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Lawmaker Seeks Repeal of Controversial Portion of Drilling Law

A Pennsylvania lawmaker wants to repeal a controversial section of a new drilling law -- as well as portions of state law dating back to 1961 -- to protect landowners from what she says amounts to forced pooling.

In a memo posted to the state House of Representatives website on Monday, Rep. Michele Brooks (R-Greenville) told her colleagues that she plans to introduce legislation "in the near future" to repeal Section 2.1 of SB 259, which passed the General Assembly and was signed by Gov. Tom Corbett on July 9 (see Shale DailyJuly 12).

While it is essential to promote energy production, it is also necessary to do so in a manner that balances the rights of owners of the land from which oil and gas are harvested, Brooks said. "More specifically, I believe we need to ensure that each property owner has the ability to fully negotiate the terms under which their oil and gas rights are leased."

Section 2.1 of SB 259, also known as the Guaranteed Minimum Royalty Act, addresses apportionment. The section stipulates that "where an operator has the right to develop multiple contiguous leases separately, the operator may develop those leases jointly by horizontal drilling unless expressly prohibited by a lease" (see Shale DailyJuly 5).

The section continues, saying that "in determining the royalty where multiple contiguous leases are developed, in the absence of an agreement by all affected royalty owners, the production shall be allocated to each lease in such proportion as the operator reasonably determines to be attributable to each lease."

Brooks voted against SB 259 on June 28, but the bill passed by a 167-33 vote.

Debate over the law intensified after EQT Corp. filed a lawsuit against 69 landowners and a golf course in Allegheny Court of Common Pleas on July 22 (see Shale Daily,Aug. 6).

EQT said it filed its complaint after lengthy negotiations to renegotiate oil and gas leases proved unsuccessful, and as a response to a class action lawsuit filed by some landowners. The company said SB 259's passage had nothing to do with its complaint, and it added that it would continue attempts at negotiations and would honor the previous offers made to landowners.

But EQT's complaint also cited Section 2.1, and the company said it wasn't required to renegotiate the leases. The Pennsylvania chapter of the National Association of Royalty Owners said it opposes Section 2.1.

Brooks said she also wants to introduce legislation that would repeal any involuntary pooling provisions contained in the Oil and Gas Conservation Law, which was enacted in 1961.

 Brooks has been a member of the state House since 2007. Her district includes parts of Crawford, Lawrence and Mercer counties, which all lie in Pennsylvania's portions of the Marcellus and Utica shales. Republicans hold majorities in the House (111-92) and Senate (27-23).

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