Pa. case will have impact on gas drilling

HARRISBURG - Pennsylvania landowners who want a better deal from natural-gas companies hoping to drill through their properties into the potentially lucrative Marcellus Shale formation will get the ear of the state Supreme Court.

Wednesday's arguments before the justices are certain to be watched closely for their impact on one of Pennsylvania's biggest economic opportunities and environmental challenges in decades.

For exploration companies with offices from Calgary to Canonsburg, the decision could result in the havoc of renegotiating land leases across the state, possibly throwing the entire gas industry into chaos.

That the court moved quickly to hear the case and resolve a burgeoning number of complaints in state and federal courts demonstrates the seriousness of the matter.

"By its actions, I think the court recognizes that this really is an extraordinary issue for Pennsylvania and it's critically important that it is resolved," said David Fine, a Harrisburg lawyer representing ElexCo Land Services Inc. and Southwestern Energy Production Co.

To some extent, justices will hear plaintiffs' attorneys tell a story of big corporations taking advantage of unsuspecting landowners by paying them a fraction of the up-front per-acre leasing fee that they later paid to other landowners as competition in the land rush intensified.

"They didn't know Marcellus Shale from a hole in the wall, and they feel the gas companies came in and got them to sell away the rights to their property," said lawyer Laurence M. Kelly, who represents Susquehanna County landowner Herbert Kilmer and his family.

The real legal question will be whether tens of thousands of leases were never valid because they violated a state law guaranteeing landowners a minimum one-eighth royalty from the production of oil and gas on their land.