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Pennsylvania Lawmakers Will Again Consider Monthly Production Reports

For the second time in less than a year, a bill that would require unconventional oil and gas drillers to report production data on a monthly basis has been introduced in the Pennsylvania House of Representatives.

HB 2278 is the second take on legislation first introduced last September by Republican Rep. Tina Pickett (see Shale Daily, Sept. 16, 2013). It received minor revisions and, after being introduced again May 29, it has been referred to the Environmental Resources and Energy Committee.

Monthly production reports in other leading oil and gas states, such as Texas and North Dakota, have given financial analysts and others who track the industry more reliable data points and a better way to monitor well decline rates. Pickett, though, has introduced the legislation on both occasions as a way to ensure that landowners get more information to help guarantee the receipt of accurate royalty payments.

"People have a hard time taking that six months reported period and trying to break it down to prove the monthly checks that they're getting -- maybe from four different operators on one well -- and trying to audit and improve those numbers for themselves," Pickett told NGI's Shale Daily at the time the legislation was first introduced.

Indeed, tracking production across Pennsylvania's Marcellus Shale has grown more challenging in recent years. As more takeaway capacity has been added in the play, and as backlogged wells have steadily come online, production shot to 3.3 Tcf of natural gas last year alone, with that number expected to keep climbing this year (see Shale Daily, Feb. 20). All operators in the state are required to submit production data twice a year, on a six-month basis.

Pickett's bill would require operators to submit production data on the 15th of each month, beginning in February 2015. Ohio made a similar move last summer when it tacked on an amendment to the state budget, requiring operators to submit data on a quarterly basis, rather than annually (see Shale Daily, Dec. 2, 2013). That step met little resistance, and Pickett's bill is expected to advance in much the same way.

But it comes as a side note to HB 1684, also co-sponsored by Pickett, which would provide further protections to landowners by clarifying the amount of post-production deductions operators can make from royalty payments. That bill has faced significant opposition from the industry and has been delayed until the fall session (see Shale Daily, June 20). A House Republican Caucus spokesman said lawmakers remain focused on passing a state budget and filling a $1.5 billion deficit by June 30, which will likely sideline Pickett's legislation as well. The energy committee has not yet scheduled HB 2278 for a meeting.

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