Less than two weeks ago, MDN reported that "forced pooling" in very limited circumstances may soon be approved in West Virginia, in cases where the mineral rights owner for land adjacent to already-leased land either can’t be determined or can’t be found (see WV Legislation Would Create Forced Pooling – with a Twist). MDN thought the proposal was a common sense approach to solve an existing problem. However, the WV Senate apparently did not agree.
Senate Bill 616 never even made it to committee for consideration. It’s now a dead issue for this session of the legislature, which is nearing the end of its 60-day term for this year:
The bill would not have permitted "forced pooling," but the West Virginia Senate still declined to consider legislation that would have allowed some unleased land to be included in drilling units.
"It never even got into a committee," Corky Demarco, executive director of the West Virginia Oil and Natural Gas Association, said of Senate Bill 616, introduced by Sen. Brooks McCabe, D-Kanawha. "I don’t want to speculate whether it was for a lack of support, or if it was just introduced too late in the session. It just never got any traction."
Two years ago, Demarco and other industry leaders advocated a bill that would have permitted forced pooling, which is now illegal for Marcellus Shale drilling in West Virginia. This concept would allow natural gas drillers to draw gas from land they have not leased.
For example, if all of your neighbors have signed leases with a particular drilling company but you refuse, you could be forced to allow your land to be used by gas drillers for the development of your neighbors’ gas by placing your land into the drilling unit. The pooling provision would require gas companies to pay pooled property owners royalties comparable to those paid to neighbors, but they would not receive any lease money.
The Legislature ultimately decided against forced pooling in 2011 after many landowners voiced concerns about losing their ability to negotiate better lease deals with gas companies.
Demarco said this year’s bill would not have "forced" anyone into anything. He said there are a number of mineral tracts throughout the state whose owners cannot be found.
"If I have a lease for 10 people in an area but we can’t find the owner for one tract of minerals, it is hard to drill in that area," Demarco said. "This is a major issue in West Virginia because some of these people cannot be found."
Demarco said he is not sure if his group will try to pass another pooling bill next year, but he said educating legislators and members of the public is key.
"There is a lot of misunderstanding in the public about this," he said. "That is something we have got to work on."
Despite the pooling bill’s failure, Demarco said drilling remains steady in the Mountain State. An average of 24 to 27 rigs are now drilling in the state, most of which he said are working in northern West Virginia.*
*Wheeling (WV) The Intelligencer/Wheeling News-Register (Apr 6, 2013) – Pooling Measure Dies In Senate