Proposed Legislation for Forced Pooling in WV Gaining Steam - Beware Mineral Owners

Have been following this closely and it appears the proposed Forced Pooling Legislation in the State of West Virginia is getting pushed along by the Oil and Gas Industry. There is already a law in place that covers formations below the Marcellus, but it appears now, the Oil and Gas Industry would like to take more from Land and Mineral Owners. The Legislation proposed by Industry Lawyers would put in place a 5 person committee, made up of an Industry Shills no doubt, to decided what "Fair and Just" bonus payments and royalty amounts will be paid to Land / Mineral Owners. This committee will base it's ruling on evidence that the O&G companies present, including what other minerals in the proximity of the mineral in question, were leased for. So if a mineral was leased for $10 per acre 20 years ago at the base rate of 12.5%, this could be used as evidence and what you could be paid under the proposed law. Keep in mind that this is being proposed because O&G Operators have such a hard time of tracking down the thousands of mineral owners required to be profitable and have abandoned massive amounts of mineral because they couldn't locate a mineral owner who's 10 acres blocked them from fully producing the 640 acre production unit and because many Land / Mineral Owners refuse to negotiate. I say that with the most sarcastic tone possible because that's what the O&G PR machine was churning out on Inside Shale (WAJR) this morning... a radio show that is paid for by the WV Oil and Natural Gas Association (WVONGA).

If you own mineral in the State of West Virginia and don't feel that your mineral should be stolen from you because you decide to decline the "Fair and Just" offer made to you by the Oil and Gas Industry, better start calling and writing letters to your state and local politicians to have your voice heard. Right now they are proposing a requirement of 67% be leased before they can Force Pool your minerals. A mineral owner group has proposed their own legislation with a 90% requirement but it will no doubt be negotiated down.

You can read more about the proposed legislation or google forced pooling in wv.

Anybody out there for Forced Pooling? I'm not convinced as I've sat in negotiations where landmen have threatened my family to sign for cheap or they will drill our mineral and hold it in an account until we sign their cheap offer. I think this will be another tool they use to force folks into signing bad leases that benefit their own pockets.

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Perhaps 75% and "favored nation" within 5 miles. That would include any lease (government) in that 5 miles.
That 75% applies to all land within that 5 miles not some gerrymandered unit.

Make no mistake, the oil & gas companies are the enemy of landowners and they prove it time and again. Small landowners throughout Ohio are being looted of their mineral resources by a consortium of firms including ExxonMobil, XTO, Phillips Resources, that have conspired with federal judges like U.S. District Judge John R. Adams of the Northern District of Ohio who have made the transfer of mineral rights less than that required to sell a used car. Why would any honorable person make a distinction between that property which is above the ground versus that which is below? There is no good explanation other than to enrich themselves and their partners at the expense of small landowners...

This actually helps landowners more then it hurts them. Right now WV has no set back rules for gas wells and its my understanding this will be part of this legislation too. In WV companies can drill right on a given property line (same way they did it 115 years ago), and they're draining the gas approximately 750' - 1000' on either side of a horizontal well (so they're getting the gas without paying anything when they drill on a property or lease line). Second if 5 property owners lease and a sixth or seventh, who maybe each have 5-10 acres won't lease what happens is the unit gets redrawn to exclude those and invariably, at least some of gas gets drained anyway with ZERO compensation to those outside.

Pretty much every state has a process similar to the one proposed for WV. Ohio has whats called the TAC, made up of an equal number of regulators and legacy producers. Oklahoma has a separate court system that hears dozens of these cases on a daily basis (its a lawyers wet dream). In no state can your minerals be pulled into a unit and then you be forced to have a drilling site/well head on your property. That will never happen. As to them not being able to find descendants; that is not really something to worry about. What happens in those cases is something called quiet title. They have to go before a judge and prove that they tried all means available to contact the last known descendant (certified mail, newspaper ads, etc). In the rare event they can't actually find an heir it all goes back to the current surface owner who can then sign a lease or not. My grandfathers family moved from Putnam County WV to Ross County OH in 1899. Last year a genealogist working for Cabot contacted me because when my grandfathers family sold their farm in 1899 they kept the minerals. No one in my family had any idea. So they are looking, not because of any altruistic motive but rather because they can be sued for astronomical sums (and the companies will lose every time) if they don't. They can be sued for all the production royalties that were never received plus enormous damages. If someone dies and leaves no obvious heirs the royalties are required by law to be held in an escrow account (where it earns interest too) until an heir is found. You can have your operating license revoked forever for failing to follow these laws and the wells can actually be taken away from the companies. You don't have to like the O&G companies but this law really does help the landowners more (protect them). The companies are all for it because they don't need as many people out trying to talk to landowners for months and months and months. Contract land men make about $500/day and the bills for their services can run into the hundreds of thousands of dollars per month because at any one time there are hundreds of people holding out.

Finally, as is the law in Ohio, the "governing body" that ultimately approves these requests won't even review the application unless the amount the companies are trying to force pool is less than 10% of a unit and it's likely to flop if its not less than 5%. So on a 640 acre unit (which is a bs number anyway as there are lots off 300 acre or 400 acre units being drilled) they wouldn't even hear the request unless the amount the company wants to pull is less than 64 acres, and it will likely be rejected if its not less that 32 acres. Especially if the 32 acres is held by more than one owner. The more owners (smaller parcels) there are the less likely they will approve the request.You don't have to like or trust the companies but WV has needed this kind of law for 100 years.

The threshold for forced pooling in Ohio is 65%, and yes they do pretty much what the O & G companies want.

What's your source for the 750-1000 feet of drainage number?  The number I've been able to find is about 250-300 feet to either side.  If it's more, that could make a big difference for some of my clients.  I'd love to be able to show 750-1000 feet.

If I may, I would like to rephrase your opening statement slightly:

"This actually helps landowners more then it hurts them."

It is more correct to say:

'This actually helps more landowners than it hurts.'

To expand:

' ...and helps the O&G's more than landowners.'

West Virginia residents and landowners,

The House Judiciary Committee is voting on the Forced Pooling Bill known as HB 2688 this Monday morning.  Mr. Ryan Weld is currently undecided which way to vote.  His vote could be the deciding vote!

Those who oppose forced pooling should email Ryan Weld. 

Ryan Weld    (R - Brooke, 02)

CONTACT Capitol Office: Room 224E, Building 1 State Capitol Complex Charleston, WV 25305 Capitol Phone: (304) 340-3367 Home: 2225 Marianna Street Wellsburg, WV, 26070 Home Phone: (304) 737-4185 Business Phone: (304) 670-6605

Also, here is a link to the all of the members of the House Judiciary Committee.

I wouldn't hurt to email each member:

House Judiciary  - Agenda

Monday, February 23, 2015, 9:00 AM

Location: Room 418

9:00 AM Meeting called to order

Roll call

  Approval of minutes

  SB357/HB2566  Coal Jobs and Safety Act of 2015 

HB2688  Providing for the unitization of interests in drilling units in connection with all horizontal oil or gas wells

Don't forget that the royalty percentage on your lease means nothing if the state doesn't have a law in place to ensure you are getting a fair royalty.

Our 17.5% Gross lease in Ohio is giving Buck Well 1H landowners $57 to $150 per acre per month in royalties regardless of volume of Oil, gas, and NGLs produced.

The laws in Ohio do not apply to my producer, since they have "taken care of business" in Columbus.

Having a minimum royalty law, a state government that will enforce it, and an audit method to ensure your producer cheats you only now & then is the only hope that the landowners will take home some money.

That money will help us keep our land in spite of the new Real Estate Taxes and other local taxes that the states are coming up with assuming the producers are paying a fair royalty, which isn't going to happen without some law enforcement.

did this pass?  anyone hear?

This bill is on the agenda today at 9AM.

It's still being discussed in the House Judiciary Committee.

To listen in live, click this link, then, under 'House Committees', then click 'Judiciary Room 410M'.

A new window will pop up.  You may need to look behind the window you already have open by minimizing it.

The pop-up window may have a grey screen.

Right click on the puzzle piece and click 'Run this plug-in'

Make sure your sound is turned up.


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