Eminent Domain of Natural Gas Rights Discussed in Wheeling
About 10 people showed up for a public meeting at the McLure House in Wheeling last week (9/3/15) to discuss forced oil and gas leasing. It may not sound like a riveting way to spend an evening, but the facts discussed could change the oil and gas scene in the region, which could have effects on day to day life in the Ohio Valley. More drilling is what it amounts to – like it or not. If legislation passes during the 2016 session in Charleston, (as it almost did during the last session), a mineral owner might not have a say in whether or not gas rights are leased. In fact, mineral owners already have less say than you might imagine.
Eminent Domain v. Forced Pooling
Eminent domain is essentially when a government entity takes over private property for public use. A piece of legislation is forming that would essentially allow that to happen in the northern gas fields of West Virginia. Only the government entity is allowing private industry to take over property, which is in gas form, 6,000 feet below the surface. And it won’t benefit the public directly, unless you count severance taxes.
The practice is called “forced pooling,” and public meetings continue around the state to allow members of the public to learn more about it.
Under current state law, when gas companies attempt to drill a well, if a royalty owner in the area refuses to sell or lease rights, the company cannot drill the well. Forced pooling could change all that. Industry stakeholders have been pushing the idea with legislators since the Horizontal Well Control Act was passed in 2011.
Industry stakeholders say forced pooling is necessary to make sure gas resources aren’t wasted (which would be against to law (§22C-9-6.)). Opponents say it amounts to an illegal property grab. The West Virginia Royalty Owner’s Association used to be among the loudest of opponents, but now Vice President Tom Huber has organized and is moderating discussions around the state to explain what new legislation could mean for mineral owners.
Forced Pooling Already Exists in W.Va.
During the meeting, Huber referred to the “deep well statute” in West Virginia code, which already allows for forced pooling of deeper shale rocks, like the Utica formation. A forced pooling law applied to the Marcellus formation would require owners of 80 percent of a land parcel, based on net acreage, to voluntarily lease rights. Owners of the remaining 20 percent would have to accept leasing terms if an expanded oil and gas conservation commission orders it.
Reactions at meetings have varied, Huber says, from enthusiastic and inquisitive to hostile and suspicious; he says the reactions he gets often depend on the companies communities are encountering. Mostly, though, he says people just don’t want to be taken advantage of.
Royalty Owners Help Shape Pooling Bill
“I helped negotiate the bill,” said Huber; “it’s kind of a part of me.”
Huber, a mineral owner himself, says his only objective in these meetings throughout the state is to give people information so that they can make up their own minds about whether to support the bill.
“I think, personally – this is my belief — if people know what’s in the bill, they will support it. This is a negotiating tool for royalty owners to get a better deal.”
Huber says the West Virginia Royalty Owner’s Association will likely make a final draft of a forced pooling bill available for review later this month. While there has been talk of a special session to discuss the matter, Huber expects the bill will more likely be introduced during the 2016 legislative session.
Similar legislation died by a single vote during the final night of the 2015 session.
