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Pooling: Legislation may force the issue

February 26, 2013
By CASEY JUNKINS - For The Times Leader , Times Leader

WHEELING - As the West Virginia Legislature works this month and next in Charleston, Corky DeMarco contemplates whether to make a push for natural gas drillers to gain the right of forced pooling.

"I am not sure if we will make a push for it or not," said DeMarco, executive director of the West Virginia Oil and Natural Gas Association. "I don't know whether there is much of an interest in doing anything here other than building jails."

Forced pooling - which is now illegal for horizontal Marcellus drilling in West Virginia - would allow natural gas drillers to use land that they have not leased to form a well pad. For example, if all of your neighbors have signed leases with a particular drilling company but you refuse, you may be forced to allow your land to be used by gas drillers for the development of your neighbors' gas by placing your land into the drilling unit.

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THE?W.VA. Legislature is considering the concept of forced pooling, which would allow natural gas drillers to use land that they have not leased to complete a well pad, which typically is a 640-acre unit.

The pooling provision would require gas companies to pay pooled property owners royalties comparable to those paid to neighbors, but they would not receive any lease money.

"Pooling is necessary if you are going to realize maximum output. Sometimes, you get someone who has 5 acres right in the middle of something - they are keeping their neighbors from developing their gas," DeMarco said.

"We would like to see some sort of ability to integrate these properties so we can proceed," he added, noting he would soon decide whether to ask a senator or delegate to introduce a bill for forced pooling.

The Legislature considered a provision for forced pooling in 2011, but ultimately decided against it after many landowners voiced concerns about losing their ability to negotiate better lease deals from the gas companies.

Tim Greene, however, said the forced pooling provision legislators are considering would eliminate protections for small mineral owners, thus allowing gas companies to bully them.

"What you don't want is to have a landman come to your door and say, "Hey, sign this or we are going to take your gas anyway," said Tim Greene, owner of Land and Mineral Management of Appalachia. "This would give the gas company too much power."

That power already exists in Ohio.

There, property owners such as Ed Hashbarger have watched as what is called "mandatory pooling" is practiced. This allows energy companies to take gas from land without an owner's consent.

"We do not defend the United States of America so the government can strip me of my rights to my land," Hashbarger, of Bloomingdale in Jefferson County, told the Associated Press. "I'm furious over the whole thing."

Laws allowing mandatory pooling began springing up across the nation in the 1960s in response to what was seen as wasteful over-drilling.

Laws on mandatory pooling were intended to assure that profits from drilling were shared among both willing and unwilling property owners, said John Keller, a Columbus lawyer who represents Ohio drillers in their pooling requests.

The arrangement prevents neighbors from allowing drillers to suck resources from under another's land without compensation, while allowing interested landowners to exercise their mineral rights.

After Marcellus Shale exploration took off in 2008 and 2009, natural gas industry lobbyists in Pennsylvania put pooling at the top of their priorities list, but no legislation has been introduced.

Gov. Tom Corbett, who is viewed as an industry ally, has said he opposes it, calling it tantamount to "private eminent domain."

Hashbarger said he's among those who just want to be left alone.

"I'm not interested in signing a gas lease, and I don't like the idea that the state has a law that can include me in that kind of agreement," he said.



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