Drilling & fracking now reaching more properties

Article by Dave McMahon, Co-Founder of WV Surface Owners Rights Organization (WVSORO), March 4, 2022

Methane gas originates in shale formations laid down eons ago. Over the eons some of it creeps towards the surface and is sometimes trapped on its way upward in a porous and permeable sandstone formation that is topped with a denser cap rock formation above it to keep it from migrating further upward. Until about 2008, almost all gas drilling was to the gas trapped in those sandstone formations. A vertical well was drilled through the formation and fractures were put into the formation for the gas to flow more freely to the well bore. Originally these fractures were created by nitroglycerine, but more recently by pumping water (and accompanying chemicals and sand) under enough pressure to crack and lift the above rock, and leave sand in the cracks!

The limitation of this gas extraction method was that the well bore exposed to the rock was only as long as the formation was thick. The other limitation is that the gas trapped in the sandstone formations was somewhat limited because what gas migrated upwards into the sandstone was a lot less than stayed behind in the shale. The shale contains much, much more gas.

Why didn’t drillers drill the shale if it had more gas? Because it has almost no porosity or permeability. In the amount of time gas will flow a kilometer through sandstone, it will only travel one meter through a shale. So, putting a vertical well through the formation will get very little gas flowing out of the shalle into the vertical well bore, to the surface, and to market.

Drillers first tried to get more gas out of shale by increasing the volume of water used to fracture vertical wells. Instead of the conventional practice of using the amount of water that can be held in a tanker truck of water, they started using enough water to fill several olympic swimming pools. That worked somewhat better.

But then along came horizontal drilling. Techniques were developed to put the motor turning the bit drilling the well bore at the bottom, far end of the drill pipe instead of using a motor at the surface to turn the whole drill pipe all the way to the bit. Also highly accurate internal guidance systems were developed. Those two factors coupled with the new large-volume fracturing techniques created a revolution, a tsunami, of horizontal drilling in shale formations like the Marcellus and the Utica.

The new wells cost several million dollars each to drill compared to several hundred thousand dollars for drilling a conventional vertical well. One of these horizontal shale wells, however, produces 60 times the gas of a conventional vertical well, so they are much more economically efficient. You are unlikely ever to see a new conventional well drilled. (And the fact that many of the old wells will likely become orphaned is a separate article.)

The most likely pollution problem from a gas well occurs as it is first drilled vertically down through the water table. (Actually it’s second; the real most likely problem is spills on the well pads during drilling.) So if one well can serve to get the same gas as 60 wells, the chances of groundwater pollution from this first step in drilling is reduced by 60 times.

Also, conventional vertical wells have to be spread far apart, with a different well pad for each. Several horizontal wells, however, can be drilled from one well pad – 6, 8 or even more horizontal wells from one pad. So again, fewer well pads on surface owners (with the danger of spill prevention going bad also reduced). That one pad is much, much bigger, but still it is a huge reduction in surface use and spill risk.

The drilling of horizontal shale wells has greatly increased. There would be even fewer wells drilled (and hopefully fewer well pads) if the horizontal wells could be drilled longer and longer. The greater the length of the bore exposed to the formation (and fractured) the more gas comes up out of one well.

What has limited the full exercise of long horizontal well bore drilling technology is that the driller should have at least 640 acres of leased mineral acreage to drill these wells. If the driller can find one 640-acre mineral tract, that is all that is needed. But ownership of much of West Virginia, particularly in the area of the state being drilled by horizontal Marcellus Shale wells, is broken up into much smaller tracts. So the driller needs to get leases from the owner (or owners, there can be scores of heirship owners of a single mineral tract) of several separately owned, neighboring mineral tracts to put in a 640 acre “unit” for the drilling of the horizontal wells.

If the owner(s) of the mineral tract towards the end of a planned horizontal well bore will not sign a lease (or cannot be identified or located because there are so many heirs) then the driller has to make the horizontal bore shorter than the driller would otherwise make it. And remember the longer the bore the better, as noted before. So the driller wants to be able to force tracts into their units so they can drill longer bores. That is why the drillers want SB 694. It allows a commission to force tracts into a unit for drilling longer bores.

WV Surface Owners Rights Organization (WV-SORO) respects the views of those who want to leave any possible stumbling block in the way of hydrocarbon energy production. But our position has always been that, for the reasons above, as long as horizontal methane gas wells are going to be drilled, legislation that will allow longer bores from fewer wells to be drilled from potentially fewer well pads is a good idea. And the reality is that these horizontal shale wells are being drilled now and will be for the foreseeable future. So a good forced unitization bill is a good idea. (Note that this is commonly called forced “pooling.” But variations of the root word “pool” are used for three different concepts in the existing statutes so we use the term forced “unitization”.)

The problem has been that the forced unitization legislation introduced in the past has done the good things such legislation can do for the drillers, but not done good things for surface owners, and has not been fair to forced mineral owners in determining how much the mineral owners will get paid up front and for royalties. SB 694 is far from the best possible bill, but it is OK, and does have some significant benefits for surface owners.

1. First, the driller will still have to get the permission of the surface owner to drill one of their big horizontal wells pads. Though the drillers would like that to be something that could be forced upon the surface owner, the bill does not provide for it. The driller has to get the surface owner’s agreement. And, we advise surface owners to ask for $640,000 from the driller to agree to the placement of the pad on their surface!

2. Second, remember how one tract of minerals can have the ownership shared by scores of heirs? Sometimes it is not possible to find those heirs in order to pay them the royalty payments and signing bonuses. Under SB 694, if the mineral owners do not show up in five years, the surface owner gets not only all the back royalties for those five years, they also get title to that share of the minerals, plus all future royalties.

3. Third, there are legislative findings in the bill recognizing surface owners rights added into the Code that can be used by courts in interpreting and carrying out the bill.

4. Fourth, about one-third of WVSORO members also own the minerals, or a share of the minerals, under their land. So if their minerals (but not surface) are forced into a unit they will get very fair royalties paid to them and they will get paid very fair up front money calculated off a weighted average of what the drillers paid to owners who did sign leases.

That is not to say that SB 694 is perfect. We could have drafted something even better in the devilish details. Considering the political climate at the current legislature, and the unpredictability of the future, we believed it was the wise thing to say that we were OK with this bill.

>>> Update: SB 694 has passed the Senate, the House Energy and Manufacturing Committee, and House Judiciary Committee and is heading to the House floor.

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SEE ALSO: West Virginia University study finds natural gas pooling law could spark economic boom | WV News | Charles Young, March 9, 2021

This study examines the potential economic impact of instituting a unitization law in West Virginia. We define two scenarios whereby drilling activity in West Virginia is assumed to increase by either 5 percent or 10 percent above current levels. We then estimate the additional economic activity from three major sources: well construction, spending due to ongoing production, and royalties paid to rights-holders within the state.

The estimated cumulative economic impacts over a five-year period from construction, drilling, and completion would be between $1.1 billion and $2.1 billion, with employment between 4 thousand and 8 thousand job-years. Operational impacts are between $12.8 million and $25.6 million over five years. And impacts from royalties are expected to yield between 500 and 1,000 job-years.

Download the 29 page WVU Business Report here.

WV, PA, OH, shale fracking states

Opinion – Editorial by S. Thomas Bond, Charleston Gazette, June 1, 2018

Fracking, the most recent method of extracting gas and oil, is the delight of some and the dread of an increasing part of the population. The arguments for it are exactly two in number: first, civilization is based on energy, and burning fuels is the way to energy; second energy provides lots of jobs, the arguments against fracking are many, keen, and the list is growing.

Unfortunately, many tend to view fossil fuels as the only feasible source of energy. This inability to distinguish between the conventional way of getting energy and energy itself is the product of science illiteracy and not-so-subtle cultivation of the idea by our present day energy industry.

The most pressing argument for ending use of fossil fuels is the accumulation of the colorless, odorless, chemical byproduct of burning, carbon dioxide. It is capable of converting a certain range of the sun’s wavelengths into heat we can feel. This is causing measurable warming worldwide, a widely studied phenomenon with seriously deleterious effects. If you “don’t believe in global warming,” you are like people who don’t believe in evolution or those who think the world is flat, not a sphere. You are beyond evidence and reason, or too lazy to pursue the subject.

Why fracking? Our national reserves of conventional gas and oil are approaching exhaustion, due to profligate use and export for decades. It lays in porous rock, and all that was necessary was to drill down to the reservoir rock and pump from the well. The petroleum would make its way to the well through the pores in the rock, and wells would supply product for decades before becoming uneconomic.

Our use was profligate, and we exported, so conventional began to run out, and we have been importing more and more in recent decades. The Eastern Gas Shales Project ran from 1976 to 1992 at the Morgantown Energy Research Center produced a way to actually break rock in shale reservoirs, which are not naturally permeable. George P. Mitchel worked with government financing to combine this new high hydraulic pressure with bending the drill stem to horizontal, special targeting control to keep the drill in the preferred strata, and a zoo of synthetic chemicals to produce the method that is now called “fracking.”

In the hinterland where fracking is done, fear runs rampant. Experience shows the new method, in practice for only a decade or so, causes a variety of harms, which drillers are unwilling to recognize or pay for. Large acreages are required for drilling, pipelines and pump stations. They cannot be returned to their original use in the foreseeable future. Environmental problems result, such as sediment in streams and destruction of wildlife and domestic animals from the drillng and leaks of synthetic chemicals.

Devaluation of property results. Who wants to live or farm near the noise, light and smells of this industry? Roads are broken by a thousand or more trips to each well site and removal of waste. The tax money pays for this cost.

Sickness is well documented by over 1,700 medical research articles, illness such as asthma and other respiratory problems, abortion and light birth weights, heart problems, and endocrine gland disruption.

There are serious problems with fracking compared to alternate energy industry. It is high capital and low labor, compared to alternate forms of energy. A lot of jobs at the construction phase, but these last only a few weeks, followed by few workers to operate the equipment. The jobs are specialized, so little is open to local men (very few women want this kind or work) except truck driving and many cases are known where drivers are kept on the job 24 or more hours straight.

Fracked wells commonly have an economic life of 6 to 8 years, and the recovery is seldom more than 8 percent of the oil or gas in place. No chance of recovery of the rest is insight. Increase in production per well is due to longer laterals (horizontal drilling segments of the well), not any real efficiency.

According to a report in a December Wall Street Journal titled “Wall Street Tells Frackers to Stop Counting Barrels, Start Making Profits,” the fracking industry has lost an amazing $280 billion since it began.

So what is the power of fracking? Politics! The accumulated law and practice that allows the industry to rip off land and mineral owners, make its neighbors sick and gets the public to pay for roads and emergencies. Cozy relations with glad handing legislators and officials is a big factor. And not to be forgotten is inertia due to lack of scientific awareness, and general reluctance to change the way things are done.

Fracking is power over people and property, over a livable world, and over alternatives the world must have.

>>> S. Thomas Bond, of Jane Lew, is a retired chemistry teacher.

Governor proposes special session for his 'ultimate resolution'

From an Article by Brad McElhinney, WV MetroNews, February 26, 2018

CHARLESTON, W.Va. — Gov. Jim Justice, who has EQT board member Bray Cary as a volunteer on his staff, today promoted a grand bargain on natural gas drilling and teacher pay — frustrating several participants on the gas issue.

During three stops around West Virginia, Justice urged that a co-tenancy drilling bill be killed in the state Senate so that it — plus another drilling policy known as joint development — may be brought up in special session.

The governor then suggested that both issues would be intertwined with the pay and health care issues that have caused thousands of West Virginia educators to walk out of schools and rally at the Capitol.

Justice said the severance tax could be raised to provide more revenue for teacher pay and healthcare.

The governor’s proposals, which were first made at a town hall appearance in Wheeling, frustrated delegates who have been involved with the co-tenancy bill as well as segments of the natural gas industry and the royalties and land organizations that have been shepherding the bill.

Several of them pointed fingers at EQT, which did not immediately respond to the criticism. “I’m pretty disappointed about the whole thing,” said Delegate John Kelly, R-Wood, vice chairman of the House Energy Committee.

“Joint development is a program that has no chance of passage in the House of Delegates. It’s failed every year since I’ve been here and I believe it’s going to continue to fail. It’s a taking and right now there’s only one company in the state of West Virginia — that I’m aware of — that even wants a joint development law passed.

“The other companies, this law actually goes against their current business practices.”

An organization called Shale Energy Alliance has been using targeted social media ads for the past week to suggest drilling legislation could be the path toward raises and stable health care for teachers.

The campaign seems to be aimed at generating teacher support and aiming it at lawmakers.

The governor, today in Wheeling, echoed those comments. The governor’s official Twitter account also put out the message:

JUSTICE—- I will call us into special session to find a way out through co-tenancy and joint development and the mineral rights people … you’ve got to find a way that satisfies everybody and raises the severance tax on gas.

JUSTICE—- I am the guy that said let’s tier the severance tax on coal and natural gas at the State of the State a year ago.

JUSTICE —- You have two trump cards. You’ve got co-tenancy and joint development. I’m telling you point blank, where you can help, don’t let co-tenancy pass. Make us go to a special session on gas.

JUSTICE —- If co-tenancy does not pass the Senate … I will call for a special session.

Controversy swirled in December over revelations that Cary, an EQT board member since 2008, had been serving as a volunteer in the governor’s office, focusing on communications and some policy issues.

EQT’s corporate governance policy says it is the duty of the board of directors to serve as a fiduciary of the company.

Cary bought several rounds of shares of EQT stock over the latter part of last year. The largest was a purchase in June of 22,627 shares valued at $1,209,186.

“It makes me wonder,” Delegate Kelly said.

Co-tenancy, which passed the House of Delegates and now is in Senate Judiciary, requires at least 75 percent of rights holders on a single piece of property to OK drilling. Advocates say it’s a way to allow the majority to go ahead if a few holdouts don’t want drilling or can’t be located.

Joint development would allow an operator that already has old leases, signed before modern shale drilling began, to combine into a single drilling unit. It’s significantly more controversial.

Bills dealing with natural gas drilling and property rights have fallen apart many times over the years, either failing to balance the rights of the various players or being weighed down by a variety of inter-related issues.

Governor Justice earlier this year brought together executives from the big natural gas drilling companies, as well as representatives from the land and royalties groups. They, along with delegates, decided to move forward with co-tenancy on its own.

Tom Huber, president of the West Virginia Royalty Owners Association, said the governor’s proposal on natural gas doesn’t stand a chance of helping teachers.

“It’s unfortunate the governor would try to manipulate teachers into going home with a false promise of forced pooling for a severance tax,” Huber said.

“Let’s call joint development what it is — it’s forced pooling,” Huber said. “Co-tenancy is a carefully negotiated bill to try to resolve disputes between mineral owners in the same tract. It’s kind of sad that he would try to trick the teachers like this.”

Huber said the governor’s position, combined with Cary’s presence in the office, looks funny.

“Obviously we, as the Royalty Owners Association, feel it is highly inappropriate to have someone who is on the board and collecting the salary of a major out-of-state corporation in the governor’s office, advising him on these issues,” Huber said. “There’s got to be something wrong with that, ethically or legally.”

Also critical of the governor’s call for a special session on drilling issues was Jason Webb, a lobbyist who represents the West Virginia Land and Mineral Owners Association.

“The WV Land & Mineral Owners Association has real concerns about a bundled bill. We believe that the Governor should sign the co-tenancy bill to help move our state forward,” Webb said

“If he wants to address joint development for EQT in a special session then we will be at the table to protect mineral owners interests.”

The West Virginia Farm Bureau, which has been a part of negotiations on drilling issues, also was critical of the governor.

“This is an effort to really submarine a lot of really good legislation,” said Dwyane O’Dell, the director of government affairs for the Farm Bureau. “A lot of hard work has been done with agreement with most of the industry. This idea of joint development is a special carve out for one company, that company being EQT.”

O’Dell also argued, more generally, against raising the severance tax on natural gas. “If he chooses to raise the severance tax, in many ways he would put West Virginia in a less competitive situation,” O’Dell said.

The West Virginia Surface Owners Rights Organization is also frustrated by the governor’s comments, said David McMahon, a lawyer who represents the group.

“We are deeply disappointed that the governor would try to tie joint development and co-tenancy to any other issues,” McMahon said. “Co-tenancy has been a four-year battle. It’s now got something that everybody can live with and is only very, very indirectly related to the severance taxes and those other issues.

“Joint development, lease integration — whatever they’re calling it this time — we call it the invisible ink bill. This is clearly an EQT move.”

The Independent Oil and Gas Association of West Virginia was very surprised by the governor’s comments, said Phil Reale, a lobbyist for the group. He said after years of negotiation, there is finally consensus among groups dealing with co-tenancy.

Reale described co-tenancy as a way to make West Virginia more competitive with Pennsylvania and Ohio. “Increasing the severance tax — when West Virginia’s severance tax is already higher than Ohio and there is none in Pennsylvania — would only make us less competitive, less attractive to those who have large opportunities in West Virginia.”

Those who deal with natural gas issues were caught by surprise by the governor’s announcement, Reale said. “Frankly, it’s a little bit disappointing that we’re here at the 11th hour when we’re about to have a progessive piece of legislation, embraced by every stakeholder with full consensus, to have this sort of a problem inserted into the mix, where he believes there ought to be something else other than has been developed.”

The West Virginia Oil and Natural Gas Association put out a statement of concern about Justice’s remarks. “WVONGA is very concerned with the Governor’s statements regarding a severance tax increase and a possible veto of House Bill 4268, the cotenancy bill,” stated Anne Blankenship, the organization’s director.

“Great progress has been made by stakeholders on this cotenancy bill to ensure that investment in West Virginia by the oil and gas industry continues to boost the state’s economy and create family-sustaining jobs that support schools and teachers. His plans to disrupt that progress will only hurt all of us, including our teachers, by keeping West Virginia’s laws uncompetitive and discouraging development in this state.”

JUSTICE —- The gas companies want two things from you — co-tenancy and joint development … I said to them, I won’t be a proponent of co-tenancy or joint development to help you without raising your severance tax. You know what they said? “We’re OK with that.”

Democrats in the House argued against the co-tenancy bill, arguing that the rights of minority rights holders were being trampled.

They’re no more likely to support the bill in a special session, especially if joint development is added in, suggested Delegate Isaac Sponaugle, D-Pendleton.

“I didn’t know the Republicans were in the business of stealing both property rights and raising taxes for a special session but apparently that’s their game plan going forward,” Sponaugle said.

“I can only speak for myself — our caucus hasn’t met on it — in regards to severance tax, but I do believe that should be raised. But I don’t believe you should be stealing people’s property rights as a way so oil and gas will lay down when you go to raise the severance tax.”

Joint development stands no chance of passing the House of Delegates, even if intertwined with co-tenancy and educator pay and healthcare issues, said Delegate Bill Anderson, R-Wood and chairman of the House Energy Committee.

“In my judgement lease integration will not pass the House of Delegates. We tried that three years ago in House Bill 2688, which failed,” Anderson said.

Anderson said the lesson of the past has been dealing with the drilling issues independently. “Co-tenancy has the horsepower to pass this year,” Anderson said.

Anderson declined to criticize Justice, though. “The governor’s going to have to make his judgments about how he runs his office,” Anderson said. “I believe we have a bill in the House now that would require people that are employed in the government, even on a volunteer basis, not receiving pay, to have to file the same ethics forms that all members of the Legislature and elected and appointed officials do that are receiving compensation. I believe that bill should pass.”

Chamber of WV House of Delegates, 2/9/18

From an Article by Nick Visser, Huffington Post, February 12, 2018

A woman was removed from the West Virginia House of Delegates on Friday after she used her testimony about a fossil fuel-sponsored piece of legislation to list industry donations to state lawmakers.

Lissa Lucas ventured to Charleston to voice her objections to the proposed bill, HB 4268, which would give oil and gas companies the right to drill on private land with the consent of just 75 percent of the landowners. Current law mandates energy companies obtain 100 percent approval before they can develop land, allowing a single person to hold up drilling.

Lucas, also a Democratic candidate for West Virginia’s seventh district, used her testimony to read a list of donations that lawmakers had received from oil and gas companies, information that was publicly available. But shortly into her allotted time, Lucas was ordered to refrain from making “personal comments” about members of the House Judiciary Committee.

“The people who are going to be speaking in favor of this bill are all going to be paid by the industry,” Lucas said, noting that “the people who are going to be voting on this bill are often also paid by the industry.”

“I have to keep this short because the public only gets a minute and 45 seconds while lobbyists can throw a gala at the Marriott with whiskey and wine and talk for hours to the delegates,” she added.

As Lucas read the list of donations, her microphone was cut off. She asked the committee to allow her to finish, and when lawmakers refused, she told them to “drag me off.”

“As I tried to give my remarks at the public hearing this morning on HB4268 in defense of our constitutional property rights, I got dragged out of House chambers,” Lucas wrote on her personal blog. “Allow me to point out that if Delegates genuinely think that my talking about who their campaign donors are ― and how much they’re receiving from corporate lobbyists/corporate PACs ― is an ad hominem attack… then they should be refusing those donations.”

The bill was later passed by the committee and will go to the lower House and state Senate for a full vote, where it is expected to pass, Newsweek reported. West Virginia Gov. Jim Justice (R) has said he will sign the bill into law.

Lucas stood by her actions in her blog post, saying lawmakers should feel guilty about these campaign contributions.

“Refuse any donation that, if someone mentions it, makes you feel personally attacked,” she wrote. “Because that’s not an attack. That’s guilt. And you SHOULD be feeling that. Let that guilt about who you’re really working for inform your votes; don’t let the corporate money do it.”

WV Surface Owners’ Rights Organization, February 10, 2018

Improved “Co-Tenancy” Bill Clears House Judiciary Committee

View this Alert Online

Dear Friends,

After yesterday’s public hearing on the “co-tenancy” bill (HB 4268), the House Judiciary Committee took up and passed an improved version of the bill that, most importantly, addresses the problems we raised regarding surface use and the need to require surface owner’s consent.

If version of HB 4268 that came out of the House Judiciary Committee passes, if the driller uses the statute to get the right to drill into the mineral tract beneath a surface owners’ land or into any neighboring mineral tract, the driller will have to get the agreement of the surface owner to locate the well pad on their surface, regardless of whether the surface owner owns an interest in the minerals.

Requiring the surface owners consent is very important, and a significant improvement that makes it worth supporting the bill.

Why? Let’s start with the legal background.

Current law says that the mineral owner/driller has the right to make “reasonably necessary use” of the surface if that use was in “in the contemplation of the parties” at the time of the severance (or at the time of the lease IF the lease was before the severance) in order to get his minerals out (otherwise the minerals are useless – at least until horizontal drilling).

But does the driller have the right to the use the surface to drill horizontal wells bores into neighboring mineral tracts that were not part of the surface at the time of severance? We say no.

The drillers say yes. They say that the only economical way to drill and produce the Marcellus under a surface owner’s land is to drill horizontals that extend into neighboring mineral tracts, so it is a “reasonably necessary use” of the surface to do so. And they say that the “contemplation of the parties” only applies for radical new surface uses like strip mining vs. shaft mining, not horizontal drilling.

We say the drillers are wrong because there is no need at all to use our surface if they can develop the mineral tract under our surface from 1-2 miles away. And we say that the horizontal drilling is like cases that ruled our way for surface owners on the contemplation theory.

That question of who is right, us or the drillers, will soon be decided by the West Virginia Supreme Court on the appeal of a case where a Doddridge County Circuit Court judge agreed with WV-SORO that a driller cannot use a surface owner’s land to drill wells horizontally into neighboring mineral tracts without the surface owner’s consent.

We are worried that the Supreme Court might decide for the drillers.

However, if the version of HB 4268 that came out of House Judiciary passes, then if driller uses the statute to get the right to drill into the mineral tract under a surface owners land, or any neighboring mineral tract, the driller will have to get the agreement of the owner of the surface to locate the well pad on their surface. Many, if not most, of the wells they drill will use the statute. So if it passes in its current form, in most cases the surface owner’s consent will be needed even if the Supreme Court decides against surface owners.

We believe this requirement is an important enough, that it is worth supporting the bill. This inclusion of these provisions is key to our support. It’s unclear if these provisions will stay in the bill as it works it’s way through the process, and we will only support it if the Senate agrees to leave these surface owner protections in.

House Judiciary Chair, Delegate John Shott (D-Mercer) deserves special thanks for listening to our concerns and making sure these provisions were included in the bill.

In addition to surface owner’s consent, the bill provides that if missing and unknown mineral owners do not show up after seven years, the millions of dollars that would go to them during that time will be used to plug some of the 4,000 orphaned wells out there that need plugged. After that, the surface owner can go to court and get title to whatever share of the minerals the missing or unknown person had, and get future royalties. This reunification of surface and minerals is also a good thing.

The version of the bill that passed the House Judiciary Committee, also strengthened the protections for the non-consenting mineral owners. We need to take a closer look at these provisions, but some of these protections include royalties paid being based on no deductions, and no storage/injection/arbitration/or venue clauses. For our members who are mineral owners we would have preferred a due process hearing before the Oil and Gas Commission, so that they can get better terms rather than be stuck with what their cousins got talked into by the drillers, but balancing what the bill does for surface owners, we can live with what is in the bill for mineral owners.

The Legislature believes that the 75% of owners who want development and royalties etc. should be able to do so and it is unfair for the minority co-tenants to block all the others from the benefits of their land ownership. We believe the Legislature will pass some bill to that effect, and for that reason and the reasons outlined above we worked to improve the bill to get better protections for surface owners, but we support it if and only if these provisions stay in.

We hope this clarifies our position on the bill. Please reply to this update if you have questions or concerns. (info@wvsoro.org)

We appreciate your support and value the trust you put in us to represent your interests at the Capitol! We’ll continue to keep you posted.

Julie Archer, Executive Director
WV Surface Owners’ Rights Organization
1500 Dixie Street, Charleston, WV 25311

info@wvsoro.org 304 346 5891

Forced pooling like a bad penny keeps showing up

Public Hearing on “Co-Tenancy” Friday, February 9th at 8:30AM

— View this Alert Online —

Dear Friends,

The House Judiciary Committee will hold a public hearing on the ”co-tenancy” bill (HB 4268) this Friday, February 9 starting at 8:30AM in the House Chamber. Anyone who would like to travel to Charleston to speak out against the bill and share their concerns will have the opportunity to do so. However, considering the high level of interest in the bill and the limited amount of time, speakers will likely have only a minute or two to make their comments.

If you plan to make the trip: Arrive early to sign up.

Prepare your remarks ahead of time and keep them brief. If you have more to say than you can share in a minute or two, you can submit additional written comments to the committee.

If you can’t make it to Charleston, please make some calls and send some emails to House Judiciary Committee members and your Delegate(s).

Click here for a list of committee members with their phone number and email address, followed by a ‘list’ of emails for all members that can easily be copied and pasted into the ‘To’ field of your email.

For your convenience, here is our list of problems with HB 4268:

First, in order to drill a horizontal well the driller has to start on one surface tract, drill down to the mineral tract underlying that surface tract, and then drill horizontally a mile or more through many neighboring surface tracts. Under current law, if the driller while drilling horizontally for that mile or more runs into that mineral tract where the driller only has leases from, say, 90% of the mineral owners, the driller has to stop.

If this bill passes the driller will be able to keep drilling even longer horizontal well bores through those neighboring mineral tracts. This means more time on the first surface owner’s land, more trucks, more noise, more light, more dust, and other air pollution to drill the longer horizontal.

As the bill is currently drafted the surface owner’s consent is not needed if they use the bill to drill through that neighboring mineral tract. The current bill only requires surface owner consent if the bill is used for the one mineral tract directly under the surface owner.

The bill should require the driller to get the surface owner’s consent if the bill is used to drill not only the mineral tract under the pad, but any mineral tract being accessed from the pad. If they use this statute to drill longer laterals to develop other mineral tracts they should be required to get your consent!

Second, the bill contains a loophole that would allow a driller with an existing surface use agreement or other valid contract that pre-dates horizontal drilling to be used to locate well pads for horizontal drilling on a surface owner’s land. Surface use agreements should be for development methods and technologies contemplated at the time of the agreement, not agreements that contemplated conventional drilling.

Last but not least, the bill requires that non-consenting cotenants be paid the highest royalty in leases signed by the consenting owners. This is an improvement over the earlier bill. A knowledgeable mineral owner still might be able to negotiate a better deal but if 75% of their out-of-state cousins sign bad leases with low bonuses, with low royalties, with clauses that allow disposal wells to be drilled on the property, or other bad lease provisions, then they are stuck with those terms.

The bill lacks due process (right to appeal, etc.) for non-consenting owners. Those mineral owners who do not like their cousins’ leases should get a due process hearing before the existing Oil and Gas Conservation Commission to try to get better lease terms.

Julie Archer, Executive Director
WV Surface Owners’ Rights Organization
1500 Dixie Street, Charleston, WV 25311

info@wvsoro.org 304 346 5891

Monthly Natural Gas Production 2008 - 2016

Mineral owners seek information about gas well laws

From an Article by David Beard, Morgantown Dominion Post, May 26, 2017

Mineral owners gathered Thursday evening to learn about some potential changes in gas well law that could diminish property rights, and to toss around ideas for action. Most of the talk in the meeting room at the Ramada Inn focused on a state Supreme Court Case called the Leggett Case and an industry-backed Senate bill that may rise from the dead, SB 576.

About 20 people turned out to hear from Tom Susman, representing West Virginians for Property Rights; Tom Huber, vice president of the West Virginia Royalty Owners Association; and Steve Butler, administrator of the West Virginia Farm Bureau.

Leggett Case

In the Leggett case, the Doddridge County plaintiffs sued EQT Corp., alleging it has been wrongly deducting post-production expenses from their royalty checks, amounting to 25-30 percent of their rightful income, since 2010.

Last November, the Supreme Court ruled in favor of the plaintiffs. But on Jan. 1, new Justice Beth Walker replaced Brent Benjamin and the court decided to take up the case again. Rethinking a case is rare, Huber and Susman said, and may indicate the court plans to reverse itself.

The case hinges on state code language mandating royalties be paid on gas extracted “at the wellhead.” As Huber explained, changes in the way gas is sold have clouded the issue. Instead of being sold where it exits the well, gas is now shipped to hubs and sold there. So the court seeks to resolve ambiguity in the meaning of “at the wellhead.”

Huber said that the practice of post-production deductions not only deprives the mineral owner of due income, it can and does lead to negative royalty checks where the company indicates expenses exceed the royalty. The Dominion Post previously wrote about this occurring across the country and described some of the lawsuits that ensued.

“We really feel that this is one of the biggest thefts for royalty owners in the state,” Huber said.

Lewis County mineral owner Tom Kopp further explained to The Dominion Post about his situation. His land has three vertical wells owned by three companies, just a few hundred feet apart. The same amount of gas is produced from each, which gets shipped the same distance. Two companies pay full royalties, but one stopped two years ago, claiming transportation expenses were too high.

When Kopp attempted to dispute the charges, the company threatened to start issuing negative royalties — essentially charging them to take the gas they own.

Huber said that if the court does reverse itself, then mineral owners and their supporters in the Legislature will need to make a full-court press to get some protective legislation pass-ed next session.

“We are at a disadvantage,” he said. “We don’t have the deep pockets. We don’t have the fleets of lawyers.”

WV State Senate Bill 576

SB 576 dealt with two topics. One is cotenancy — owners of a single natural gas tract. It allowed the owners of 75 percent of the royalty interest to consent to a lease, in the face of unconsenting or unlocatable cotenants. This part posed few problems for stakeholders.

The other part did. It dealt with joint development, or forced pooling as some call it. It allowed whole tracts to be pooled into a unit unless a lease specifically forbids it. This gained little support outside of the industry.

The bill passed the Senate, but died in the House. Huber said some fear it may be added to the call of the current special session, or another later this summer. Many agree it will return next January.

Opponents regard joint development as a kind of privatized eminent domain — taking land for commercial gain instead of public benefit.

On the other hand, area gas development companies have been posting Facebook advertisements touting a resurrected version of SB 576 as a way to create jobs and boost the economy.

Butler said that the bill contained no real protections for surface owners. It required compensation, but allowed the owner no say in the location of the well — which could disrupt or destroy the production of a farm.

Huber, Susman and Butlers said they aren’t opposing gas well development. They want fair treatment for royalty owners and surface owners. Susman said this was the fourth meeting they’ve held and they plan more around the state.

They plan to work on a package of bills to protect property owner rights and to develop some educational materials to inform property owners and legislators about the issues and needed legislation.

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West Virginia Top Court Reverses Ruling on Gas Royalties

West Virginia Surface Owners’ Rights Organization

Public Hearing Monday on Forced Pooling Bill

The House Energy Committee will hold a public hearing on the forced pooling bill (SB 576) Monday, April 3 from 9AM to 10AM in the House Chamber. Anyone who would like to travel to Charleston to speak out against the bill will have the opportunity to do so. However, considering the high level of interest in the bill and the limited amount of time, speakers will likely have only a minute or two to make their comments.

If you plan to make the trip:

• Arrive early to sign up.
• Prepare your remarks ahead of time and keep them brief. If you have more to say than you can share in a minute or two, you can submit additional written comments to the committee.

If you can’t make it to Charleston, please make some calls and send some emails to House Energy Committee members and your Delegate(s).

Click here for a list of committee members with their phone number and email address, followed by a ‘list’ of emails for all members that can easily be copied and pasted into the ‘To’ field of your email.

You can also take action via http://protectwvpropertyrights.com/.

Here is the latest on SB 576:

The Senate narrowly passed the bill on Monday, on a 19 to 14 vote. Although several amendments were offered to improve the bill, most of the amendments were rejected. A clarifying amendment offered by Senator Mike Romano (D-Harrison) related to surface use in the cotenancy section was adopted. Senator Romano’s amendment clarifies that a surface use agreement is required whether or not the surface owner owns minerals, but the loophole we are concerned about related to existing agreements has not been fixed.

The only other amendment adopted was one offered by Senator Ryan Ferns (R-Ferns) that effectively reduces the severance tax on natural gas production. According to the WV Center on Budget and Policy, the cut in the tax rate will likely cost the state $21 million in revenue for the upcoming next year.

Otherwise the bill remains unchanged and we continue to have the same problems we outlined in our previous update. For your convenience we’ve outlined these concerns again below.

A bit of good news: Our “land reunion” bill, SB 369, which would begin to reverse the trend of separate ownership by giving surface owners a first chance to own any interest in the minerals under their land that are sold for non-payment of property taxes, was approved overwhelmingly by the Senate. In the House, the bill has been double referenced to the Energy and Judiciary Committees, making it more challenging to get it passed during the last week of the session.

Please contact House Energy Committee members and your Delegate(s) and urge them to support the bill.

Problems with Forced Pooling (Cotenancy and Lease Integration) Bill (SB 576)

SB 567 contains two parts: “cotenancy,” which we have dubbed “majority rules,” and “joint development”/“lease integration” or what we call “invisible ink.” Below we have outlined our problems with the different parts of the bill.

COTENANCY (Aka: Majority Rules)

Surface only owners:

-We appreciate that a surface use agreement generally is required, HOWEVER, SB 576 contains a loophole that would allow a driller with an existing surface use agreement or other valid contract that pre-dates horizontal drilling to be used to locate well pads for horizontal drilling on a surface owner’s land.

-Also, the current version of the bill does not include provisions in earlier drafts that the royalties and ownership of missing and unknown owners go to the surface owner pursuant to the existing missing and unknown heir leasing statute. These need to be included or surface owner rights are taken away.

Surface owners who own minerals:

-We appreciate that the revised bill requires that non-consenting cotenants be paid the highest royalty in leases signed by the consenting owners. This is an improvement over the earlier bill. However, a knowledgeable mineral owner still might be able to negotiate a better deal than his or her cousins, (or limit the lease to certain formations, or limit the size of the units or the land held by production) and the bill lacks due process (right to appeal, etc.) for non-consenting owners.

• >  >  >  >  >  >  >  >  >

LEASE INTEGRATION/JOINT DEVELOPMENT (Aka: Invisible Ink)

Surface only owners:

-SB 576 still allows the driller to put well pads and roads etc. on the surface owner’s land! It is appreciated that the common law rights are preserved. And $100,000 might sound like a lot, but it is only 4/100ths of 1% of the value of the gas that will be produced. And the land may have been in a family for generations or something purchased for happiness or into which tremendous energy has been invested that money cannot replace.

Surface owners who own minerals:

-SB 576 is in violation of constitutional prohibitions on altering private contracts, and in violation of the common law of interpreting contracts against the person who wrote them. The bill only modernizes old leases for what the driller wants, a pooling provision, but it does not modernize royalty amounts or give new signing bonuses.

>>> West Virginia Surface Owners’ Rights Organization

>>> 1500 Dixie Street, Charleston, West Virginia 25311
>>> 304-346-5891
>>> Join WV SORO

Location? Dat-Location? Dislocation!

Zombie Bills: Bills to Aid Drillers Are Back

From an Article by  Julie Archer, WVSORO, February 11, 2017

As we anticipated, some bad bills that aid drillers at the expense of West Virginia landowners — bills that were either soundly defeated or stalled at different points in the legislative process in 2016 — are starting to reemerge this session.

“Right to Trespass” for Survey Access

Last year the Senate Judiciary Committee passed a bill that would give pipeline companies planning the interstate pipeline projects the right to access private property for the purpose of surveying without getting landowner permission. Currently, there are several such pipeline projects at various stages of development that will cross portions of West Virginia. The bill effectively reversed a Monroe County circuit court decision regarding survey access for these pipeline projects — a decision that was recently upheld by the West Virginia Supreme Court.

The pipeline companies had been relying on and citing West Virginia’s eminent domain statute saying it gave them survey access before an eminent domain proceeding had been initiated. That statute says eminent domain can only be for a “public purpose”.

In the Monroe County case, the judge ruled that the Mountain Valley pipeline was not for a public purpose and, therefore, the pipeline company didn’t have a right to survey people’s land without their permission.

This “right to trespass” bill, which has been reintroduced as SB 245, gives pipeline companies who have made application and been assigned a docket number by FERC the right to enter for survey activities.

Re-branded Forced Pooling (AKA Joint Development)

Another bill that has reemerged would negatively affect both surface and mineral owners. SB 244 includes two bills from last year. The first is the majority rules bill, and the second is the “lease integration” bill, which we call the “invisible ink” bill.

The majority rules bill would allow leased tracts for which the driller has leases from only a majority of the heirs to be pooled into units and drilled. It is unclear how the unsigned mineral owner would be paid and whether the surface could be used. So if your cousins sign a lease and you hold out because your cousins signed bad leases, or because you don’t want your surface used for a well pad, you will, it appears, be stuck with your cousins’ lease.

The second part of the bill is last year’s invisible ink bill. Currently, a pooling provision or amendment is needed in a lease to authorize the driller to develop multiple mineral tracts using a single horizontal well bore. And a pooling provision or amendment is needed to state how the royalty from the well or wells  on the pooled tracts will be distributed. If there is already an old lease that does not have a pooling provision, the drillers want a modernizing amendment to allow pooling, without modernizing the royalty from 12.5% to 18% or more. SB 244 takes away a mineral owners ability to negotiate an amendment with modern terms and compensation, or a “no surface use” provision, in exchange for signing. We call this the ‘invisible ink bill” because it assumes that leases have pooling provisions even if there is none in there.

Without surface or mineral owner agreement, this bill would allow a surface owner’s land to be used for one of those monster pads for horizontal drilling even if there was a “no surface use” lease. The bill says, “The operator’s use of any surface tract overlying the jointly developed leases shall be permissible for that joint development.”

Simply put, “joint development” is re-branded forced pooling with only the things that are good for the drillers and nothing for anyone else – no due process or compensation, no surface protection, and no recourse against the driller.

Take Action: Tell Senators to oppose these shameful attempts to take away the property rights of West Virginians.

In 2016, the “right to trespass” bill was soundly defeated on the Senate floor, with only 11 Senators voting in favor and 23 opposed, and joint development didn’t get out of committee. This success was largely a result of citizens expressing their outrage and making their voices heard. Please contact your Senators and urge them to reject these ill-conceived proposals once again.

For more on other zombie bills we might see this session, click here.

Thank you for your assistance and support,  

Julie Archer, Director

West Virginia Surface Owners Rights Organization

1500 Dixie Street

Charleston, WV 25311

Phone: 304-346-5891, info@wvsoro.org

Web Site:  http://wvsoro.org