Duped! Gas Companies Steal Billions in Royalties From Landowners
Money can make people do some funny things. They might go on ridiculous game shows or turn their lives into reality television trash. They might also turn over family land to oil and gas companies, thinking that the energy underneath their properties will make them overnight millionaires.
Thanks to the recent natural gas boom, this tantalizing scenario plays out in small communities across America every day. If you’ve seen the movie Promised Land, you know what I’m talking about. A slick executive waltzes into town offering struggling farmers a way to profit off of their land without lifting a finger. All they have to do is sign a piece of paper that says a gas company can drill on their land, then sit back and collect the fat royalties for the rest of their lives.
Unfortunately, an increasing number of landowners are realizing that these promises are little more than smoke and mirrors. From a ProPublica investigation:
Over the last decade, an untold number of leases were signed, and hundreds of thousands of wells have been sunk into new energy deposits across the country. But manipulation of costs and other data by oil companies is keeping billions of dollars in royalties out of the hands of private and government landholders…An analysis of lease agreements, government documents and thousands of pages of court records shows that such underpayments are widespread. Thousands of landowners like Feusner are receiving far less than they expected based on the sales value of gas or oil produced on their property. In some cases, they are being paid virtually nothing at all.
To call this ‘adding insult to injury’ is the understatement of the century.
In addition to hiding the truth about toxic chemicals pumped into the ground to access the gas, lying about fracking’s potential to contaminate our air, water and soil, and blatantly bullying the EPA and others who tried to launch scientific investigations that would answer these questions once and for all, oil and gas companies are using unspecified “gathering” expenses to rob landowners of royalty payments it agreed to make.
To keep royalties low, companies sometimes set up subsidiaries or limited partnerships to which they sell oil and gas at reduced prices, only to recoup the full value of the resources when their subsidiaries resell it, reports ProPublica. Royalty payments are usually based on the initial transaction.
Meanwhile, farmers and ranchers across the country must watch in agony as their land is ripped up to access a fuel that will only accelerate climate change and pollute the creeks and rivers they’ve known since childhood. In some cases, proximity to drilling operations has even affected the health of the farmers themselves, turning what should be golden years into a medical nightmare.
This is why it’s necessary for communities small and large to rise up against fracking. This is why it’s essential to block the companies from operating at a community level, and not just leaving it up to individuals to decide. For many, the money is the only reason to even consider such an offer, and sadly it’s becoming clear that even that is a lie.
Sign this petition to demand oil and gas companies pay landowners their fair share.
Image via Richard Webb