Category Archives: Legislation

Forced Pooling Bill is Dead (Most Likely)

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SB 576, this year’s revised version of forced pooling, is unlikely to pass.

The reason it isn’t likely to pass is that the House is running out of time to pass legislation and the House hasn’t spent any time on the forced pooling legislation.  This sounds like bad planning on the sponsor’s part, but actually the House spent a huge amount of time debating some legislation about medical marijuana–lots more than was expected.  (It looks like that is going to pass, if you’re interested.)

There’s a small possibility that someone could push for this bill on the last day or two of the session so we can’t say it’s completely dead yet.  It’s on life support, though.

We’re glad this forced pooling legislation won’t pass.  It was not really well written and it gave a lot of power to the companies.  Last year’s legislation was probably a tiny bit better, actually.  At very least it was a better written piece of legislation.

One of these years the companies are going to realize that getting forced pooling passed is really hard.

One of these years the companies are going to realize that they need to address one or two issues instead of trying to push legislation that addresses every single issue they want to address.

This year wasn’t that year.

Lease Integration and Co-Tenancy Bill Slowed Down — UPDATED:

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The West Virginia Senate postponed voting on SB 576, the Cotenancy Mineral Development Act.  It was previously SB 244, but underwent some significant changes and was given a new number.

This is great news!  After the rally at the capitol last week it seemed like the oil and gas industry was pulling out the stops to get this bill passed.

Thankfully, there are some good people at the capitol who are working hard to keep it from passing.  Their work is paying off.

Also notable in the linked article is the fact that the Farm Bureau came out in opposition to the bill.  They had previously expressed some support for it.

2017-03-30 UPDATE: The bill passed the senate yesterday evening.  Time to call the House.

2017 Legislation: Force Pooling is Back

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Forced Pooling is back, as everyone expected it to be.  However, the oil and gas companies have realized that they can’t get forced pooling to pass under the name of forced pooling here in West Virginia.  So they’re giving it two new names, “joint development” and “cotenancy”.  Both seem to be created in the same bill.

The new forced pooling bill is Senate Bill 244.  It will change Chapter 37 Article 7 Section 2 of the West Virginia code which deals with a legal concept called “waste”.

The existing paragraph is very short, and says simply that if a cotenant commits waste he’ll be liable to his other cotenants for damages.  The new section is much longer and focused precisely on oil and gas leases.

The new paragraph (b) will make it so that if a majority of the owners of a tract agree to a “lawful use” (a lease), the company will not have to enter into a lease with the other owners.  All the company will have to do is account to (pay) the other owners a proportionate share of the revenues and costs of the “lawful use”.

So when 50.01 percent of the owners agree to lease, the other 49.99 percent of owners will have no say in what kind of lease they enter in to.

Also, the only thing the company will have to do is pay royalties to the 49.99 percent.  But they can deduct post-production costs.  It won’t be more than a minute before that right gets abused.

The new paragraph (c) will give the company the right to use the surface of any tract overlying the “jointly developed leases”.  In other words, when tracts are pooled for development the company can use any of the surface without entering into a surface use agreement with the surface owner.

The stated intent of this legislation is to make it so the companies can pool both old and new existing leases which don’t have pooling language in them.  However, it does a lot more than that.

This is bad legislation for both mineral owners and surface owners.  It only benefits the companies, which will get into leases for far less money than they already do.  Don’t forget, the West Virginia Marcellus Shale is the most economic shale play (in 2013, but not much has changed relative to other plays) in the United States.  We’re already giving up our minerals for less than people in Pennsylvania and Ohio do.  Let’s not let the companies force us into even cheaper leases.

 

2017 West Virginia Oil and Gas Legislation

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We’re going through the list of proposed bills this year and finding the ones that mineral and royalty owners should be interested in.

First up, Pat McGeehan is doing his usual good work to protect mineral and royalty owners’ rights by proposing a bill that would do away with forced pooling for deep rights in West Virginia.  A lot of people think we don’t have forced pooling in West Virginia, but we do.  Anything below the Marcellus can be force pooled.  HB 2131 would remove force pooling from deep formations.  Prediction: this one doesn’t get passed, sadly.

A similar bill has been proposed by a group of Delegates.  HB 2158 would make it necessary to get the approval of all the owners in the unit before the unit could be effective.  Prediction: this one doesn’t get passed, sadly.

Here’s a great one.  HB 2170 would require a setback of 1500 feet between the limit of disturbance of a well site to an occupied dwelling structure.  Whew!  Right now the setback is 625 feet from the center of the well pad.  The current setback is definitely not enough.  HB 2170 also does some other good things, including providing notice of development to the occupant of any residence on the tract, and creating air, noise, light, and dust standards.  It would also create an obligation by the oil and gas developer to pay the surface owner for the change in value from it’s highest and best use, not the actual current use.  Boy, would that help some people I know.  Prediction: this one doesn’t get passed.

The West Virginia Oil and Natural Gas Association is going to push for forced pooling again, just from a different angle.  They are calling their two proposals “co-tenancy” and “joint development”.  I haven’t found the bills on the Legislature’s web site yet, so they must not have entered them yet.  I’ll keep an eye out for them.

West Virginia Nuisance Lawsuits Against Oil and Gas Companies Sent Back to Mediation

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There are around 200 people who have filed nuisance lawsuits against two oil and gas companies here in West Virginia.  Judge Moats has ordered them back to mediation, telling the parties that fixing the problem is worth more than money.  The parties previously went to mediation.  Perhaps having the judge encourage the parties to settle will help mediation move along a bit.  We think Judge Moats’ words were well chosen.  They could be interpreted to hint that the judge is leaning either way.  Perhaps it’s better to say that neither party can say that the judge is leaning toward their own side.

In related news, we have heard through the grapevine that SB 508, which would have severely limited the ability of landowners to bring nuisance lawsuits against any company operating nearby, has been defeated.  It’s a little too soon to say for sure that’s the case, but the word out of Charleston is that the House Judiciary is unlikely to pass the bill out to the full House.

Legislative Update, March 1, 2016

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We may be a day early to report the death of this year’s forced pooling bill, but the rumors coming out of Charleston and the news articles we’ve read sound promising.  Good for McGeehan and everyone else who has worked to defeat this bill.  Maybe next year they’ll come up with something that makes it easier for oil and gas companies to put together drilling units, but without taking away private property rights.  Eminent domain is one of a few things the Founding Fathers got wrong.

The other good thing we’ve seen is that the bill which would have allowed pipeline companies to enter private property without permission if they were surveying for a proposed pipeline easement has been killed.  The Senate voted it down by a margin of 2-1.  Those are good numbers against a bad bill.