The Tribune Democrat, Johnstown, PA

May 1, 2011

Gas legislation must appease 3 masters

Robin L. Quillon
rquillon@tribdem.com

JOHNSTOWN — Passing “forced pooling” legislation is a key wish-list item of the state’s booming natural gas industry.

Industry leaders want the ability to extract gas from contiguous land tracts.

This allows them to slant-drill under hundreds of acres of land with fewer wells, which they believe has less impact on the environment. They do not want to have to skip over tracts because of stubborn landowners who do not want to lease their land or who are holding out for higher prices.

On the other hand, landowners want the highest price for their land and gas rights. They favor letting the free market determine the price and do not want to be compelled to accept a deal they believe is not fair.

And many believe forced pooling laws will circumvent the free market and favor the gas companies. After all, why negotiate when they can simply take the gas with the state’s blessing?

Underpinning it all is this question: How can we allow this industry to grow and protect our environment at the same time?

Crafting legislation that satisfies everyone is going to be a difficult balancing act.

Gov. Tom Corbett says he opposes forced pooling. He told a drilling industry gathering in Pittsburgh on Tuesday that forced pooling is tantamount to private eminent domain and that he doesn’t agree with it.

I agree with the governor. Landowner rights should not be trifled with. The thought of the government taking private land and using it for another’s private gain is as anti-American as you can get, “comrade.”

Forced pooling laws are on the books in other states. In essence, as defined by an oil and gas website, forced pooling is compulsory. The gas company files a request for a pooling order, which provides for the surrender or sharing of interest by the landowner. The pooling order and notice of a hearing must be published. After the specified time, a hearing is held before the appropriate state agency.

As a result of the hearing, an order can be issued by the state concerning the setting of the cost formula for sharing costs and revenues in the pooled area. The state and the production company usually set the cost formula. Most landowners have very little input in this situation.

Every citizen has skin in this game, and should voice his or her opinion.

With that said, for this industry to grow in a responsible way, there must be compromise on all levels. However, compromise does not mean the gas companies (no matter how much campaign money they have contributed) get to write legislation to suit themselves at the expense of the landowners and our environment.

And let me be the first to say to the governor and legislators – beware of the gas companies offering to accept a tax severance in return for a lopsided forced pooling law that steamrolls the landowners. They know that, more than likely, a tax is forthcoming anyway, so why not offer it now in exchange for legislation that slant drills in their favor.

The governor’s resistance to a severance tax is wrong thinking. Every other state where gas is extracted has a severance tax. This is a price this industry expects to pay. And, I might add, is a mere pittance compared to their companies’ take.

This tax would be lockboxed and used “only” for pollution cleanup resulting from gas extraction.

Just look at where the coal industry mined the coal and left taxpayers with the bill to clean up dead rivers and boney piles.

Corbett and the Legislature need to stop posturing and get busy crafting thorough legislation and regulations. This must be done on the state level with one voice. This will prevent local municipalities from enacting inconsistent ordinances that will unfairly hobble the industry.

Harrisburg must not allow the Marcellus genie out of the bottle unchecked.

Because once he is out, it will be very difficult to put him back in.



Robin L. Quillon is the publisher of The Tribune-Democrat. He can be reached at rquillon@tribdem.com

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