WV Surface Owners’ Rights Organization, February 10, 2018

Improved “Co-Tenancy” Bill Clears House Judiciary Committee

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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

WV Gas Industry Forcing Pooling Again

Citizen Input to the Legislature is Essential on Most Bills

From an Article by Casey Junkins, Wheeling Intelligencer, February 20, 2015

Whether one wants to call it “forced pooling” or “unitization,” Tim Greene said allowing Marcellus and Utica shale natural gas producers to drill on unleased land will give the industry an unfair advantage in dealing with mineral owners.

Identical bills, both introduced Friday, are now up for committee debate in both the West Virginia House and Senate. The House bill – H.B. 4558 – is sponsored by Speaker Tim Miley, D-Harrison, among others. The Senate bill – S.B. 578 – is sponsored by President Jeff Kessler, D-Marshall, and Senator Larry Edgell, D-Wetzel, among others.

In both 2011 and 2013, similar bills that would have allowed frackers to include unleased minerals in horizontal drilling pads failed to pass in the state Legislature. Reached late Wednesday, Edgell said the pooling bill is “not going to pass,” adding that he had asked his name to be removed from its list of sponsors.”The way this is crafted, it just is not fair to a bunch of landowners I know back home,” Edgell said. “There is a lot of opposition to this.”

Meanwhile, Greene is a former West Virginia Department of Environmental Protection oil and gas inspector who now owns Land and Mineral Management of Appalachia. He said “small” mineral owners throughout the Mountain State will suffer if legislators approve the practice he calls forced pooling.

“I just hate to see it being used as a hammer against the small mineral owner. They deserve the right to negotiate a fair lease,” Greene said. “There are landmen now going around the state telling mineral owners, ‘You either sign this or we are going to force pool you.’ And it is not even the law yet.”

Under the legislation, if surrounding property owners have signed leases with a particular drilling company but one property owner has not, that property owner could be forced to allow their land to be used by gas drillers for the development of the neighbors’ gas. The pooling provision would require gas companies to pay pooled property owners royalties comparable to those paid to neighbors.

In the case of a mineral owner who refuses to sign, he said the bill would require drillers to lease a “supermajority” of the adjoining acreage before they can act on pooling.

Corky Demarco, executive director of the West Virginia Oil and Natural Gas Association, said any royalties paid to an absent property owner would be placed into an escrow account. “Pennsylvania and Ohio have statutes allowing this,” he said. “If we are going to maximize our opportunity with the shale industry, we need some certainty. We can’t allow one mineral owner who wants to hold out to shut down a drilling operation.”

The Legislature ultimately decided against forced pooling in 2011 after many landowners voiced concerns about losing their ability to negotiate better lease deals from the gas companies. The industry tried to pass a similar bill last year without much success.

“There is a lot of acreage in this state that is just not going to be developed unless we get this,” Demarco said. As with Demarco, Greene is not sure of the bill’s destiny, but said companies should not be able to “bully” mineral owners.

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West Virginia Environmental Council Action Alert – February 21, 2015

There are three–yes, three–items about which you might contact Senate Judiciary members.

1. Any day, we’re expecting that committee to take up S.B. 423, “Amending the Aboveground Storage Tank Act.” This bill would gut the water protections gained in last year’s S.B. 373. Tell committee members to reject this bill!

2. We’re also expecting the committee to take up S.B. 482 any day. This bill would seriously weaken air pollution permitting for smaller sources, and establish unrealistic deadlines for the WV-DEP to review permit applications. And it says that if the DEP does not act, the permit is deemed granted as applied for. Tell committee members to reject this bill also!

3. Sooner or later, this committee will take up S.B. 167, the DEP rule that would restore “Category A” (drinking water) status to the portion of the Kanawha River that flows past Charleston. Tell committee members to pass this rule without amendment!

Note:  The House Judiciary Committee meeting at 9 am this Monday will take up “Coal Jobs and Safety Act” (H.B. 2566/S.B. 357); this bill would relieve coal companies from meeting water quality standards in their pollution permits and also weaken aluminum criteria for streams. Mine workers oppose it too, because it weakens mine safety.

This is the mid-point of the 2015 Session of the Legislature, the last (60^th) day is March 14^th.

WV Surface Owners Rights Organization — Update

From a Letter by Julie Archer, July 18, 2014

Mark Your Calendars: WV-SORO Membership Meeting, August 23rd

Please mark your calendars for WV-SORO’s upcoming membership meeting. The meeting will be Saturday, August 23rd at Salem International University in Salem, WV, from 10 AM-4 PM, followed by a public screening of “Triple Divide” at 5PM. Lunch will be provided.

Salem is in Harrison County, west of Clarksburg on US Route 50 and very near Doddridge County.

We are still working on the agenda but the goals and objectives of the meeting are:

1) Solicit input from SORO members on organizational focus/priorities.

We are entering our 7th year. A lot has changes since SORO was formed in 2007.  We have tried to be adaptable and respond as issues come up — but there are so many issues.  We want to know what issues to prioritize and how we can be more effective.

2) Educate SORO members on current issues of concern.

Pipelines are a major issue right now, with three proposed gas transmission lines crossing the state, not to mention various other projects planned or in the works for gathering lines, as well as lines for transporting water and waste water. Who has oversight/control over these lines?  What to do about right-of-ways? What comes next?  (Compressor stations, more drilling etc.) With this in mind we are starting to put together a panel on pipeline issues with folks from various state and federal agencies — DEP, PSC, FERC — to answer some of these important questions.

More details coming soon.  In the meantime, please save the date and plan to join us on August 23rd. We look forward to seeing you there.

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Workshops on Understanding Renegotiation and Renewal of Natural Gas Leases, July 22nd & July 24th. Sponsored by: WVU Extension Service Natural Gas Education Team

Presenter: Eric Gordon of Berry, Kessler, Crutchfield, Taylor and Gordon, Attorneys at Law, from Moundsville, WV

Tuesday, July 22nd in Wheeling, WV & Thursday, July 24th in West Union, WV

Both Workshops begin at 6:00 PM For program schedule and directions see the WVU extension web site.

For more information, contact Georgette Plaugher, WVU Extension Service Natural Gas Team Coordinator at 304-329-1391 or via e-mail Georgy.Plaugher@mail.wvu.edu.

Gas Leasing Still Hot in Upper Ohio Valley

From Article By Casey Junkins, Wheeling Intelligencer, November 11, 2013
         
North, south, east and west, natural gas abstractors continue flooding courthouses throughout the Upper Ohio Valley in the effort to lock up land for Utica and Marcellus shale drilling.

A trip to the Belmont County Recorder’s Office last week found at least 25 abstractors inside the office, with some even working upstairs on the mezzanine level. Though hectic, the activity seems orderly.

The rush continues due to the impressive amounts of oil, natural gas and natural gas liquids that companies such as Chesapeake Energy, Chevron, Gulfport Energy, Antero Resources, Magnum Hunter, Hess Corp. and others are pumping throughout the area.

A common sight at Belmont County, Recorder Mary Catherine Nixon’s office these days, as natural gas abstractors crowd in to dig through property records to see who owns certain oil and gas rights.

Tim Carr, the Marshall Miller Professor of Energy at West Virginia University, estimated that one Barnesville area Gulfport well could have been producing about $100,000 worth of revenue per day earlier this year. Gulfport also has the “monster” – as labeled by energy investment firm Global Hunter Securities – Shugert well that yielded as much as 28.5 million cubic feet of gas per day deep within the Egypt Valley area near Morristown.

Some property owners have received at least as much as $6,000 per acre, with as much as 20 percent of the production royalties. Much of the high value for the gas underlying parts of Belmont County is that it contains wet ethane, propane, butane, pentane and oil – in addition to the dry methane gas.

Antero has signed the village of Barnesville to a drilling contract, along with many individual landowners in the community. The deals call for Antero to pay $5,700 per acre to lease the land and 20 percent of production royalties once the gas starts pumping. The company is also paying the Barnesville Exempted Village School District more than $400,000 in lease payments for the rights to extract gas from school property.

County Recorder Mary Catherine Nixon and her staff first started seeing an increase in activity about three years ago, a time when drillers were first considering Belmont County as a target for horizontal drilling and fracking. The traffic has increased during the interim period, largely due to positive drilling results.

In Monroe County, Carr said a single Utica Shale well drilled by Antero Resources could be producing as much as $300,000 worth of revenue per day.

“The well production will decline, but you are talking roughly $2 million per week in gross revenues,” said Carr. “If production holds up for even a short period of time, the well should pay out in two to three months.”

Gulfport’s Clay 3-4H well, just west of Piedmont Lake in Harrison County, is now in production. The well reached a peak daily production rate of 2.5 million cubic feet of natural gas, along with 392 barrels of condensate and 323 barrels of natural gas liquids, such as ethane, propane and butane.

On the West Virginia side of the Ohio River, abstractors are back at work in Ohio County, after they had left for a few months. In Tyler County, officials eventually had to limit access to County Clerk Theresa Hamilton’s office because there just was not enough room in the records vault. This had some abstractors waiting outside all night to secure their places in the records office for the next day, until officials came up with a more organized plan. (Just south of Tyler County, the Pleasants County courthouse is now active also.)