Shortchanged: the fight over gas royalties | Marcellus Minutes
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Shortchanged: the fight over gas royalties

As the natural gas industry took off, many Pennsylvanians leased their land for drilling with the understanding that under state law, they were entitled to a certain percentage of the money companies made from selling the gas.

Pennsylvania’s Guaranteed Minimum Royalty Act of 1979 put the figure at 12.5 percent.

However some leases allow companies to deduct the expenses they incur processing and transporting gas– for things like compressor stations and pipelines. These are known as “post-production costs” or “gathering fees.” Several years ago a number of Pennsylvania landowners complained and filed lawsuits. In dozens of cases they argued all those deductions invalidated their leases because they ended up with less than 12.5 percent. Gas companies disagreed.

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