Times have changed for the better when it comes royalty payments for property owners in the Marcellus Shale region of Pennsylvania with natural gas well eases.
Eight years ago Bradford County landowners were getting checks as low as $1.10. Today some of the monthly payments are in the six figures.
“It’s like a gift from God,” said Rex Kinglsey, who has six wells on his property.
Coterra Energy, formed by the merger of Cabot Oil & Gas Corp. and Cimarex Energy Co., paid $2 billion royalties between 2010 and 2021 just in Susquehanna County, spokesman George Stark said.
Statewide, the industry will pay county and municipal governments affected by drilling $123,217,163 in impact fees for the 2021 reporting year, according to the Public Utility Commission. With this year’s distribution, communities will have received over $2.2 billion.
The larger royalty payments and increased drilling and fracking activity are being driven by the higher price of natural gas, officials say.
The industry is showing some revitalization in north central and northeastern Pennsylvania, said Thomas Murphy, director of the Penn State Marcellus Center for Outreach and Research.
There are fewer rigs but they are more efficient and the drilling process is more environmentally friendly, he said. The amount of gas produced in the commonwealth continues to increase, he said.
Pennsylvania is the No. 2 natural gas producer in the United States and that’s “pretty impressive,” said state Sen. Gene Yaw, R-Lycoming, whose district also includes Bradford, Susquehanna and Sullivan counties.
According to the state Department of Environmental Protection data:
- 204 well permits were issued this year through June 13 compared with 145 for the same time period last year.
- Drilling started this year on 56 wells in Susquehanna County, 39 in Bradford, 24 in Lycoming and six in Sullivan.
- Susquehanna County with 1,883 has the most wells in the north central and northeastern part of the state. Bradford County has 1,541, Lycoming 1,032 and Sullivan 171.
A pad may have multiple wells going in different directions and into different layers of shale.
Chesapeake Energy, which leases 650,000 acres in Bradford, Sullivan, Susquehanna and Wyoming counties, has drilled 14 wells in 2022. It projects drilling 80 to 95 by the end of the year.
Last year the Oklahoma City energy company settled a suit brought by the state attorney general’s office over royalty payments.
The 2015 complaint alleged Chesapeake had cheated landowners over drilling leases, making industry-friendly deals in the boom’s early years and then deducting post-production expenses from royalty checks.
Settlement terms included restitution of $5.3 million and improved royalty payments going forward.
Glenn Aikens, who has three wells on his Bradford County farm, said his share of the settlement was $150.
The royalty checks he receives from Chesapeake are better than the $1.10 he received in 2014 but he believes they should be more.
Since emerging from bankruptcy, Chesapeake has acquired Chief Oil & Gas that also had leases in the region.
Another indication of an uptick in the drilling activity is the amount of sand being transported into the region for use in fracking the shale to obtain the gas.
There has been an increase in carloads on the Lycoming Valley Railroad that serves the Williamsport area, a spokesperson said.
The natural gas activity is not what it was in its heyday, said Jim Willis, editor of the Marcellus Drilling News he issues each weekday online from Kirkwood, New York.
One of the reasons, he said, is investors in public companies would rather have the higher revenues used for financial stabilization than capital projects like drilling.
Getting the gas to markets outside Pennsylvania continues to be a challenge, Murphy said. He attributes that in part to New York and New Jersey not approving new pipelines.
The Atlantic Sunrise pipeline enables gas from Susquehanna County to be exported through the Cove Point Terminal in Maryland and utilized in Japan in 28 days, Stark said.
But the lack of pipelines makes it difficult to get Pennsylvania gas to New England where there is a demand, he said.
In agreement is David Callahan, president of the Marcellus Shale Coalition.
“Pennsylvania has world class natural gas assets, but pipeline constraints prevent us from fully unleashing the value of these resources for consumers locally and our allies abroad,” he said.
Natural gas demand is strong and we’re seeing producers respond with more than half of new well activity occurring in northeastern Pennsylvania.”
Coalition members stand ready to produce more natural gas but “we need policies that encourage, not hinder, development and infrastructure buildout,” he said.
The increased activity in the well fields and larger royalty payments have been good for the economy, said Bradford County Commissioner Doug McLinko.
The tradeoff is consumers are paying a higher price for the natural gas used in their homes and businesses, he pointed out.
More:
Driver responsible for fatal five-vehicle I-80 accident to be charged: state police
Defendants in Penn State hazing death suit seek to keep depositions confidential until trial