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Senate gives up on forced pooling, may consider other gas industry reform bills

By RUSTY MARKS

The State Journal

CHARLESTON, W.Va.  — State Senate President Mitch Carmichael, R-Jackson, said the Senate has given up on trying to pass legislation allowing for the forced pooling of natural gas resources.

“Forced pooling has no chance,” Carmichael said Monday.

But that doesn’t mean the state Legislature will not pursue bills aimed at encouraging oil and gas drilling in the Mountain State.

Senate President Mitch Carmichael

“What we really need to do is modernize our oil and gas statutes and make this the best place to drill for these resources,” Carmichael said.

He said West Virginia’s outdated mineral rights laws are discouraging companies from drilling in West Virginia and encouraging them to drill in neighboring states.

Forced pooling would require property owners to go along with allowing drilling underneath their property if adjoining property owners have signed agreements with oil or gas companies. Lawmakers have tried and failed to pass such legislation during recent sessions of the Legislature.

“We didn’t even attempt it last year,” Carmichael said. He said the Senate will no longer try to pursue a forced pooling bill.

“We’re not going to damage property owners’ rights,” he said. “We’re not going to take those rights.”

However, Carmichael said the Senate will try to pass two pieces of legislation that could make it easier for oil and gas company owners to get to underground resources.

The first is a cotenancy bill to address access to mineral rights beneath properties with multiple owners or heirs. Under current law, oil or gas companies can’t drill on a piece of property if even one of a group of owners or heirs objects.

“Even one, out of 7,000 or 8,000 owners, could hold up development of the whole thing,” Carmichael said. “We really need to modernize that.”

Carmichael said senators likely will pursue a bill to allow drilling under property if a majority of surface right owners agree. The percentage of owners who must agree has yet to be decided upon.

Carmichael also said the Senate is interested in a bill allowing for the integration of multiple leases if the leases are all held by the same company. He said under current law, an oil or gas company can drill a vertical well on any of the individual properties, but can’t easily drill under several pieces of property even if all the adjoining surface rights owners have leases with the same drilling company.

“These companies now are not drilling unless they can get these long, lateral drills,” Carmichael said. He said the lease integration bill would allow oil and gas companies to drill under several different surface properties based on the lease agreements originally made with the surface rights owners.

David McMahon, an attorney with the West Virginia Surface Owners’ Rights Association, said he doesn’t necessarily have a problem with oil and gas law reform. But, he said, “the development bills we’ve seen have done things the industry needs, but have not provided enough protection for surface owners.”

McMahon calls lease integration an “invisible ink” bill. He said lease integration isn’t fair to surface owners because it locks them in to existing leases based on 12 1/2 percent royalties, plus $1 per acre. He thinks drillers should negotiate new leases when they go under properties based on more modern lease agreements, which might be 18 percent royalties and $3,000 an acre.

In the case of cotenancy, McMahon thinks a better law would send such disputes to the state Oil and Gas Conservation Commission to sort out.

House Speaker Tim Armstead, R-Kanawha, could not be reached for comment Monday.

Staff Writer Rusty Marks can be reached at 304-415-1480 or email at [email protected]

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