Policy: Environment & Energy

Royalty owners see fracking up close and like what they see

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Opinion,Op-Eds,Energy and Environment,Pennsylvania,Fracking,Oil,Natural Gas,Shale

With most U.S. oil and natural gas drilling occurring on privately-owned land, it's the royalty owners who most directly experience the impact of drilling and fracking operations.

As the people who have leased land to drilling companies, they monitor the drillers' performance very carefully.

Despite the stories of burning tap water and other exaggerations proffered by environmental groups with a political agenda, the vast majority of royalty owners are supportive of fracking and energy development.

In a survey conducted among the 40,000 royalty-owner members of three websites -- GoMarcellusShale.com, EagleFordForum.com, and GoHaynesvilleShale.com -- 71 percent were satisfied or neutral with respect to operations on their land. More than 90 percent said they would lease their property again if given the opportunity.

Furthermore, 75 percent of the respondents were satisfied or neutral over the timeliness and accuracy of their royalty payments from energy production companies.

Many of the royalty owners have described how these payments made it possible for them to pay their bills, improve their standard-of-living, and achieve life-long dreams.

For Paul and Meredith Steurnagel, for example, the monthly natural gas royalty checks were the answer to a prayer. The proceeds paid for completion of his college education and for the adoption of a baby boy for the couple.

“We would not be the family we are without the royalty money,” she said. “That may sound dramatic to read but it’s the truth.”

Royalty owners are a growing segment of U.S. landowners who are sharing in the nation's "shale gale," the term that refers to the extraction of oil and natural gas from shale formations.

The National Association of Royalty Owners estimates there are more than 8.6 million royalty owners in the United States who receive payments from oil and gas companies producing energy on their land.

Natural gas exploration companies alone paid an estimated $21 billion in lease bonus and royalty payments in 2010, when the last analysis was conducted.

Today, as America’s energy boom continues and more wells are drilled, the figure is likely far higher.

Questions have arisen, however, regarding the details of some royalty payments. Royalty owners frequently ask, “Am I getting paid what I am owed?” or, “Why was this deduction subtracted from my payment, and why does it vary drastically from month-to-month?”

This concern surfaced in the survey. Forty-eight percent of the respondents reported being dissatisfied or highly dissatisfied with post-production deductions from their royalty payments.

These sentiments reached a fever pitch in Pennsylvania recently where Gov. Tom Corbett called for an investigation into how one company, Chesapeake Energy, deducts various costs from royalty payments.

Last month, the Pennsylvania Senate passed three bills aimed at improving transparency on deductions and ensuring landowners are justly compensated for their resources.

As royalty owners can attest, oil and natural gas development is helping their families and increasing the nation's prosperity during the otherwise lackluster economic recovery.

The shale gale has created thousands of jobs, greatly increased U.S. energy supplies, and is improving U.S. energy security.

And America’s shale gas production helped to reduce carbon dioxide emissions by 12 percent between 2005 and 2012.

Yet many environmental groups continue to criticize domestic oil and gas production while ignoring the benefits.

As a nation, we should listen less to them and pay more attention to the royalty owners who witness first-hand the plusses and minuses of energy development every day.

Keith Mauck is publisher of GoMarcellusShale.com, EagleFordForum.com, and GoHaynesvilleShale.com.
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