least.  If the people who were visited by the landmen and women a few years back had been well off financially, would they have signed those gas leases?

Read the article here.

The Questionable Economics of Shale Gas

Photo: “American Gasland,” artwork by River Side (marcellusprotest/Flickr)

So is unconventional tight gas going to generate enormous profits?  Isn't that the message that we hear frequently?  This article by Chris Nelder (smartplanet.com/blog) casts serious doubt about the economic benefits of natural gas drilling. Nelder claims that, our shale gas resources, "while much ballyhooed in the press, are far from certain."  We have only an 11-year supply of gas on the books, but beyond that, the future of natural gas is only "probable, possible, and speculative."  The US, he writes, could become a net gas importer by 2035.  Admittedly, he says, we are producing a lot of gas for the moment, but it may come at the cost of profitability.

The article asserts that on an averaged annual basis, shale has been unprofitable since 2008.  As to why there is so much drilling activity, read the entire article.

The uncomfortable truth is that, at this point, we simply don't know how big our shale gas resources are, how much of the gas can be technically or economically produced, or how profitable producing the gas actually is.  And that should give us pause.

I'll say!   Don't believe everything you hear! 

LINK