Articles & Updates

LEGAL UPDATE: Proposal to amend PA Dormant Oil and Gas Act would benefit both landowners and drillers

Feb 20, 2015 | Articles & Updates

By: Jennifer L. Beresky, Esq.

On January 21, 2015, House Bill 67 was referred to the Environmental Resources and Energy Committee of the Pennsylvania House of Representatives. House Bill 67 would amend Pennsylvania’s Dormant Oil and Gas Act of 2006 to define when an oil and gas estate may be deemed abandoned.

As of now, the actions operators and surface owners can take under the Dormant Oil and Gas Act are limited. Interested parties may petition a court to have a trust declared in favor of unknown oil and gas owners, into which royalties from any operations must be paid. But, with the passage of House Bill 67, landowners would be able to have the oil and gas interest underlying their properties reunited with the surface estate. Specifically, under this bill, an oil and gas interest may be deemed abandoned if 20 years passes “after the last sale, lease, mortgage or transfer of record of the interest,” or, if 20 years passes since the last drilling permit or actual production related to the interest or to a lease covering the interest, or since its use in underground gas storage operations.

Much like Ohio’s Dormant Minerals Act (ODMA), House Bill 67 would provide predictability for operators. Being able to know under what circumstances historically reserved oil and gas interests could be abandoned would make leasing property much less arduous. Rather than having to track down heirs of parties who reserved an oil and gas interest, sometimes generations ago, drillers could complete the simpler research of discovering whether operations or transactions related to the oil and gas interest have occurred within the 20 year statutory period.

Opponents of House Bill 67 raise the concern that it deprives oil and gas interest owners of their property, but the bill includes requirements for anyone claiming abandonment of an oil and gas estate to provide notice, and non-surface oil and gas owners have the opportunity to file claims to preserve their interests.

House Bill 67 has bi-partisan support, largely due to the benefits it would offer to landowners. And for the predictability it would also provide to operating companies, industry players should be eagerly anticipating a vote on this bill. Please continue to check the Burns White Energy Group’s LinkedIn site for further updates regarding House Bill 67.