02/12/2018
From Scott Windom:
Forced Pooling/Co-Tenancy...let's look at this from the industry argument:
Industry wants the bill to permit them to lease acreage where there are hold-out owners. They want to force lease terms on the oil and gas owners to permit the companies to produce the owner's resources. The State is behind this so it can get the tax revenue and there will be the always promised jobs, jobs, jobs.
Now, there were two provisions in a version of the forced pooling bill that would have forced the owners to either develop all the acreage or surrender those portions that are not produced. That means developing all depths and all the acreage.
The oil and gas industry opposed this. Why? That makes no sense. They claim that they want to develop all the acreage and they want to create jobs.
That is not what they want. They want to hold our property and hold our rights and then, when it is valuable, they want to sell it under terms that benefit them.
If an oil and gas company really wants to develop the Marcellus Shale, they don't need the Utica, or Big I***n, or Gordon, or Big Lime, or Rogersville. They NEED the Marcellus under lease. They WANT the other formations because if another wants to lease the them, that new company has to pay the first company for an assignment of the lease. They don't have to pay the oil and gas owner who was forced into a lease. That means any bonus money goes to the corporation and not the landowner. It also means that any increased royalty goes to the coporation in the form of an override, instead of to the landowner. See how this whole greed thing works?
Then, let's say that the oil and gas company that forces a lease on a landowner only incorporates 10 acres of a 100 acre farm into a drilling unit. The landowner gets royalty for 10% of her total acreage. The other 90% is not produced. How does that create jobs and foster the full development of oil and gas? It doesn't! It encourages companies to hold acreage as an "asset". They can then tout to their investors that they have 5 Million acres under lease. And then they can sell those valuable rights or farm that acreage to other companies at a later time and the landowner loses out on the bonus and delay rental for the assignment. She also loses out on the ability to negotiate better terms or a higher royalty for the other acreage.
That is what Delegate Harshbarger and the Republicans on the House Judiciary Committee did last week. Protections against these shenanigans were in a committee substitute. However, HArshbarger and the Republican leadership gave the oil and gas companies the right to hold all of your oil and gas and all of your acreage without fully developing it. By all I mean every freaking bit of it! They basically gave the industry something for nothing. Well, not nothing, per se, they got their campaign contributions!
