Prompted by the booming natural gas drilling industry in his district, Pennsylvania state Senator Gene Yaw (R-23rd) said he will introduce a series of bills that address issues related to the growing Marcellus Shale industry. Yaw’s district includes Bradford, Susquehanna and Lycoming counties, which are some of Pennsylvania’s top Marcellus producing areas.

“Our area is at the epicenter for Marcellus Shale-related activity, and as a result we are seeing some of the issues that come along with it here first,” Yaw wrote in a Jan. 27 newsletter to constituents. “Because of this, I feel it is necessary to craft legislation to protect our communities and encourage well-regulated growth. And frankly, the majority of these bills are directed toward benefiting the landowners.”

Under current state law, placing as little as two acres of a large tract of land in a production unit can hold up the rest of the tract with no obligation to develop the gas under it, according to Yaw, who said he would propose implementation of a Pugh Clause.

“This provision would provide the landowners and gas companies the option to develop the acreage not included in a production unit; allow the lease to expire with respect to the unused portion; renegotiate the lease as to the unused land or include the unused land in another production unit. I see no harm whatsoever to gas companies, but I see a great benefit to landowners,” he said.

Another Yaw proposal would restore to counties the authority to assess producing wells for property taxes, something the counties were able to do prior to a 2002 Pennsylvania Supreme Court decision.

“It appears that some sort of tax or fee is inevitable,” Yaw said. “Under this legislation, the taxing authority would be local and all of the funds derived from an assessment would stay within our local governments where impacts are tangible. I believe this is the best option, rather than sending our money to the black hole in Harrisburg and standing in line with our hand out, hoping to get a little back.”

Yaw said he would also propose company-to-company pooling to encourage development of the Marcellus with a minimum number of well sites. The legislation could solve about 90% of existing pooling issues, he said.

“What has been discovered is that the majority of pooling issues involve intercompany dealings with leased land…unlike earlier pooling suggestions, this type of pooling would affect only leasehold interests and would have no impact on private landowners who decline to lease their land.”

A recent public opinion poll found little support for forced pooling in the state (see Shale Daily, Oct. 8, 2010).

Another bill proposed by Yaw would designate nonuse of gas or other subsurface rights for 21 years to be considered an abandonment of those rights, thus vesting them to the current owner of the surface rights. The search for subsurface rights-holders has at times been a struggle for state officials (see Daily GPI, Aug. 30, 2010).

Yaw said he will also introduce bills requiring a detailed listing of all deductions on royalty payments and requiring state certification of all metering devices on Marcellus wells.