What under earth just happened in Pennsylvania? The first phase of forced pooling, that’s what! Over this past weekend, the PA legislature approved Senate Bill 259, which grants oil and gas industry operators the ability to combine oil and gas leases– in absence of landowner agreement. You read that correctly. As you know, I am a dog and dogs can stomach a lot, but even I can’t swallow this.
Pennsylvania mineral rights holders just lost a significant portion of their of property rights. Humans in PA now have a severely restricted ability to renegotiate old oil and gas leases, and this so that oil and gas companies can drill horizontally under properties without reaching agreement with leaseholders unless horizontal drilling is “expressly prohibited” in an old lease– which is very, very unlikely, as horizontal drilling has only been around in PA for about a decade, and vertical drilling leases go back many decades (remember the first commercial well specifically drilled for oil in the US was drilled right here in Titusville, PA, back in the 1800’s).
Let me summarize the above for you: The PA legislature just approved stage one of what the layman calls “forced pooling.” Next– and bark my words– forced pooling will be applied to landowners who have “held out” and never signed leases at all. Right now, it appears as though lease pooling might “only” being forced upon humans with old leases who didn’t sign up for horizontal drilling. This is the first step down a very short road to complete abandon of private property rights to the wiles of the oil and gas industry so that they don’t even have to bother with acknowledging who has leased and who has not. In short: Private property rights be damned.
The rationale? Well, let’s turn to Senator Gene Yaw (R-Lycoming), who introduced SB259 and flat-out stated, “We’re giving the gas company the right to make the decision.” Of course, he then tried to greenwash the bill by saying that it would cut down on the number of well pads if the oil and gas companies could simply drill under whatever property they felt like without reaching an agreement with the landowners. As if you are that stupid.
The exact wording of the bill reads as follows:
WHERE AN OPERATOR HAS THE RIGHT TO DEVELOP MULTIPLE CONTIGUOUS LEASES SEPARATELY, THE OPERATOR MAY DEVELOP THOSE LEASES JOINTLY BY HORIZONTAL DRILLING UNLESS EXPRESSLY PROHIBITED BY A LEASE. IN DETERMINING THE ROYALTY WHERE MULTIPLE CONTIGUOUS LEASES ARE DEVELOPED, IN THE ABSENCE OF AN AGREEMENT BY ALL AFFECTED ROYALTY OWNERS, THE PRODUCTION SHALL BE ALLOCATED TO EACH LEASE IN SUCH PROPORTION AS THE OPERATOR REASONABLY DETERMINES TO BE ATTRIBUTABLE TO EACH LEASE. (Emphasis added.)
There are two questions you may be asking if you have your thinking caps on…1. How did this come to be? Well, it’s convoluted: First, Chesapeake was accused by landownders of underpaying royalties. Then, Last week, Senator Yaw held a Senate Panel about the fact that some humans have not been receiving the 12.5% minimum royalty payment guaranteed to them in PA by PA law. (In fact, some landowners have even been billed for “post production costs” by the gas companies and have received royalty payments for zero dollars and zero cents– and Senator Yaw’s advice is for citizens to sue gas companies, evidently because more lawsuits are always better and because everyone has lots of extra cash laying around to hire lawyers to fight national and multinational billion-dollar corporations.) Finally, during this past weekend, when the legislature was trying to pass the PA budget, Senator Yaw then introduced the language above— a “Trojan horse” that has nothing to do with the PA budget. Then, the PA legislature approved the bill.
2. Is it really “forced pooling” or not? Senator Yaw has decided to get semantic, and he claims that giving the gas companies the right to combine leases in absence of an agreement with a private citizen is not the same as “forcing” the citizen… which is utter hogwash and an obvious attempt to get around the word “forced.” As foreshadowed in 2011 when Penn State professor Terry Engelder described to NPR his own role in building the Trojan horse that would carry forth forced pooling across PA: “I suspect that if the [Marcellus Shale Advisory Commission] were to word their recommendations for pooling in a clever enough way, this would provide political cover for the governor himself.” And clever is what we got. As HuffPost reports, the clever greenwashing has begun: “The Marcellus Shale Coalition, an industry group, said in an email that the legislation ‘provides for ongoing development of existing leases in the most efficient and environmentally sensitive manner while guaranteeing fair compensation to the landowner.'” (For the aforementioned NPR interview transcript in which Engelder described fully and brazenly his intent on using his academic standing to covertly manifest forced pooling in PA, see here.)In closing, remember this: Over the weekend, PA Senator Gene Yaw covertly and firmly initiated the first stages of forced pooling as passed in the PA legislature during the budget approval. Also, remember that Sen. Yaw did this in the guise of helping PA citizens get back the state-mandated fair-share of royalty payments– which was a smokescreen, and now rather obvious. For more information on private property mineral rights, please see this link. PA Gov. Corbett has just over one week to sign this bill into law. Call the Governor’s office to express your disgust or concerns at 717-787-2500 or click here to send Corbett an email. I know it won’t change Corbett’s mind, but at least then he can’t say that nopawdy complained.
Post Script: For more on Sen. Gene Yaw’s ties to the fracking industry and conflicts of interest, please see this research piece by Dory Hippauf.