SALEM, Ohio — Some West Virginia lawmakers and landowners were surprised when the most recent version of a bill designed to expand oil and gas unitization — commonly called forced pooling — died in a 49-49 vote.
Sponsors like House member Lynwood Ireland, R-Ritchie, were hoping that a higher threshold for landowner approval and new safeguards to protect property owners would convince the state legislature to approve the bill, known H.B. 2688.
The bill increased the minimum threshold for landowner consent from 67 percent to 80 percent, and it also sought to expand the commission that oversees unitization orders — the Oil and Gas Conservation Commission — by adding two members, a farmer and a mineral owner who is unaffiliated with oil and gas.
The bill would have applied to oil and gas produced from horizontal wells, vertical shallow wells, existing deep well units, and unconventional reservoirs, according to West Virginia Farm Bureau, a proponent.
It gained early approval, with a House vote of 60-40 in favor, March 4, and about a week later the Senate approved a slightly amended version, 24-10.
But in a somewhat unexpected decision, the House killed the bill March 14, with a 49-49 vote.
“I think we were surprised at the change in attitude,” said Charlie Burd, executive director of the Independent Oil and Gas Association of West Virginia.
Burd said the state has unitization laws on the books that pertain to other aspects of drilling, and the concept is not new.
“This particular effort would have actually advanced property rights,” he said, adding that “we were really trying to make this a super majority concept with regards to being able to pool in those from outside.”
Seth Gaskins, chief legal counsel to the House Energy Committee, said stakeholder groups like the Farm Bureau came together and put together a bill they felt was “fair to the farmers and landowners.”
Property rights issue
For instance, the 80 percent threshold is believed to be among the highest in the nation.
Gaskins said the issue, from what he can tell, is that many lawmakers still view unitization as a “property rights issue and feel very strongly that this is a ‘taking’ of some sort.”
That’s the concern some landowners still have, like Harrison County beef farmer Bill Suan.
“What I own is private property,” he said. “I just feel like we’re opening a can of worms.”
He said the state’s existing laws for dealing with unitization should be sufficient.
He’s also concerned that some energy companies may be overstating the need to create new pools. In some cases, he said the owner of minerals is unknown and, as the law currently stands, those funds are held in escrow and later paid to the surface owners.
He’s concerned new unitization laws could take that right away from surface owners.
Robert Spencer, whose family has about 260 acres near Flemington, West Virginia, said he’s concerned landowners who are forced to join won’t be getting adequate compensation.
He’s concerned about the royalties, but also about land treatment and future issues, like pipeline placement.
Spencer said he’s not against drilling, but at the same time, he said, the fracking is an “experimental thing,” with the results still to come.
“I don’t feel that the legislature or the Senate has the right to take my pooling clause and put us in jeopardy,” he said. “That should be our choice.”
And that’s the heart of the debate — who should make the choice — and at what point should a choice be made.
Gaskins said the energy committee maintains that unitization is not a taking, it’s not eminent domain and it’s also not unconstitutional.
He also said that landowners who hold out for too long, may be stranded holding those minerals for good, because it’s less likely the energy company will come back.
The West Virginia Farm Bureau, in its policy statement, says forced pooling “should rarely be used.”
The Farm Bureau said that H.B. 2688 was “greatly improved” from previous legislation and that it “represented the needs of all stakeholders. While it is not perfect for any stakeholder, it represents significant positive gains for surface and mineral owners.”
Gaskins said a similar bill is “highly likely” to be introduced in the near future. The next West Virginia legislature begins in January.
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