(08/23/2007)
HISTORY LESSON: "OPEN FOR BUSINESS" HAS MEANT GROSS POVERTY IN WEST VIRGINIA

The controversial royalty case died during this week's special legislative session, but it will rise again during the next 60-day session.

Gas well producers began withholding production costs from royalties paid to landowners who leased or sold their mineral rights generations ago after the federal government deregulated the industry in the early 1990s.

Thousands of landowners sued in a Roane County court and won a $404 million settlement, claiming they had been ripped-off by the producers,

Charleston lawyer Scott Segal, who represented plaintiffs in the Roane County case, pointed out gas firms make 87.5 percent profits, according to the Charleston Gazette.

"Isn't 87.5 percent enough out of the hides of our royalty owners?" he asked at Monday's hearing.

He said attorneys found gas drillers were charging the royalty owners for a number of items like operating costs, return on investments, equipment depreciation and others.

"[The plaintiffs] were told there were no deductions being taken on their royalties," he said. He said drillers have "skimmed" from landowners and even charged them for gas leaks.

West Virginia is the largest natural gas producer east of the Mississippi River and drilling is conducted in 49 of the state's 55 counties.

The state has 40,500 gas wells that produce 191.6 billion cubic feet of gas.

It is really big business.

The state Supreme Court has ruled that gas drillers cannot simply take production costs from royalty owners.

Instead, it must be spelled out in the contract, something that can be accomplished without going to court or changing the law. "It's easy. They go to the royalty owner and sign a contract that allows them to do it," said the attorney.

Roane County lawyer Orton Jones, a former lawmaker who was involved in the lawsuit, said the governor's proposal used four pages to explain 23 legislative findings to justify the idea. Jones noted that was a lot of legislative findings.

"It takes a lot of lipstick to pretty up a pig," Jones said.

Anne Tawney Goff, daughter of royalty suit originator Garrison Tawney, said "I went down to the big house for the hearing. Sen. Deem was talkative about his independent O & G producer's stance, saying that mineral owners should share proportionately in the post production costs."

Sen. Deem is an oil and gas businessman.

"Whatever happened to a little fairness over greed?" she asked.


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