Throughout Pennsylvania, landowners are continuing to experience sticker shock when they open their royalty statements related to gas drilling. The practice of deducting post-production costs from the royalty is becoming widespread as more and more gas drillers elect to pass these costs on to the landowner.
Although the landowner negotiated an 18 percent royalty, the actual payment is nowhere close to that. Instead, the royalty is reduced by operational costs that the gas driller allegedly incurs after the gas is extracted from the ground. These so-called post-production costs can include expenses for dehydrating, compressing, gathering and transporting the gas as it moves downstream.
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