Posts Tagged ‘ElexCo Land Services Inc.’

Court will hear landowners’ claims that gas companies took advantage of them.

MARC LEVY Associated Press Writer

HARRISBURG — Pennsylvania landowners who want to snatch a better deal from natural gas companies hoping to drill into their ground and the potentially lucrative Marcellus Shale formation beneath it will get the ear of the state’s highest court.

Wednesday’s oral arguments in front of the state Supreme Court are certain to be watched closely for its impact on one of Pennsylvania’s biggest economic opportunities and environmental challenges in decades.

For exploration companies with offices from Calgary to Canonsburg, the decision could either bring a huge sigh of relief or the havoc of renegotiating land leases across the state, possibly throwing the entire gas industry into chaos.

The fact that the court moved quickly to hear the case — and resolve a burgeoning number of complaints in state and federal courts — demonstrates the seriousness of the matter.

“By its actions, I think the court recognizes that this really is an extraordinary issue for Pennsylvania and it’s critically important that it is resolved,” said David Fine, a Harrisburg-based lawyer representing ElexCo Land Services Inc. and Southwestern Energy Production Co.

To some extent, justices will hear plaintiffs’ attorneys tell a story of big corporations taking advantage of unsuspecting landowners, paying them a fraction of the upfront per-acre leasing fee that they later paid to other landowners as competition in the land rush intensified.

“They didn’t know Marcellus Shale from a hole in the wall and they feel the gas companies came in and got them to sell away the rights to their property,” said attorney Laurence M. Kelly, who is representing Susquehanna County landowner Herbert Kilmer and his family.

The real legal question will be whether some tens of thousands of leases were never valid because they violate a state law that guarantees landowners a minimum one-eighth royalty from the production of oil and gas on their land.

The lawsuits are just the latest sign that Pennsylvania’s laws governing mineral rights and environmental protection are lagging behind the large, modern-day industry presence that has descended here.

Dozens of exploration companies and contractors have flocked here since early 2008 from as far away as Houston, Denver, and Calgary, Alberta, in a rush to lock up land rights over the thickest portions of the shale. That rush has eased somewhat since the recession drove down natural gas prices — but the legal disputes have not.

By Fine’s estimate, more than 70 lawsuits have been filed in federal and state courts by plaintiffs seeking a judgment that the leases they signed were never valid.

In general, the leases in question give the exploration company the right to subtract certain costs — such as taxes, assessments or transportation — before paying the 12.5 percent royalty. That violates the law, plaintiffs say.

The law, however, is silent on the meaning of “royalty” and whether it is determined before or after those expenses.

Fine and industry officials say it is standard language in leases to deduct those costs — a contention disputed by landowner advocates in Pennsylvania and elsewhere.

But judicial decisions in two of the cases raised the prospect of a myriad of different legal opinions.

In Susquehanna County, the judge in the Kilmer vs. ElexCo case handed the companies an initial victory, saying the law does not specifically prohibit the subtraction of costs. Kilmer has appealed to state Superior Court.

Separately, a federal judge in Scranton hearing a case against Cabot Oil & Gas Corp. denied a motion to dismiss the case, saying the law’s silence does not necessarily mean the costs can be legally deducted.

Fine decided to ask the state Supreme Court to take up Kilmer vs. Elexco immediately, and effectively settle the matter for everyone.

Still, the high court’s decision could create a new kind of chaos. Records of oil and gas leases dating back to the royalty law of 1979 are kept in county courthouses, often in arcane filing systems, making it nearly impossible to know how many landowners and leases are potentially affected.

“I’m sure that no one person knows,” Kelly said.

Copyright: Times Leader

Commissioners consider asking for proposals to drill at Moon Lake Park.

Having witnessed the natural-gas drilling boom both in other counties and for some local residents, Luzerne County officials are considering the windfall potential for county lands.

At its meeting on Wednesday, the county commissioners are expected to approve issuing a request for proposals to drill in a little more than 2,000 acres in Moon Lake Park. They’ll also likely vote on creating a gas exploration task force proposed by Commissioner Greg Skrepenak.

Commissioner Steve Urban said he’s been following the gas progress for about six months and feels now is the time to offer the park lands because surrounding landowners are seeking leases as well.

“People are already interested in the land around Moon Lake, and I’m optimistic they’d be willing to talk to us,” he said. “It’s good to be proactive.”

He said the going rates seem to be between $2,600 and $3,200 signing bonuses per acre and perhaps 18 percent royalties.

Beyond the benefits to the county, he suggested local customers would find a benefit in receiving domestically produced natural gas.

He said the drilling wouldn’t affect plans to construct mountain-bike racing courses there.

Skrepenak said he’d likely support offering the lands for leasing, but said the county should have fully researched the topic first.

“I definitely think we need to take this issue as far as we can,” he said.

The task force would gather information, but also be a source for residents and local companies seeking work with the gas companies, he said. It should be made up of county officials, other public officers and experienced professionals, he said.

The shale drilling has shown to be “recession proof” in Texas, he said, which is why he finds it an exciting consideration. “It is the hot topic,” he said. “It’s been seen as a positive thing for the most part.”

Dave Skoronski, director of the county Geographic Information System/Mapping Department, noted there are promising signs that companies are considering the county. Several companies in related industries have come to his office to buy the county’s map data.

“They’ve been coming, and some people who work at the desk said they were doing gas research,” he said, noting that Burnett Oil Co., Inc., Mason Dixon Energy, Inc. and Elexco Land Services, Inc. have purchased map information.

Panel created

Luzerne County Commissioner Greg Skrepenak was named to the County Commissioners Association of Pennsylvania’s Natural Gas Task Force.

The group has been established to identify issues related to exploration and development of natural gas in Pennsylvania and to advise on policy related to those issues. Skrepenak participated in the task force’s first conference call on Sept. 26.

Copyright: Times Leader