Thousands of West Virginians have agreed to let drillers extract natural gas from under their land in exchange for monthly royalty payments, but a review of court records shows that drillers have been "whittling away" those payments with a variety of sketchy tactics. "Sometimes, the companies deduct a variety of 'post-production' costs
from gas proceeds" such as the cost of transporting and processing the gas, the Charleston Gazette-Mail's Ken Ward Jr. reports for ProPublica's Local Reporting Network. "Other times, they’ve avoided paying full royalties by creating shell
companies that, at least on paper, buy the gas at reduced prices. These
practices have gone on for decades."
The state legislature and courts have tried to keep pace with drillers' practices and close loopholes, but drillers keep shifting tactics. A 2013 class-action lawusit on behalf of more than 10,000 people and companies that own gas will go to trial in two weeks; it alleges that the state's second-largest driller, EQT Corp., is making improper deductions from royalties. EQT, meanwhile, is suing to overturn a 1982 law that banned low-payout leases, Ward reports.
"West Virginia’s natural gas industry has flourished, with production roughly tripling in the past five years. State leaders portray the industry as the heart of a strong future economy, perhaps to replace the declining coal business," Ward reports. "But there are growing indications that natural gas is taking West Virginia down the same path as coal, including a long and continuing battle over how the profits are divvied up among residents and out-of-state companies that are extracting natural resources from the land."
The state legislature and courts have tried to keep pace with drillers' practices and close loopholes, but drillers keep shifting tactics. A 2013 class-action lawusit on behalf of more than 10,000 people and companies that own gas will go to trial in two weeks; it alleges that the state's second-largest driller, EQT Corp., is making improper deductions from royalties. EQT, meanwhile, is suing to overturn a 1982 law that banned low-payout leases, Ward reports.
"West Virginia’s natural gas industry has flourished, with production roughly tripling in the past five years. State leaders portray the industry as the heart of a strong future economy, perhaps to replace the declining coal business," Ward reports. "But there are growing indications that natural gas is taking West Virginia down the same path as coal, including a long and continuing battle over how the profits are divvied up among residents and out-of-state companies that are extracting natural resources from the land."
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