Pennsylvania legislation would revamp royalty payments for harvesting natural gas

By Natalie Kapustik | The Center Square contributor

HARRISBURG, PA – Legislation sponsored by Pennsylvania state Rep. Eric Davanzo, R-Westmoreland, would define what can and cannot be deducted from landowners when calculating compensation for natural gas harvested from their property.

House Bill 1763 would amend the Oil and Gas Lease Act to define royalty payments and clarify how they are calculated.

The current Guaranteed Minimum Royalty Act of 1979 stipulates that natural gas companies are responsible for paying landowners a minimum of one-eighth of the value of the gas harvested from their property. The act does not define a royalty or how it is calculated.

Natural gas companies can charge postproduction costs that result in payments below the one-eighth amount.
“It is crucial to Pennsylvania landowners and industry representatives that the definition of terms used in contracts is precise and just,” Davanzo said in a news release. “This legislation will provide assurance that two parties can work together in furtherance of this important industry.”