In my opinion (as a hopeful lease holder) that is wrong. If the gas is not produced and not returned to the reservoir for maintaining pressure, royalties should be paid to the mineral owners. Alaska made this change years ago and cut down on the uneconomic flaring.
that is only more common on new leasehold agreements.
Most leases in effect do not pay royalties on flared gas or gas used as fuel for operations on the leasehold. Language contains clause that allows company to utilize.