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Senate of Pennsylvania
Session of 2017 - 2018 Regular Session

MEMORANDUM

Posted:	December 20, 2016 09:33 AM
From:	Senator Gene Yaw
To:	All Senate members
Subject:	Pugh Clause

In the near future, I plan to re-introduce legislation requiring a Pugh Clause for natural gas development. This legislation was Senate Bill 145 of last session. The Pugh Clause essentially defines what happens to the portion of the acreage a person leased that does not either contain a well or is not included within a producing petroleum pool or unit. Under current law, if a landowner has 300 acres and only 20% of it is included in a unit, the company would be able to tie up the remaining 80% by production after the primary lease expires even though there is no production on the remaining acreage. My language would release any land covered by a lease but not included in the unit. By introducing this legislation, we are no longer allowing gas companies the option of drilling on a small portion of a landowners’ property to provide themselves additional years to utilize land. This will create a fair process for the landowners to either: Re-negotiate the lease Allow the company to renew the lease under previous terms Lease to another company in the area Thank you for your consideration.

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