Ohio: Forced Pooling: How Many Acres?

Ohio does have forced pooling; a buddy of mine without a lease thinks he cannot be forced pooled because of the size of his acreage which is 150 acres and drilling is occurring close to his property Is this true is their a limit on the amount of acres that can be force pooled?  If this answer has been given before just point me to the discussion--sometimes the answer is in an unlikely discussion.   Thanks in advance.

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Permalink Reply by Keith A Williams on June 7, 2013 at 10:46pm

Searcherone,

Your buddy needs to have a lot more acres to stop them from drilling. See this article

http://www.oilandgaslawreport.com/2013/04/25/unitization-in-ohio-co...

In the article (actually 3 articles) Andrew Trafford does a great job of explaining what the current laws are and how they apply.

If I understand it, the company needs 65% of the unit locked up and can then force the other 35%. So on a 640 acre unit they could force up to 224 acres. Also remember that not all his acres would/could be in one unit. They may be split up into 2.

If you want to get your buddy all worked up, just tell him that the company can force pool a small corner of his property in a unit and leave the rest of it hang. He would only get small money from that AND since he has no lease, he has no right to have the rest of his property drilled any time soon. He could be in limbo for a long time. I can see the steam coming out of his ears in my mind!!

HTH

Keith A. Williams

Permalink Reply by Bill Bergseid on June 20, 2013 at 3:54pm

Keith-This isn't quite right.  The unleased mineral owner always has a right to drill his own well if he has enough acreage to satisfy the spacing requirements.  Since most mineral owners don't have the money or the expertise to drill their own horizontal well, they grant a lease to someone who does and keep a cost free royalty interest.  Either way, I don't see why he should have steam coming out of his ears.

Permalink Reply by Joseph-Ohio on June 20, 2013 at 4:20pm
How about if the fellow's land were force pooled into a
Utica Horizontal Unit held by a 'Tailgate' class
leasehold agreement.
We'd consider that simply unfair in today's Long
Horizontal Bore Utica era.
Anybody see it otherwise ?
0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on June 20, 2013 at 4:41pm

If there's an old lease agreement then the landowner isn't being force pooled, the owner of the lease is.  And I have a problem with that because the lease owner shouldn't be forced into parting with an asset simply because an unelected political appointee says so.

Permalink Reply by Joseph-Ohio on June 20, 2013 at 5:24pm

Marcus,

I was trying to address the potential that a Utica Drilling Unit (65% of which may be formed by a perhaps even 'flipped' tailgate class leasehold) and formed at the presiding official's determination that said official could also force pool adjacent 'un-leased' lands / landowners awaiting a Fair Lease Offer for their Gas and Oil resources.

I see many problems of what would be Fair vs. Unfair and all apparently indeed decided by what an 'unelected political appointee' determines.

I agree with you and I believe that the process taken at it's face value could work out to be  entirely unfair to landowners considering the current / new Utica Shale Long Horizontal drilling techniques; larger drilling units and even in conventional vertical wells within a larger drilling unit comprised of force pooled lands / landowners.

The force pooling rules were written originally toward conventional vertical bores and caused more wells to be developed with landowners enjoying the production from their well privately as I understand.

These new forced pooling perspectives / rules seem to me to leave the landowners' interests at the discretion of said 'unelected political appointee' as things seem to stand.

And what stops a conventional vertical well from being force pooled into a larger drilling unit and thereby splitting / diluting a landowner's return on  the resources that lie only within said landowner's lands ?

Personally, I'm seeing ample opportunity for a landowner or landowners to get steamed about fairness issues.

Kindly correct me if I misinterpret / am incorrect in my perceptions.

Permalink Reply by Jeffrey E. Fort on June 21, 2013 at 10:24am

A law school professor told us over 30 years ago, and it's true: the law does not protect someone from making a bad deal. Freedom of contract should trump all else except, perhaps, in extreme circumstances like fraud. Anyone who signed a lease and then thinks it is "unfair" has to question his judgement. Read our recent blog (at the Porter Wright web site) regarding a 1901 lease in NW Ohio. Even then that landowner understood the issues and made sure his lease expressed his interest.

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on June 21, 2013 at 10:30am

This isn't an issue of a landowner signing a bad lease and then complaining about it later.  This is about someone who is unleased and is uninterested but forced into a unit anyway.  I'm ok with the concept up to a point, but I cannot accept the notion that the Chief determines the price per acre and the LOR and simply imposes that on a landowner. 

Permalink Reply by Joseph-Ohio on June 21, 2013 at 12:16pm

Marcus,

 

We agree on the point you made also.


There's that point, my point and many other fairness issue points that shouldn't be resolved by old mis-applied legislation and / or by any single appointee (perhaps politically motivated).

That in itself is unfair.

 

IMHO

Permalink Reply by Joseph-Ohio on June 21, 2013 at 12:27pm
There are those of us also, who are unleased and interested; but, think it unfair to be forced into a sub-standard lease by today's Utica standards.
Permalink Reply by Joseph-Ohio on June 21, 2013 at 7:34pm
Jeffrey,
The scenario you describe is not the scenario
that my post discussed.

The mis-application and enforcement of old rules
to the complexities of deep and long horizontal
bores commonly used in modern shale gas & oil wells
traversing multiple properties raise many new
'Fairness' concerns even beyond what my post / replies
discuss.
Permalink Reply by Tony Yurina on June 21, 2013 at 10:53pm

We now see what the Kings men will do and decide on behalf of the " landowner" for  the betterment of the citizens of the state.  And O&G companies.

Signing a lease document of your own volition  is one thing, being forced into a deal with your land/minerals against your will is quite another.

Add antiquated laws and theory to modern development and the complex techniques, another problem arises. 

Where is the fairness to the landowner/mineral owner? 

This poor family may have to look out their picture window at a multi-well pad for 30 years, and be reminded every time they view the scenery they were forced into participating by the Kings men.

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on June 22, 2013 at 10:51am

This is an excellent way of summing up the problem.  There needs to be a more common sense approach so that units can be maximized and landowners rights are not trampled.  Maybe I ought to run for office and see if I can fix this one.

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