Replies to This Discussion

Permalink Reply by Kathleen on March 23, 2013 at 7:51am

I think I read it to say once you are forced in, the oil and gas co can use your surface as it sees fit to produce the oil and gas. Of course it says you have to be compensated.
If I lived in WV I would write in to argue against that. The law states the co has to have 75% of the unit already so why should the person who really didn't want their land in, now be forced to have roads, pipes, compressor stations, you name it on their land when they could work with the other 75%? I feel one or two people should not stop others around them from benefiting from their minerals but after forcing them in now they could lose some of their surface to the whim of the oil and gas co. I really think they took that too far.
I hope I read that wrong.
I can hear a landman now "not only will we force you in but you won't have a lease protecting YOU from all the things our co could put on YOUR land".

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Permalink Reply by Kathleen on March 24, 2013 at 3:59am

I was so shocked by that surface use I thought I had to be reading that wrong :0(.
I hope people in WV pay attention to this since I believe if enough people speak up they could change this to no surface for forced pooled minerals.

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Permalink Reply by Jason Grecco on March 24, 2013 at 4:29am

I can understand the premises of the bill for capture of O/G through subsurface extraction, but surface usage takes the law way to far.  WV....call your sentators!!!

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Permalink Reply by john on March 24, 2013 at 10:46am

My interpretation is different.  The producer must have 75% interest of each tract within the unit..  If 75% is obtained than the company may utilize the lands (surface) if the lease allows them..  if someone within that 75% negotiates a non-surface agreement than the company cannot use the surface.  However,  a non-surface agreement would only be negotiated by a land man if the oil and gas owners own the surface as well.  many parcels in this state are owned by several heirs.  Oil and gas reservations have been dated back to 1850. An oil and gas title chain can get out of control in West Virginia.    Obtaining 75% of the oil and gas owners on one particular tract can be very very very difficult in this state!!!!  I think this needs a little revision but mainly the state is trying to solve a big issue. 

 

most decisions in this country are made by majority vote.  why should someone be held back from money because of a distant relative that maybe they dont know, don't speak, and probably has never been to the state, whom won't sign a lease??   

 

I think forced pulling will help landowners in the State of West Virginia.  Forced pulling will also make West Virginia more attractive to the producers.  

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Permalink Reply by Kathleen on March 24, 2013 at 1:08pm

I'm reading it to say the integrated parcels do not have a lease so this law takes the place of a lease and states the oil and gas co can use the surface of that integrated parcel.
A leased parcel in that unit may have a non surface lease which has to be follow and this new law does not supersede that language.
It seems WV knows lost heirs, like you mentioned may be an issue and keeps using the language of unknown owners (that was not exact wording). This might be being drafted with that in mind but if the wording stays as it is they can force someone in and use the surface.
I hope the person who started this thread takes a min and puts it in a few WV county threads so it gets the attention it deserves.

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Permalink Reply by 29041431 on March 24, 2013 at 4:12pm

Actually, there are several issues at stake here. First, the majority of gas companies complaints about "missing heirs" always applies to 5% or less of the total acreage needed. Setting the bar at 75% is ridiculous.Second, under this bill, they can force pool anyone, not just missing heirs. The Landmen will be using that old familiar story trying to scare you into signing bad leases by threatening to "force pool" you, if they give you that opportunity in the first place. The other mineral owners in the group might get market rate and signing bonuses and great leases because they were able to negotiate their leases. But if they force pool you, they are limiting your revenue to 1/8 or 12.5% gross (less production and enhancement costs) which would probably net you about 7% plus NO SIGNING BONUS and no limitations on how long they can hold your property without production. There are no specified requirements here and they are not required to even offer you a lease. They want to take away your property rights by limiting your ability to negotiate a fair lease. Also, under this bill, they lock up all strata of your oil and gas. Finally, the Oil and Gas Commission has five (5) members, four of which are oil and gas people. You don't want to leave it up to them to decide your future. The gas companies waited until the very end of the legislative session to introduce this bill for a reason. More to come.Be vigilant!

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Permalink Reply by Christine Davis on March 26, 2013 at 3:29am

A lot of old leases don't have unitization, which they need in order to drill a horizontal well.  However there is no way to determine if the well is actually still producing, especially with a lot of old flat rate wells.  In some instances the lease allows the company to continue paying even if the old well isn't in production, however some say if the well is not producing the lease is dead.  In may instances no one knows. There is a big difference in what a person would be paid for a new lease versus a modification.

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Permalink Reply by Christine Davis on March 26, 2013 at 3:22am

West Virginia Royalty Owners Association has been watching for this, there had been talk of a bill being introduced this session, there is one on the Senate Side Bill 616 (3/22) and one one the House Side Bill 3151 (Introduced 3/25).  This bill is terrible for mineral owners.  

The 75% under lease is calculated by excluding the lost and unaccounted for people.  

It also is just 75% of the unit not the total acreage they will be able to hold up with the integration order.  For example say you have a 100 ac tract and they are including 1 ac or the 100 in the unit.  They get to keep all 100 even though only 1 ac will actually benefit the royalty owner.

The best part is there is already to statutes in WV that address Unknown and non-consenting owners.  WV 55-12a-1 addresses unknown owners, by appointing a special commissioner  to lease or sell the acreage on behalf of the unknown heir. Which different oil and gas companies have been using in the past successfully.  

WV 37-4-1 and 37-4-3 addresses the non-consenting owners, in that it allows a judge to either divide a tract between owner or calls for the sale of the tract.  This can only be done if you own an interest in the tract with a non-consenting owner. 

These bills need to be defeated, and I hope that some of you may pass this information along to other WV owners.  

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Permalink Reply by 29041431 on March 26, 2013 at 7:08am

There are actually two bills in the House -  HB 3060 and HB3151 and one bill in the Senate, SB616, that have been introduced in the last few days that merit your attention as a royalty owner. These bills have been forwarded by gas industry lawyers and are sponsored by powerful members of the Legislature with one purpose in mind and that is to wait until the last minute of the Legislative session to make a run at passage. Perhaps the most dangerous bill of the entire lot is HB3060, because, if passed, it could “reclassify” Marcellus drilling from shallow well status to deep well classification. If that happens, all oversight and control passes to the Oil and Gas Conservation Commission. HB3060 begins with well spacing but from there could lead to Forced Pooling, if the Commission gets to make up the rules. They effectively take away your property rights without review by doing everything behind closed doors. Now is the time to contact your legislators. At the very least, please contact the legislators who control the movement of these bills through the legislature. Here is their information:

HOUSE SPEAKER – RICHARD THOMPSON – DEMOCRAT – WAYNE –
speaker.thompson@frontier.com
Room 228M  Bldg 1                              State Capitol Complex
Charleston, West Virginia 25305
Capitol Telephone: (304)-340-3210

SENATE PRESIDENT – JEFFREY V. KESSLER – MARSHALL –
Jeff.kessler@wvsenate.gov
Room 227M, Bldg. 1
State Capitol Complex
Charleston, West Virginia 25305
Capitol Telephone: (304)-357-7801

Here is the specific information and sponsors of each bill:

HB3060– Lead Sponsor - Brent Boggs – Democrat – Braxton
Brent.boggs@wvhouse.gov       Capitol Telephone: (304)-340-3220
Address: Room 228M  Bldg. 1
Sponsor – Tim Miley – Democrat – Harrison
tim.miley@wvhouse.gov    Capitol Telephone – (304)340-3252
Room 418M   Bldg. 1
Sponsor – Tim Manchin – Democrat – Marion
tim.manchin@wvhouse.gov      Capitol Telephone – (304)-340-3392
Room 400M  Bldg. 1
http://www.legis.state.wv.us/Bill_Status/bills_text.cfm?billdoc=hb3...

HB3151 – Sponsored by Tim Manchin – Democrat - Marion
tim.manchin@wvhouse.com
Room 400 Bldg. 1
http://www.legis.state.wv.us/Bill_Status/bills_text.cfm?billdoc=hb3...

SB616 – Sponsor – Brooks McCabe – Kanawha
Room 209W Bldg. 1       Capitol Telephone – (304)-357-7990
http://www.legis.state.wv.us/Bill_Status/bills_text.cfm?billdoc=sb6...

Thanks. More to come

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Permalink Reply by 29041431 on March 28, 2013 at 4:26pm

It appears that House member Woody Ireland, Republican-Ritchie, has successfully amended HB3060 to make it apply only to deep wells and not shallow wells. It is doubtful that SB616 is going anywhere at all so HB3151 is now probably the most dangerous bill regarding forced pooling. Please contact your legislators to voice your opposition to HB3151.

 

HB3151 – Sponsored by Tim Manchin – Democrat - Marion
tim.manchin@wvhouse.com
Room 400 Bldg. 1
http://www.legis.state.wv.us/Bill_Status/bills_text.cfm?billdoc=hb3...

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Permalink Reply by Inchworm antenna on March 29, 2013 at 10:05am

http://www.legis.state.wv.us/WVCODE/ChapterEntire.cfm?chap=22&a...

The above address will take you to WVC 22-6-8 and has to do with royalty to be be paid on flat rate leases and here it is below: I believe this to be a key sentence: " shall tender to the owner of the oil or gas in place not less than one eighth of the total amount paid to or received by or allowed to the owner of the working interest at the wellhead for the oil or gas so extracted, produced or marketed before deducting the amount to be paid to or set aside for the owner of the oil or gas in place, on all such oil or gas to be extracted, produced or marketed from the well."

WEST VIRGINIA CODE

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§22-6-8. Permits not to be on flat well royalty leases; legislative findings and declarations; permit requirements.

(a) The Legislature hereby finds and declares:

(1) That a significant portion of the oil and gas underlying this state is subject to development pursuant to leases or other continuing contractual agreements wherein the owners of such oil and gas are paid upon a royalty or rental basis known in the industry as the annual flat well royalty basis, in which the royalty is based solely on the existence of a producing well, and thus is not inherently related to the volume of the oil and gas produced or marketed;

(2) That continued exploitation of the natural resources of this state in exchange for such wholly inadequate compensation is unfair, oppressive, works an unjust hardship on the owners of the oil and gas in place, and unreasonably deprives the economy of the state of West Virginia of the just benefit of the natural wealth of this state;

(3) That a great portion, if not all, of such leases or other continuing contracts based upon or calling for an annual flat well royalty, have been in existence for a great many years and were entered into at a time when the techniques by which oil and gas are currently extracted, produced or marketed, were not known or contemplated by the parties, nor was it contemplated by the parties that oil and gas would be recovered or extracted or produced or marketed from the depths and horizons currently being developed by the well operators;

(4) That while being fully cognizant that the provisions of section 10, article I of the United States Constitution and of section 4, article III of the Constitution of West Virginia, proscribe the enactment of any law impairing the obligation of a contract, the Legislature further finds that it is a valid exercise of the police powers of this state and in the interest of the state of West Virginia and in furtherance of the welfare of its citizens, to discourage as far as constitutionally possible the production and marketing of oil and gas located in this state under the type of leases or other continuing contracts described above.

(b) In the light of the foregoing findings, the Legislature hereby declares that it is the policy of this state, to the extent possible, to prevent the extraction, production or marketing of oil or gas under a lease or leases or other continuing contract or contracts providing a flat well royalty or any similar provisions for compensation to the owner of the oil and gas in place, which is not inherently related to the volume of oil or gas produced or marketed, and toward these ends, the Legislature further declares that it is the obligation of this state to prohibit the issuance of any permit required by it for the development of oil or gas where the right to develop, extract, produce or market the same is based upon such leases or other continuing contractual agreements.

(c) In addition to any requirements contained in this article with respect to the issuance of any permit required for the drilling, redrilling, deepening, fracturing, stimulating, pressuring, converting, combining or physically changing to allow the migration of fluid from one formation to another, no such permit shall be hereafter issued unless the lease or leases or other continuing contract or contracts by which the right to extract, produce or market the oil or gas is filed with the application for such permit. In lieu of filing the lease or leases or other continuing contract or contracts, the applicant for a permit described herein may file the following:

(1) A brief description of the tract of land including the district and county wherein the tract is located;

(2) The identification of all parties to all leases or other continuing contractual agreements by which the right to extract, produce or market the oil or gas is claimed;

(3) The book and page number wherein each such lease orcontract by which the right to extract, produce or market the oil or gas is recorded; and

(4) A brief description of the royalty provisions of each such lease or contract.

(d) Unless the provisions of subsection (e) are met, no such permit shall be hereafter issued for the drilling of a new oil or gas well, or for the redrilling, deepening, fracturing, stimulating, pressuring, converting, combining or physically changing to allow the migration of fluid from one formation to another, of an existing oil or gas production well, where or if the right to extract, produce or market the oil or gas is based upon a lease or leases or other continuing contract or contracts providing for flat well royalty or any similar provision for compensation to the owner of the oil or gas in place which is not inherently related to the volume of oil and gas so extracted, produced and marketed.

(e) To avoid the permit prohibition of subsection (d), the applicant may file with such application an affidavit which certifies that the affiant is authorized by the owner of the working interest in the well to state that it shall tender to the owner of the oil or gas in place not less than one eighth of the total amount paid to or received by or allowed to the owner of the working interest at the wellhead for the oil or gas so extracted, produced or marketed before deducting the amount to be paid to or set aside for the owner of the oil or gas in place, on all such oil or gas to be extracted, produced or marketed from the well. If such affidavit be filed with such application, then such application for permit shall be treated as if such lease or leases or other continuing contract or contracts comply with the provisions of this section.

(f) The owner of the oil or gas in place shall have a cause of action to enforce the owner's rights established by this section.

(g) The provisions of this section shall not affect or apply to any lease or leases or other continuing contract or contracts for the underground storage of gas or any well utilized in connection therewith or otherwise subject to the provisions of article nine of this chapter.

(h) The director shall enforce this requirement irrespective of when the lease or other continuing contract was executed.

(i) The provisions of this section shall not adversely affect any rights to free gas.

Note: WV Code updated with legislation passed through the 2012 1st Special Session

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