Royalty owners have filed ten class-action lawsuits against natural gas producers to collect unpaid royalties on the value of the gas that the producers allegedly flared from the horizontal wells over the past six years. The royalty owners allege that 30% of the natural gas produced in North Dakota is flared, which amounts to burning $100 million of natural gas a month. The royalty owners sued Burlington Resources Oil & Gas, Continental Resources, Crescent Point Energy, HRC Operating, Marathon Oil, Samson Resources Company, SM Energy Company, Statoil Oil & Gas LP, WPX Energy, and XTO Energy. The plaintiff royalty owners assert that neither the leases nor North Dakota law allows for the producers to flare significant amounts of gas without compensation. The plaintiffs seek royalties on gas flared 1) after the first year of production when the company did not apply for a flaring exemption, 2) within the first year of production when the producers exceeded the maximum production limits, and 3) during the first year of production when the wells were physically connected to a gathering system.
The complaints are available on the plaintiffs' website: http://www.
Written by: Tom Panighetti
October 23, 2013
Appalachia has also borne the brunt of the widespread coal-to-gas switching in the electrical utility industry, as Appalachian coal has the highest breakeven/equivalency price with natural gas.
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Natural Gas Royalties