Dear Esteemed Delegates:

   You will have an opportunity on Monday, March 2, to vote for or against HB 2688 which provides for fair pooling (aka unitization) of oil and gas interests of both oil and gas mineral owners and oil and gas development companies.  This is an extremely important new bill  which will profoundly impact the citizens of the state of West Virginia.  On behalf of the Appalachian Chapter of the National Association of Royalty Owners (NARO), I strongly encourage you to vote YES for the passage of this bill.

    This bill represents fairness to all parties and is the result of considerable efforts of representatives of all stakeholders who may be affected by horizontal drilling of all geological formations to explore for and produce oil and natural gas in West Virginia.  Included were oil and gas producers associated with the West Virginia Oil & Natural Gas Association (WVONGA) and the Independent Oil & Gas Association of West Virginia (IOGA of WV), along with the West Virginia Farm Bureau, the West Virginia Royalty Owners Association, the West Virginia Land and Mineral Owners Association, The West Virginia Surface Owners Association, and the group I preside over, NARO Appalachia.

    The current bill, HB2688, represents a working compromise between all of the above stakeholder groups.  It follows the introduction of vastly different proposals by industry representatives and mineral and surface owners of the above named groups in two interim Legislative meetings in late 2014 and three special meetings of the House Energy standing committee headed by Delegate Ireland during the early weeks of the current 2015 session.  It also follows unsuccessful and very controversial efforts with vastly differing opinions during previous years' sessions to develop a viable pooling bill for horizontal wells in West Virginia.

    In considering how you will vote on HB2688 tomorrow, please realize that all stakeholders are clearly aware that this bill is not perfect and is certainly not a panacea which will be agreeable to every citizen of West Virginia.  However, it does include many favorable features to companies and mineral/land owners alike and is characterized by providing for a seven member horizontal pooling review commission made up of individuals from each stakeholder category, oil & gas professionals, and certain state overview agencies. 

   Not less important, it requires the submission to that commission of relevant factual components previously agreed to by other parties which will be included in the planned pooled units and in the general region of the planned pool by the applying party, including the sign-on bonuses amount in dollars and the royalty percentages.  Noteworthy is that the  horizontal pooling commission cannot permit pooling of either unaccounted for/un-locatable or unwilling mineral owners at royalty rates less than 12.5% of gross sales, the latter of which cannot be reduced by any costs or expenses incurred by the Lessee in any form.

    Also during your consideration, note that many factors need in-depth consideration by investors and drilling companies when deciding on whether to drill expensive horizontal wells. Among them are certainly the geological setting, availability of mineral estates/leaseholds, available markets for oil and gas, capital availability, current and projected oil and gas prices, operating costs, lease bonuses and royalty percentages, anticipated profits, the availability of pipeline access (for natural gas), global events, and available liquids extraction plants to process their raw product stream. 

   Also note that passage of a "fair" pooling bill such as HB2688 is just one of the many factors that can contribute to a company's final decision to acquire leases and drill horizontal wells.  Thus, horizontal pooling, while not guaranteeing by itself that substantially more wells will actually be drilled in the near future, by providing for additional drilling units it can be the catalyst for companies to commit extremely large financial sums in West Virginia in pursuit of developing the estimated huge reserves of oil and gas underlying our state from the Marcellus and Utica Shales.  It can also be the deciding factor to mid-stream companies that West Virginia is conducive to aggressive oil and gas development, justifying their corresponding installation of extremely expensive liquids extraction plants such as for ethane crackers. 

   Finally, with passage of HB2688, more of West Virginia's mineral owners will potentially experience the development of oil and gas resources from their properties and enjoy the associated financial benefits of oil and gas production and sales.  On a larger scale, greater development of those resources will coincidentally have the potential to reduce America's dependence on foreign oil and gas sources.


  Robert N. Hart, P.E. CMA
  Petroleum Engineer
  President, Appalachian Chapter
  National Association of Royalty Owners
  (With Chapters in ten Oil & Gas Producing States)

Views: 726

Reply to This

Replies to This Discussion

My thoughts on these people who are heading some of these groups, who are pushing for passage:  They would not be pushing this bill unless it is going to benefit them financially.  One needs to check out their background and the companies they represent.  That shows who is a wolf in sheeps clothing.  When reading the above letter one word stands out on more than one occasion. "FAIR"  Fair for who would be the question that needs answered. 

In an attempt to garner support from hopeful mineral owners, supporters of this bill loudly proclaim the bill's initiative to protect owners' tracts from 'sterilization'.  However, the debate in the WV legislature has forced the industry to admit that pooling activity can have the same results on neighboring mineral tracts.

Long ago, WV code established 12.5% as a minimum for mineral owners' royalty due them from the sale of their property.  This is not new, nor is it appropriate to the present time.  I don't know of any lease agreement in recent history which carries this low of an amount; indeed, the industry itself has moved to a higher 'first offer'.  Additionally, in searching public records, I have encountered historical signing bonus agreements, which will be used to calculate bonuses for force-pooled minerals, as low as $15 per acre.  For this bill to be, as its title falsely implies, a fair bill, it should establish a minimum royalty and signing bonus for forcibly pooled minerals that is equivalent to the highest negotiated royalty and signing bonus in the proposed pool.  Anything less will constitute punishment for 'holding out', or even simply being unaware of the producer's attempt to locate the owner.

Since forced pooling does not allow forced surface activity, it makes no sense for anyone associated with farming or other surface activities to be involved in debate on the bill, nor to have members on the 'Commission'.  As surface owners, the only interest that these entities would have in this legislation, would be in the case of their owning the mineral rights under their surface properties.  In the case that they want to lease these rights, forced pooling could be used by the forced pooling applicant to these owner's advantage.  Should their mineral rights be force pooled with neighboring tracts, their surface rights would have no bearing, as surface activities cannot be forced.

In other words, if a farmer owns the minerals under his farm, and wants his farm to be drilled, but his neighbor is holding out, forced pooling might be used to complete the unit, allowing the farmer's minerals to be drilled.

On the other hand, if the farmer does not want to sell his minerals, but his neighbors do, forced pooling might be used to include his farm in a unit with theirs.  In this case, the farmers surface rights are protected by the bill, and his farm goes undisturbed, while his minerals are forcibly seized.  In this circumstance, he is no different from any other mineral owner, and is affected in the same manner.

This should illustrate that any surface entity, whether it be farming, forestry, recreational, or residential, should have no bearing on passing nor the enforcement of HB 2688.

As to the WVROA, someone else on this website has called into question, the motives of this organization.  According to this poster, the president of this organization is, in reality, an operator within the oil and gas industry in WV, residing in Florida.  I have been unable to confirm this, which, in itself, seems suspicious, since most citizens' advocacy groups' leadership is quite transparent

For years now, much has been said about the proposed 'cracker plants'.  Counties all along the Ohio River, from Huntington to Pittsburgh,  have spent much time and energy, if not money, romancing companies in the effort to attract one of these plants, with no real progress.

As far as I know, not one of those ill-fated initiatives failed because of an anticipated lack of available gas.

This bill is simply an extension of an industry's well-established history of preferring bought-and-paid-for legislation, and litigation, over profit reduction.


If the people supporting this bill in the legislature, think for minute that the oil companies won't find loopholes in this bill, then they are oblivious to anything.  Those companies will twist this bill to benefit them and then it will be too late for owners.  The pass the blame will start but the fact is government voted it in.

Did I miss something but, I thought if forced pooled, one would not get any bonus money.  May have missed something or the owner may still be able to negotiate a bonus payment.  So far, these new people now in Charleston,  are not about protecting the owners.

I wish someone would have uncovered these big time flip artists earlier, that hide behind the owner groups logo.  They are just looking to take what they can for themselves at any expense...... 

The bonus money is not necessarily eliminated by the bill.  The mineral owner will be offered another opportunity to negotiate directly, though his/her position will be significantly weakened.  Failing this, the mineral owner and the company will be afforded a hearing in which to present evidence including bonus amounts from the area.  The bonus amount, as well as the royalty percentage, will be set by the Commission

The algorithm to be used in this process is not defined by the bill.  It seems that it will be arbitrary, based on the 'opinion' of the Commission, with voting members taking into account agreements already in place in the area, but not necessarily that unit, or pool.  I can see no reason that a reluctant owner should be paid less than a willing lessor in the same unit, but it seems that the door will be left wide open for this to occur.

That doesn't sound so bad until you look at the makeup of the commission.  Again, I don't see how forestry, farming, or any other surface interest offers any sort of balance.  The bill explicitly protects mineral owners from any forcible surface activity, rendering these members' areas of 'expertise' moot.  

The only apparent advocate for mineral owners on the Commission will be the mineral owner, who will be chosen by the governor from three candidates.  These three candidates will be nominated by "...the major trade association representing royalty owners in this state...".

 Which association that will be is undefined in the bill, but my money is on the WVROA.  

The president of this organization is Ron Hayhurst.  Mr. Hayhurst is a resident of Florida, and operates at least three different entities active in the oil and gas industry, all out of the same office in Fairmont.

The following is a link posted by Todd on another thread that I have reposted here, and leads to a complaint filed in US District Court for the Northern District of WV, which reads like an episode (a to-be-continued one) of 'Dallas'.

The complaint is long, repetitive, and downright revolting, but it should leave little doubt as to the breadth and the depth of deception and corruption being practiced to deprive WV owners of their property.




The president of both mineral groups who are both in the oil business support the bill and the one from the WMOA is in a lawsuit.  Makes a person want to deal with those people.  Then you have  those with mineral interests who are supporting and sponsoring the bill in Charleston.  I think that the money is taking over here in this case.


© 2024   Created by Keith Mauck (Site Publisher).   Powered by

Badges  |  Report an Issue  |  Terms of Service