NEW CASTLE, Pa. — A public meeting about Hilcorp Energy’s proposed forced pooling of oil and gas well sites in Mercer and Lawrence counties was put on hold after some legal wrangling.
Well spacing order
Hilcorp Energy Co. is applying to the Pennsylvania Department of Environmental Protection for a well spacing order that establishes four Utica shale gas well drilling units on 3,267 acres in Pulaski Township in Lawrence County and Shenango Township in Mercer County.
This is the first-ever spacing order application for an unconventional shale gas well.
Drilling without lease. Forced pooling is an unused Pennsylvania state law (Oil and Gas Conservation Law) that would allow Hilcorp Energy to drill under a property without the owner’s consent.
Even if a landowner didn’t sign a lease, his land could get included with those who did sign. All landowners who are drilled upon would divide the royalties.
Hilcorp is trying to use the 1961 law to drill under the property of four landowners in New Bedford.
Three of the property owners affected, Martin and Suzanne Matteo, Robert and Carol Valentine and Steve Emery, filed a motion with the DEP May 2 to intervene in the case.
The Oil and Gas Conservation Law is designed to minimize the waste of oil and gas resources that may otherwise remain underground due to inefficient development.
In addition, the act is intended to protect the rights of property owners who may either be prevented from participating in a voluntary development unit, or who may receive no compensation for the development of their oil and gas resources due to the development and extraction of the mineral resource from adjacent property, which is subject to the rule of capture.
Rule of capture
Litigated extensively in Pennsylvania, the rule of capture generally recognizes that oil and gas “belong to the owner of the land, and are part of it, and are subject to his control; but when they escape, and go into other land, or come under another’s control, the title of the former owner is gone,” which was the decision in a Cambria County court case.
Hilcorp claims that 99 percent of the property owners in the 3,267-acre area have signed leases.
The public hearing was to be held May 7 and May 8, after which the DEP would create an order establishing the well spacing and drilling units.
However, on May 2, DEP Secretary E. Christopher Abruzzo determined that petitioning property owners have the right to be an official party to the Hilcorp application for gas well spacing unit proceedings.
The public hearing has been postponed due to the decision proceedings.
The landowners said in the filed documents they believe the Pennsylvania Oil and Gas Conservation law violates the Pennsylvania constitution by taking the property without compensation and violates the property owners’ due process rights.
In an effort to stop the uninterrupted development of oil and gas resources of the Pennsylvania and Mississippian Systems and within the Upper and Middle Devonian geological series, the Oil and Gas Conservation Law was limited to those wells that targeted the Lower Devonian geological series.
This means the law is applicable only to wells that penetrate the Onondaga Horizon, or 3,800 feet below the surface in areas of Pennsylvania where the Onondaga Horizon is closer to the surface than 3,800 feet.
The Utica shale is below the 3,800 mark. According to Penn State, the Utica shale is anywhere from 14,000 below the surface to 4,000 feet in Pennsylvania depending on the area. It is deeper in the middle of the state and as it extends to the northern border, it becomes more shallow.
The Oil and Gas Conservation Law is not applicable to development of natural gas from the Marcellus shale, unless the well bore penetrates the Onondaga Horizon.