Pa. House panel OKs bill on gas drilling royalties

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HARRISBURG, Pa. (AP) - A bill that would limit the ability of natural gas exploration companies to deduct costs before paying royalties to Pennsylvania landowners has the approval of a state House committee.

The bill passed the House Environmental Resources and Energy Committee on Monday, 15-to-10.

It’s opposed by industry groups.

The bill is being spurred primarily by complaints about allegedly exorbitant post-production costs deducted by natural gas exploration giant Chesapeake Energy before it pays landowner royalties. Under the bill, companies could deduct post-production costs, but a landowners’ royalty payment couldn’t go below one-eighth of the gas sale proceeds in the commercial market.

It would apply to existing and future drilling leases, but industry groups say it would unconstitutionally alter the terms of legal contracts that are already in force.

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