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Permalink Reply by 29041431 on February 19, 2014 at 6:31am

The problem is that under this bill they can force pool if you are already leased, so long as there is not a working well on your pooling unit. Under that restriction,they can actually throw out your current lease and pay you the state minimum of 12.5% (actually calculated to be 6.5% after deductions). The Oil and Gas Commission gets to decide what you get. How does that sound to you?

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Permalink Reply by 29041431 on February 19, 2014 at 8:16am

Jim

It's under

§22C-9-7a. Unitization of interests in horizontal well drilling units.

The meeting of the House Energy Committee has been changed to 4:00 P.M. today instead of 3:00 P.M.

 The Forced Pooling Bill may be found at

http://www.legis.state.wv.us/Bill_Status/bills_text.cfm?billdoc=hb4...

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Permalink Reply by Nancy Mosley on February 19, 2014 at 1:36pm

§22C-9-3 appears to be the place. It lists exceptions, including some wells already drilled.

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Permalink Reply by David Perotto on February 19, 2014 at 2:00pm

What about this scenario:

Forced pooling is not in place in West Virginia. Anti-fracers band together and say "no you are not drilling". They shut down the ability to form a drilling unit and nobody gets anything. It can happen.

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Permalink Reply by Nancy Mosley on February 19, 2014 at 2:05pm

Mr. Perotto I don't think that is happening much at all in WV.

The language that Mr. Taylor is wanting to find is in

22 - 9 - 7a f  6

  (6) With respect to royalty owners of leased tracts who have not consented to pooling or unitization, the commission may require that unitization consideration be provided to executive interest royalty owners equivalent to just and reasonable consideration for the modification of rights under a lease. Further, if an award of unitization consideration differs from the rights under a lease or other contract, the applicant, all royalty owners, and owners of leasehold, working interest, overriding royalty interest, and other interests in the oil and gas shall be bound by the order. Unitization consideration shall be provided by the participating operators, including the applicant, to the extent of their interest in the horizontal well unit.

and

   (7) With respect to interests in oil and gas as to which there is no lease in existence, the owner thereof is deemed a royalty owner to the extent of one-eighth and operator to the extent of seven eights by virtue of subdivision four, subsection (a), section two of this article and:

    (A) Any such owner may elect to surrender the oil and gas underlying such tract to the participating operators, including the applicant, to the extent of their interest in the horizontal well unit for consideration, which if not agreed upon, shall be just and reasonable as determined by the commission; or

    (B) Executive interest owners may make an election for unitization consideration, and if the executive interest owner elects unitization consideration, the interests of the executive interest owner and the associated nonexecutive interest owners shall be deemed leased to the participating operators, including the applicant, to the extent of their interest in the horizontal well unit on terms which, if not agreed upon, shall be just and reasonable as determined by the commission. Thereafter, the applicant and all royalty owners and owners of leasehold, working interest, overriding royalty interest, and other interests in the oil and gas shall be bound by the order, and the participating operators including the applicant, to the extent of their interest in the horizontal well unit, will be the operator of such oil and gas as to the deemed seven-eighths interest and the owner of the unleased oil and gas will be the executive interest royalty owner as to the deemed one-eighth interest.

    (C) Owners of oil and gas interests as to which there is no lease in existence who do not elect paragraph (A) or (B) of this subdivision shall be deemed to be a royalty owner with respect to one-eighth and an operator with respect to seven eighths of their ownership interest, and may not receive unitization consideration. With respect to such seven eighths, that owner may elect Option 1, Option 2 or Option 3 as provided by subdivision (9) of this subsection.

    (8) No unitization consideration may be required to be paid to any royalty owner who has consented or agreed to pooling or unitization by virtue of the terms contained in an oil and gas lease, pooling or unitization agreement, or other agreement which permits pooling or unitization.

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Permalink Reply by Nancy Mosley on February 19, 2014 at 2:16pm

I read the whole thing and it is pretty complicated but when they get 67% net acreage of the royalty owners of the land which the company wants to put in a unit, and 85% net acreage of the bonded operators (I think it is this kind of language) then they can force everybody else of the 33% of royalty owners into a lease at 12.5% and change the language of the lease, if one is in effect. Those operators can be forced to give up their rights in the leaseholds.

I am not an attorney and I read it just once and wasn't taking notes, but this is what jumped out at me. It sounds really bad. There is some language about unknown owners and maybe that is ok but I'd rather see it handled as property whose taxes are delinquent (owed by the unknown) rather than pool them and put the money into escrow. That is quite fair. However that is not the main part of this bill.

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Permalink Reply by Nancy Mosley on February 19, 2014 at 3:24pm

Those operators and the royalty owners are really victims here. I hope they have been able to object to this. They don't have much more clout than royalty owners compared to the Big Guys.

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