Sen. Yaw Calls for Attorney General Inquiry into Post-Production Cost Deduction Practices of Chesapeake Energy

HARRISBURG – State Senator Gene Yaw (R-23) has announced today that he has sent a formal request to Pennsylvania Attorney General Kathleen Kane asking for an official inquiry into post-production cost deductions by natural gas producer Chesapeake Energy.

“Over the past several months, my office has received numerous complaints from landowners frustrated over the business practices of Chesapeake Energy,” Yaw said. “Their primary complaint involves the deduction of what are believed to be excessive post-production costs. I feel that the Attorney General is the appropriate third party entity to officially review these claims from a consumer protection aspect.”

On June 27, 2013, Sen. Yaw convened a public hearing of the Senate Environmental Resources and Energy Committee. “During our hearing, the committee heard testimony that deductions by Chesapeake were as high as 100 percent of some royalty checks. This raises a significant consumer protection issue for hundreds of constituents in my Senate district.”

In light of the ongoing issues between Chesapeake Energy and Bradford County leaseholders, Yaw has also introduced a package of legislation, known as the Oil and Gas Lease Protection Package, which consist of three bills:

Senate Bill 1236 would expand upon the Oil and Gas Lease Act by allowing royalty interest owners the opportunity to inspect records of gas companies to verify proper payments. All information provided by a gas company will be confidential in nature and cannot be disclosed to any other person, other than a current leaseholder.

Senate Bill 1237 would prohibit a gas company from retaliating against any royalty interest owner by terminating their lease agreement or ceasing development on leased property because a royalty interest owner questions the accuracy of current royalty payments.

Senate Bill 1238 would require a gas company to record a satisfaction piece in the county Recorder of Deeds office where the oil and gas well is located within 30 days upon expiration, termination, or forfeiture of an oil and gas lease. The satisfaction piece will release the gas company’s interests in the oil and gas. This is similar to what a mortgage company would be required to do after a mortgage was paid in full.

“I believe my legislation will dovetail nicely with the legislation (House Bill 1684) already introduced in the House of Representatives,” Yaw said. “Over these past several months, I have said consistently that I would support the House legislation when it passes that Chamber and moves to the Senate. I am not only reiterating my support for House Bill 1684, but I am also putting forward my own legislation that would support the interests of landowners already leased with natural gas companies.”

Adam Pankake

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