A major gas company actively drilling the lucrative Marcellus Shale deposits in Pennsylvania recently offered a settlement to hundreds of landowners. The property owners had accused the company of cheating them out of royalty payments.
If a landowner gets an offer from a gas company today, they could get $3,000 an acre plus a 20 percent royalty payment on the gas extracted from their property. Back in 2004, landowners got a lot less. A group of them sued one of the earliest drillers in the state — Texas-based Range Resources.
Joyce Mitchell owns a 133 acre horse farm in Washington County. Mitchell says she and her neighbors were naive when they signed up for a $1000 a year payment and modest royalties. She says the company then began chiseling away at her meager earnings -deducting post-production costs from her royalties, cutting the payments almost in half.
“There’s a total culture of arrogance associated with this. They sort of give you the ‘well if you don’t do it we’re going to do it anyway, we have a whole building of lawyers that support us and it won’t matter what you say.’ So, that’s sort of how we got rolled over.”
Mitchell says the drilling process polluted her neighbor’s pond. So she and her husband told Range Resources they would not renew their lease. But within a week the company was drilling on their land and she said their lawyer told them there was nothing they could do about it.
Matt Pitzarelli is a spokesperson for Range.
“I will tell you with all certainty that the vast majority of folks who signed the lease are pleased and happy and have had a very positive experience. We encourage and advocate for people to get the facts and have a very clear expectation as to what modern natural gas development entails.”
Pitzarelli says Range is happy with the settlement because it makes its royalty payments more predictable in the coming years. If a federal judge approves the deal, Range will pay more than 2,000 landowners about $1.75 million immediately. And more than $20 million in the years to come.