Back-door Forced Gas Well Pooling Signed Into Pennsylvania Law

Pennsylvania Governor Corbett draws flack for over forced-pooling provision of new law affecting natural gas fracking wells.

Published on: Jul 17, 2013

Pennsylvania Governor Tom Corbett signed a controversial bill into law giving natural gas drillers the power to combine or "pool" leases for horizontal oil and gas drilling. He had previously vowed to not sign any legislation allowing "forced pooling" – giving drillers the right to take gas from a property owner who hasn't signed a lease.

The legislation was originally intended to bring more transparency to the deductions companies take out of royalty payments. But maybe he didn't thoroughly read the whole bill. An amendment tacked onto Senate Bill 259 weakened the bargaining position of landowners having older (pre-shale) drilling leases who want to renegotiate those leases to allow shale drilling.

WEAKENS LANDOWNER POSITION: "We are not pleased." charges Jackie Root, president of the Pennsylvania Chapter of the National Association of Royalty Owners (NARO-PA). "[The legislation] was so vaguely written and so broad."
WEAKENS LANDOWNER POSITION: "We are not pleased." charges Jackie Root, president of the Pennsylvania Chapter of the National Association of Royalty Owners (NARO-PA). "[The legislation] was so vaguely written and so broad."

Corbett later acknowledged concerns over the bill, but offered this in defense: "I do not believe anything in [the bill] expands the ability of an oil or gas operator to define the size of a drilling unit, or to expand the ability of an operator to hold by production any parcels of leased land."

Objections raised
Better reporting would normally be something supported by the National Association of Royalty Owners.

But the group, representing Pennsylvania's mineral owners, was angered over language which allows pooling of some leases and didn't receive enough scrutiny.

NARO-PA argues the measure could adversely impact people who signed contracts years ago and didn't anticipate modern shale gas drilling. It leaves landowners at a disadvantage– hindering their ability to renegotiate old leases.

Pooling language had no place in the bill, adds NARO-PA Vice President Trevor Walczak. "We should have been doing it in a stand-alone bill we could debate, not hiding it in here and fast-tracking it through."
Sen. Gene Yaw (R- Bradford), who introduced the bill, says it only applies to existing leases. It allows companies to combine land parcels for horizontal drilling, unless it's explicitly prohibited in the lease. He doesn't feel the measure is unfair to landowners.

"Remember, this land is already leased," he reasons. "It just seems to be logical that if you can go on the land and drill horizontal wells out, [then] you could drill horizontal wells under it."

Pennsylvania Royalty Owners Association disagrees.

Courtesy of Marcellus Drilling News