Pennsylvania Dairy Couple Receive Up to $35,000 in Monthly Shale Royalties
Jeff and Pamela Barnes were running a dairy farm near Lawrenceville, in Pennsylvania’s Tioga County, when royalty income from natural gas began reaching their household. Kiplinger reported the case in November 2011, saying the couple had previously struggled with household expenses and had been receiving the payments for almost a year.
The gas was produced from the Marcellus Formation, a shale deposit that formed roughly 400m years ago. It extends under portions of Pennsylvania, New York, West Virginia, Maryland and Ohio. The spread of horizontal drilling and hydraulic fracturing made extraction from the formation commercially viable and led energy companies to seek leases for mineral rights held by landowners.
The Barnes family’s monthly receipts reportedly varied between $8,000 and $35,000. They used part of the money to pay outstanding bills and purchase farm equipment. They also put $50,000 into mutual funds, consulted a financial planner and an accountant, and established a college fund for their sons, Glenn and Nicolas.
The report placed the family’s experience within a wider expansion of drilling in Pennsylvania. Nearly 3,400 wells had been drilled in the state since 2008, according to the account. Gas development brought drilling equipment, pipelines, water-storage installations and workers to communities where production was taking place.
A study cited by Kiplinger estimated that a typical well generated about $4m in economic benefits and supported 62 jobs. Shale-gas output reportedly grew by an average of 48% a year from 2006 to 2010. A later report from the Allegheny Institute, published in May 2013, recorded a 61% rise in rental and royalty income across Pennsylvania between 2006 and 2010. In counties with Marcellus drilling, the increase was 119%; Susquehanna County’s reported total rose from $8m to more than $133m over the same period.
Royalty amounts depend on the terms of each lease, the quantity of gas recovered and the price paid for it. The source said Pennsylvania law set a minimum royalty of 12.5% of the value of gas removed or recovered from a property, while negotiated rates could reach 20%. Land ownership above a shale deposit did not itself ensure immediate payments: wells could await pipeline access, and receipts could be affected by production levels and gas prices.
Royalties were also taxable and could fall as wells became older. The Barnes case therefore concerned income linked to a particular property, lease and production arrangement rather than a standard return for all agricultural landowners. For the couple, the proceeds provided money for current expenses, farm investment and family financial planning alongside revenue from dairy farming.
