National Association of Royalty OwnersPennsylvania Chapter - PDF document

1 National Association of Royalty OwnersPe
National Association of Royalty OwnersPennsylvania Chapter The only national organization representing, solely and without compromise, oil and gas royalty owner interests. May 11, 2011Owns 400 acres in Tioga County PA with Lessor with interest in 8 Marcellus wellsPresident of R&R Energy Consulting LLCNARO PA Chapter President Commercial Farm on 400 acres in Tioga

2 County Lessor with interest in 8 Marcell
County Lessor with interest in 8 Marcellus wellsFirst lease offer in 2000 for TBR Negotiated lease with particular attention to surface Jackson Township operated under an AMI with SWEPI (Shell Western E&P Inc.) and Talisman R&R Energy Consulting LLCPresident of R&R Energy Consulting LLCAdvocate for landowners and/or mineral Negotiated for 19 landowner groups sinc

3 e Annual State Convention in March brou
e Annual State Convention in March brought together mineral owners, the OG industry, state regulators, scientists, attorneys and financial plannersLegislative Committee identifies the potential impact of proposed legislation on PA mineral ownersProvides education to members regarding mineral management for the present and future generations at both national and s

4 tate levels Marcellus Shale Development2
tate levels Marcellus Shale Development2008 to 2011 Well pads 5 acresGravel base sufficient to support required heavy equipmentTemporary ponds to hold fresh water prior to frac’ing converted to flowback pond post frac’ingffic during hydraulic fracturing Dirt roads temporarily impassible during wet conditionsExcessive road dust affecting people, livestock and crops

5 Production equipment and brine tanks wit
Production equipment and brine tanks with no containment systemLack of coordination with township officials and local emergency Unitization and well spacing based on leasehold 1 Well �pads 10 acres facilitating safer operationsLined pads decreasing potential pollution from spillsDrill cuttings held in containerswater. Location of ponds near activity combine

6 d with water piping reduce truck traffic
d with water piping reduce truck trafficRoad agreements with township officials have resulted in substantial upgrades prior to and during operationsEfforts to reduce road dust during operationsBrine tanks and production equipment installed with containment systems to reduce contamination of soil and water from spills911 site addressing and emergency responder trai

7 ning is helping Unitization and well spa
ning is helping Unitization and well spacing based on leasehold 1 Road maintenanceProperty rightsRegulations that impede Emergency Response & Public SafetyOverall tax burden of mineral Incentive to produce in PAOil and Gas Conservation Law Water well testing within 2500’ of a gas well should be requiredIf a water source has been damaged, the remediation should inc

8 lude payment of monthly fees associated
lude payment of monthly fees associated with maintenanceImpact fees for road damages that would shift repairs back to local government or Penn DOT could slow developmentDust from gravel (dirt) roads continues to be an issue. Just the s dust levels that are a hazard to people, livestock and crops. Regulations that impede developmentStates should continue to regul

9 ate the industryArmy Corp review of pipe
ate the industryArmy Corp review of pipeline permits is resulting in lengthy delays between well completion and productionProperty RightsThe subsurface is the dominant estateBest management practices should always be used in the extraction process however, the mineral owner’s right to develop cannot be limited Emergency Response and Public Safetyreportable incid

10 ent Good communication between operators
ent Good communication between operators and surface/mineral owners should be considered a Best Management Practice!Oversight of gathering lines would benefit public safety long termMethane detectors for all dwelling units and habitable buildings within the potential impact radius of a pipeline where odorization Supportive of the impact fee concept provided tha

11 t a substantial portion remain in the im
t a substantial portion remain in the impacted regionsPossible pollution that might occur downstream should be considered a violation of law and not an impact entitling non Marcellus portions of the state to a percentageOverall Tax Burden on Mineral OwnersRoyalty income for most PA mineral owners will be a one time In addition to Federal and State tax there are pr

12 oposals for severance and property tax a
oposals for severance and property tax as well as an ongoing threat to the Incentive to Produce in PAIn order to grow its rig count, PA needs to maintain a business Oil and Gas Conservation LawIt is hereby declared as an expression of policy to be in the public interest to foster, encourage, and promote the development, production, and utilization of the natural

13 oil and gas resources in this Commonweal
oil and gas resources in this Commonwealth, and especially those which may exist in the Lower Devonian Series and the Silurian and Cambro-Ordovician Geological Systems or from any formation below the Onondaga horizon, in such manner as will encourage discovery, exploration, and development …and to provide for the drilling, equipping, locating, spacing and operati

14 ng of oil and gas wells so as to protect
ng of oil and gas wells so as to protect correlative rights and of oil or gas or loss in the ultimate recovery thereof, and to regulate such operations so as toowners and producers of oil and gas to the end that the people of the realize and enjoy the maximum benefit of these , it being recognized, however, that the uninterrupted exploration and development of Pen

15 nsylvania and Mississippian Systems and
nsylvania and Mississippian Systems and the Upper and Middle Devonian Geological Series, being sands and strata above the Onondaga Horizon, both of a primary and subsequent methods have been carried on exhaustively since the discovery of oil in the Drake Well in 1850 without regulatory restriction or control to such an extent that at the present stage of developme

16 nt it would be impractical and detriment
nt it would be impractical and detrimental to the operation of such shallow impose regulations under this act, particularlyinviewofthefactsthattheproductiontherefrom,whetherofprimaryorsecondarynatureiscarriedonwithoutappreciablewasteandthatthemethodsofexploration,discovery,developmentandproductionabovetheOnondagaHorizonandinshallowhorizonsatadepthoflessthanthreet

17 housandeighthundredfeetdifferfrommethods
housandeighthundredfeetdifferfrommethodsofexplorationdiscovery,developmentandproductionbelowtheOnondagaHorizonorbelowthreethousandeighthundredfeetincost,methods,operatingproblems,andotherimportantcharacteristics. Oil and Gas Conservation LawApplication to the Marcellus Shale would serve to prevent wasteThe conservation law as it exists will apply to the Utica Shal

18 eThe law is vague and does not correlati
eThe law is vague and does not correlative rights of mineral owners regardless of the formation to which it appliesMarcellus Shale spacing and unitizationWell density is solely operator’s discretionUnit boundaries dictated by operator’s leasehold and lease Geology is not a required consideration in spacingProtection of correlative rights and waste prevention shou

19 ld be a goal in Marcellus development Th
ld be a goal in Marcellus development The information presented is derived from direct experiences and is a mineral owner’s perspectiveNew laws and regulations need to consider the rights of mineral owners, key stakeholders in oil and gas developmentPennsylvania Department of Environmental Protection is best equipped to regulate development in the CommonwealthIt

20 is important to recognize the oil and ga
is important to recognize the oil and gas industry’s progress in the formulating new and improved Best Management Practices to reduce the impacts of Marcellus developmentIt is imperative that we manage the impacts but also promote development in a manner that will maximize the resource and The only national organization representing, oil and gas royalty owner int