Lease Integration/Force Pooling Summary
A Summary of the Lease Integration/Force Pooling Bill
The Bill is Sponsored By:
Tim Manchin in the House of Delegates Bill 3151
Brooks McCabe in the Senate Bill 616
This Bill is a wish list of all the items that the horizontal drillers wish to impose on surface owners and mineral (royalty) owners. This Bill will allow the horizontal drillers to bully, dictate, threaten, and take advantage of West Virginia surface owners and mineral (royalty) owners in their negotiations with big, out of state oil and gas companies. The following are some of the most oppressive parts of the bill.
1. This Bill will allow horizontal drillers to take almost anyone’s property. “When a unit has been formed and integration order has been entered under this section, the operators shall have the right to utilize the surface of all the property in the unit as necessary to conduct drilling activities and to construct and operate access road, pipelines and facilities incidental to the drilling and production activities on the surface of all respective tracts within the drilling unit, provided however that this provision shall not relieve the operator of any express lease or contract obligation:” Page 8 Section 11
2. This Bill will allow the horizontal drillers to pay the minimum amount of money possible for damages to the surface. “That the operator shall provide the owners of the surface estate notice as required by article six-a, chapter twenty-two of this code, and the operator shall compensate the owners of the surface estates for damages pursuant to article six-b of that article.” Page 9 Section 11(top of page continued from page 8)
3. The Bill will allow the horizontal drillers to pay the least amount possible to the mineral (royalty) owner. “as to one-eighth interest in such oil and gas” Page 2 Section 4
4. The Bill will allow the horizontal drillers to hold the drilling unit for seven years and as long thereafter until all the wells are plugged “An Integration order shall expire if a horizontal well has not been drilled in the integrated unit within seven years of the date the order is final and nonappealable, and if such a well has been drilled within seven years the order shall continue in force and effect until all the wells drilled in the unit are plugged.” Page 8 Section 10
5. The Bill will allow the horizontal drillers to hold all of the acreage in all of the formations of the unit until all of the wells are plugged. The horizontal drillers call this legacy acreage.
6. This Bill will allow the deep well commission to oversee all shallow and deep horizontal wells except coal bed methane wells. This commission is made up of five members Director of the Department of environmental protection, Chief of the Office of Oil and Gas of the DEP, A Governor appointed independent producer, A Governor appointed public member not employed by the public service committee, and a Governor appointed professional engineer with a degree in engineering or geology and experience in oil and gas. This commission is dominated by industry people with no mineral (royalty) or surface owner representation.
Last Updated (Tuesday, 18 June 2013 16:36)
Legislative Interim Update
WVROA has been holding monthly meetings to inform our members about the Lease Integration Bill (Force Pooling Bill) that was introduced in the 2013 Legislative session and that will be carried over into the 2014 Session. During the Legislative interim the Judiciary Committee will be studying “integrated leasing of horizontal gas wells”. Which is why now is the time to get the word out that this bill is going to hurt West Virginians.
Our organization is still working hard to keep your mineral interests safe, please pass this along to family, friends and neighbors; we may have tough fight ahead of us in the 2014 legislative session.
Last Updated (Tuesday, 18 June 2013 16:35)
1. Forced Pooling is the taking of an individual’s personal property rights.
2. Forced Pooling would allow companies to forcibly take private property for the benefit of private corporations.
3. The West Virginia State Tax Department estimates that there are 500,000 owners of oil and gas in West Virginia.
4. Meaning, approximately 1 out of every 4 people in West Virginia own oil and gas minerals and would be subject to forced pooling.
5. There is no need to pass a new law regarding lost and unaccounted for heirs; West Virginia State Statute 55-12a-1 addresses this issue.
6. Land-men already use the tactic of "If you don't sign this we'll just force pool you"; in passing this law it will allow bullying to increase.
7. Recently proposed legislation would allow a Commission to approve surface use without consulting surface owners.
8. The Recently proposed legislation does not take into account the fact that horizontal drilling is going to happen in many different formations under the same tract in the future.
9. Force pooling legislation is going to cost mineral owners many millions of dollars in royalty payments if it's passed.
10. It will not only cost mineral owners millions, it will also cause the loss of numerous high paying jobs in West Virginia.
Last Updated (Tuesday, 18 June 2013 16:46)
Leasing Clauses to Look for
Top Leasing Clauses to Include or Remove!
1. Specific Depth Reservation
· Lease only the Marcellus, or only the shallow formations; never lease the surface to center of the earth.
2. Lease only Your Tract
· Avoid language that includes words such as adjacent, or contiguous; it can allow them to hold your tract even though there is no production.
3. Your Royalty Payments are Deduction Free
· Deductions or post production expenses on royalty payments can reduce a 12.5% lease to under 6%.
4. Avoid Enhancement Clauses
· Enhancement clauses have been used against royalty owner’s under the guise of ‘The gas is not marketable at the well head, so transportation is an enhancement’; even if your lease says deduction free.
5. Pugh Clause
· If a portion of your acreage is not included in a unit, the non-developed acreage is released, allowing for another company to potentially develop it.
6. Warranty of Title
· Do not give any warranty on your title, in most cases you haven’t done title and they have approached you wanting to lease.
7. Limit on Shut in Payments
· Put a time limit for how long a shut in payment can hold your lease in full effect.
8. ALWAYS Consult a Lawyer
· These are a few things to watch for and should not be considered legal advice, find a good oil and gas lawyer that will be able to assist in the leasing process.