API number is a unique identification code

The Ohio River Valley Institute (ORVI) recently released a report entitled Diversified Energy: A Business Model Built to Fail Appalachia. Over the last several years, Diversified Energy has become the largest owner of oil and gas wells in the country! However, Diversified is not, for the most part, in the business of drilling new wells. It is buying up existing, declining wells and milking them now for all they are worth. But in the future thousands of their wells will not be producing enough gas to even pay to operate themselves, let alone to save the money to plug them.

Diversified already has a little more than 2000 wells in West Virginia right now that should already have been plugged! They only plugged 75 of these wells since January last year. Their disclosures to their stockholders (in Great Britain) raise a question whether thousands more that will need plugging will be coming, and whether Diversified will have the money in the future to plug somewhere around 10,000 wells in West Virginia that reach the end of their economic lives. We think they will become orphaned wells.

If you have a Diversified well on your land, and if it is not producing, please get hold of us. We would like to help to try to get it plugged while some money is still available, or by some other means, rather than have it left unplugged on you. Contact us through lawyer and co-founder Dave McMahon whose contact information is at the bottom of this blog.

Generally you will know if the well on your land is operated by Diversified because it will have Diversified’s name on it. If it does not and you still suspect it might be a Diversified well then:

There are two ways we can find out if the Diversified well on your land is producing (and if it is in fact operated by Diversified). One, you can send us your surface tax ticket or the information on it (we would need the county, district name, map and parcel number from that). Two, another more certain way to make sure we have the right well is for you to go to the well and get the API number off of the well. That number will look like 047 – 0_ _ – 0 _ _ _ _. (Other numbers that don’t look like that can be an old company well number of an equipment part number) Get us that API number. Here is a web page about API numbers. Or that page tells you how you can look up the information yourself on the West Virginia Geologic and Economic Survey website and others.

While you are there at the well listen to hear if it is making a hissing sound in the pipes. That will mean that it is producing and we may not be able to get it plugged soon, but if you have other questions about it let us know. (If it is making a hissing sound as gas is escaping out of the pipes into the air, be sure to contact us!) If there is a no sound it may not be producing and, again, let us know about it – we might be able to do something to get it plugged to stop devaluing your land or before it pollutes your surface land, groundwater, air etc,

To avoid any lawyer ethical problems, or even the appearance of impropriety, this communication is branded as “advertising material”. We also have to note that the lawyer responsible for this email is David McMahon, a co-founder of WVSORO. His number is 304-415-4288. His address is 1624 Kenwood Rd, Charleston, WV 25314. His email is wvdavid@wvdavid.net. He is the person to contact about the well on your property.

>>> Advertising Material from David McMahon, Lawyer, Charleston, WV

Reference ~ West Virginia Surface Owners’ Rights Organization, 1500 Dixie Street, Charleston, WV 25311
info@wvsoro.org 304 346 5891

ALERT — Oil & Gas Wells Need Attention

From Julie Archer, WV-SORO, Charleston, February 15, 2019

Help Prevent One of the Most (If Not the Most) Widespread Environmental & Property Rights Disasters in WV

One of, if not the most, widespread environmental and property rights disasters ever is now unfolding in West Virginia! WV-SORO needs your help to hold drillers responsible and keep this from happening.

Please contact your Senators and Delegate(s) and tell them to support a strong Orphaned Oil and Gas Well Prevention Act (SB 576 & HB 3065).

There are currently more than 4,500 orphaned oil and gas wells that have gone unplugged for so long that the driller/operator has gone out of business and there is no one to plug it. A company called Diversified is buying declining, conventional wells from EQT and other Marcellus Shale drillers. WV-SORO expects Diversified will plug only 310 of the 17,000 wells they have purchased in the next 15 years, and after 2019 to start leaving 10,000 more unplugged. These wells are located on surface and mineral owners across West Virginia.

The Legislature needs to pass the “Orphaned Oil and Gas Well Prevention Act” (SB 576 & HB 3065) in order to stop more wells from being orphaned. Currently operators only have to post a “blanket” “performance” bond in the amount of $50,000 – as little as $20 a well for some – when plugging costs $25,000 to $65,000 or more for each well.

It will be good if the Legislature passes other bills like HB 2779 and HB 2673, that will generate money to plug a few orphaned wells, perhaps 60 a year. (These bills have already passed the House of Delegates.) But we need the Orphaned Oil and Gas Well Prevention Act passed in order to prevent more wells from being orphaned by requiring what we are calling “plugging assurance” for three kinds of wells: 1) new wells, 2) existing wells that are producing but no longer producing in paying quantities, and 3) wells are transferred (often from a driller that can afford to plug its old wells to one that cannot).

“Plugging assurance” would be a single well bond in the actual cost to plug the well, or plugging assurance would be payment into an escrow account for each well in the treasurer’s office of the cost to plug the well when it is time.

Please contact your Senators and Delegate(s) and tell them to support a strong Orphaned Oil and Gas Well Prevention Act (SB 576 & HB 3065).

For additional information on why the Act is needed see here and here.

For more information on Diversified, see the following news articles:

>>> Sale of older gas wells concerns surface owners lawyer

>>> Diversified’s deal with West Virginia on plugging old oil wells shows rules need to change, environmental groups say

Contact: WV Surface Owners’ Rights Organization,
1500 Dixie Street, Charleston, WV 25311

info@wvsoro.org 304 346 5891

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.”

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

Diesel engines provide noise and dangerous air pollution

From the Guest Opinion-Editorial by David McMahon, Charleston Gazette-Mail, October 9, 2017

I write in response to the op-ed by the executive director of the West Virginia Independent Oil and Gas Association of West Virginia in which he opined that gas production in Pennsylvania and Ohio is increasing more than in West Virginia and that is because of our Legislature’s failure to adopt legislation the industry wants.

I do not know if it is true that production is increasing faster in Pennsylvania and Ohio or if the reason for the increase arises from what he claims or is from a variety of other reasons. I do know that some of the legislation the drillers have wanted here should not pass because it is so lopsided in favor of the drillers that any increase in production would mostly benefit the drillers and not our citizens.

During the 2017 session, drillers pushed so-called “cotenancy” legislation, which said that, if a number of family members own shared interests in one mineral tract, the drillers only needed a certain percentage of the family members to sign leases to drill on that tract. And then the driller could pay every family member according to the terms of the leases signed by only some. I have cousins who are a retired airline stewardess and a retired obstetrician. They left West Virginia decades ago. They know nothing about the Marcellus Shale and do not have the same financial or surface use concerns that I do. I know what drillers can afford to pay and what other provisions should and should not be in a lease. The drillers should not be able to get around me by getting my cousins to sign the driller’s unnegotiated boilerplate lease.

That “majority rules” legislation was bad, but the industry’s additional proposed “invisible ink” legislation was worse. Many leases signed early in the last century are still in effect today because there are still old, low-producing wells on the mineral tracts. Those antiquated leases do not have voluntary-pooling clauses that are required to drill using the new, mile-long horizontal well bore drilling techniques; and they have the pre-Marcellus, industry standard royalty rate of 12.5 percent. I know of one Marcellus Shale well drilled next to a conventional well that, in the first full calendar year of production, produced 60 times more gas than the conventional well a few feet away. And there were eight more Marcellus Shale gas wells drilled on the same new pad.

Things have changed.

Modern leases do have pooling clauses, but they also provide for royalties of 18 percent and even higher. Some drillers ask the mineral owners to modernize the old leases to add a voluntary-pooling clause (and often other fine print favoring the driller), but refuse to also modernize the royalty rate. Many mineral owners have refused to sign these one-sided lease amendments, so the drillers have gone to the Legislature asking for laws that say there is a pooling clause in these old leases even though there is not.

I have spent a career advising people who come to me asking if a driller can do something on their tracts. I tell them I have to read the lease (completely drafted by the drillers’ lawyers — no required consumer-protection language here); and if the lease says the driller can do it, the driller can do it and not pay for the privilege. Now the drillers want legislation that says they can do things even if their lawyer did NOT put the things in the lease.

To add insult to injury, initial drafts of this so-called “joint development” legislation allowed the new gigantic well pads to be placed on people who only own the surface even though the use of the surface that was contemplated in the severance deeds signed by their ancestors was the use that was contemplated before the Model T Ford.

If West Virginia is going to pass legislation, it should not make the mistake Pennsylvania made. West Virginia should look to the laws of states like Texas and Oklahoma, where there is plenty of drilling but the citizens are better off. Those states have legislation with policies that would achieve the drillers’ goals but balance the benefits to the drillers with the benefits to West Virginia citizens.

>>> David McMahon is a retired lawyer in Charleston. See also: www.WVSORO.org

Dave McMahon explains "public use" of private land

Debating ‘Public Use’ and Its Worth to Landowners

Op-Ed Column by David McMahon, WV State Journal, March 9, 2017

In order for eminent domain laws, sometimes called “condemnation,” to be used to take private citizens’ land for a project, the project must be for a “public use.”

I write to caution that the broadening of the definition of “public use” in our eminent domain laws will do severe collateral damage to the principles of free markets and private property rights, particularly if the expansion of “public use” is not tempered by requiring private free market property value determinations.

If a 42-inch transmission pipeline to North Carolina is determined to be a “public use” for which eminent domain can be used (like any other type of projects) there is more than one effect. The first, obvious effect is that eminent domain takes from the landowner and gives to the company the right to use the property, even though the landowner does not want it to happen.

A second, less realized effect is that the determination of how much the landowner will be paid is taken out of the private free market. In a private enterprise free market purchase of the use of land, the value paid for the land is the amount the land is worth to the buyer for the buyer’s use, and not the amount the land was worth to the seller.

On the other hand, if a farmer owns land the state wants for a road, the state uses eminent domain proceedings. Clearly a road is a “public use.” It is available for use by all citizens of the state, and it will benefit many of them directly, and many more indirectly. It is actually owned by the state (and the state’s only income to purchase the land is its collection of taxes). Giving the farmer only his pasture value for this true “public use” is reasonable. The value of the land to the seller, the farmer, is determined, and the farmer is paid that amount, the pasture value, as “just compensation.”

But what if Exxon wants to build a gas station/convenience store beside the road? Should the farmer sell his acreage to Exxon for what it was worth to the farmer, the seller, as a pasture? Of course not. In this private, free market transaction, the farmer will negotiate to be paid what the acreage is now going to be worth to Exxon, the buyer, as a commercial gas station/convenience store. If Exxon cannot get the farmer to agree to Exxon’s price, or if the farmer does not want to sell because the farmer likes his pasture better than money, then Exxon can talk to neighboring farmers.

But if Exxon is given the right of eminent domain because such a gas station is seen as an expansion of business and infrastructure and it is seen as creating jobs and increasing property taxes (a frequent justification for expanding the definition of “public use” to justify more eminent domain), the farmer ought to be given the value of his land to Exxon for Exxon’s commercial use, rather than what it was worth to the farmer as a pasture.

It is said that the pipelines are needed in order to benefit the West Virginians who are mineral owners. But when the driller purchased leases from the mineral owners, the amount paid to the mineral owners whose gas is being produced was negotiated in a private enterprise free market. And the mineral owners negotiated as large a signing bonus and as high a royalty as they could get in order to get what the lease was worth to the drillers/lease buyers.

The rights of way for these new, huge, 42-inch pipelines out of the Marcellus Shale region will not be owned by the state, but by a private for-profit company. Most of the gas will be used not by local homeowners, or even by local businesses. Much of the gas will be used by for-profit private enterprise businesses or, at best, by privately owned electric utility companies with regulated, guaranteed profits. Billions and billions of dollars worth of gas will pass through the pipelines.

So if the farmers are to have unwanted pipelines placed across their land, they should not be given the low price of what the pasture was worth to the farmer as a pasture. They should be given what the value of having the pipeline across the farmer’s land is worth to the pipeline company and their gas buyers.

West Virginians have little experience with the dollar amounts at stake. I know of one well pad with nine horizontal Marcellus Shale wells that will produce well over one-quarter billion dollars worth of gas during the life of the wells — that’s just one pad. I would bet if the landowners were offered what the pipeline was truly worth to the pipeline company and its customers (either up front for the value of the pipeline over the years, or as a yearly payment) the pipeline companies would not need eminent domain.

I do not say my friends are wrong when they say building these pipelines at all is a bad idea, because it enables us as a society to avoid increasing energy efficiency and to avoid turning to renewables, and instead enables continued climate change. Pipelines enable value-added industries to locate in other states and not here. Pipelines can leak and even sometimes explode, and their compressor stations cause tremendous noise and other types of pollution. But if eminent domain is allowed because the Legislature or the courts deem these pipelines a “public use,” then West Virginia landowners should be required to be paid the private free market property value of the rights of way to the buyer pipeline companies and their customers and not the seller’s pasture value.

Texas, where the mineral owners are politically dominant, are rich. West Virginians are poor because we cede too often and too much to the drillers and pipeline companies out of our company town history and culture. Requiring payment to sellers of the value to the buyer in eminent domain proceedings is one step West Virginia should take to change that.

>>> David McMahon is an attorney in Charleston and a co-founder of the West Virginia Surface Owners’ Rights Organization.

See: www.WVSORO.org See also: www.FrackCheckWV.net

WV government has "no respect"

WV gas industry sues landowners to “legally” perform forced-pooling of mineral rights

From an Article by Andrew Brown, Charleston Gazette, June 21, 2015

West Union, WV — When Lorena Krafft received the court summons in 2013, she didn’t quite understand what was happening. Months before, she had received a letter and a draft lease from Antero Resources asking her to sign over a portion of minerals she owns in Harrison County so the company could drill. She ignored that letter and the string of calls that followed. She told the company to consult with her attorney.

It wasn’t that Krafft, a resident of Ohio, was opposed to drilling. She had been willing to lease the 15 pieces of property she inherited from her mother in Doddridge and Harrison counties. The problem was that her interactions with Antero had soured because of disagreements over the location of a gas-compressor station and the cutting of trees on land she owns in Doddridge.

She wanted those issues resolved before she would sign a lease with the company. Instead of bringing the company to the negotiation table, though, Krafft’s refusal to sign prompted Antero to file a lawsuit in Harrison County Circuit Court seeking to end her ownership in the tract of minerals.

Without Krafft’s signature on a lease, the entire Marcellus Shale well that would be drilled through nearly 14 properties could be put on hold, delaying profits for Antero and the other property owners, who already had signed over their mineral rights.

Krafft’s case is just one example of how the oil and gas industry has turned to West Virginia’s court system in the absence of a pooling law to force mineral owners to either sign leases or sell their property. In county courthouses throughout the north-central part of the state, gas companies have filed what are known as partition lawsuits, seeking court-ordered buyouts of partial mineral owners who have yet to sign a lease.

In Doddridge and Harrison counties alone, Antero, one of the region’s largest gas producers, has filed nearly two-dozen lawsuits over the past two years. Lawyers who have worked on similar cases in the state say the lawsuits also have been used by other companies, like EQT Corp., in the state’s other Marcellus gas-producing counties.

For the companies, the lawsuits are a necessary part of their effort to clean up the state’s fragmented mineral acreage, which often is split between dozens of shared owners, the result of property being passed down through generations, sometimes unknowingly.

For the people who are sued, though, the litigation often is seen as an unfair process in which they are either compelled to sign a lease or watch as their property is sold to a gas company for whatever price the court determines is fair — often less than what can be made from the minerals once they are drilled.

Two years after the lawsuit was filed, Krafft continues to fight Antero in court, an effort that has cost her a significant amount of money and shaken her confidence in the court system. “We’re tired of it. We are tired of the expense. We’re disillusioned with our legal system because the cost is outrageous. From attorney fees to court fees, the amount of money that is involved is way beyond our imagination,” she said. “You get the feeling they are just waiting for us to run out of money, to get tired and give up. But what do you do? You have this much money invested already.”

In lieu of ‘forced pooling’

The use of the lawsuits coincides with several years of failed attempts by the industry to push a forced-pooling bill through the West Virginia Legislature — the most recent defeat coming three months ago, when a large number of Democrats and the right wing of the state’s Republican party united to force a last-minute tie on the controversial bill.

A pooling bill would allow companies to group dozens of mineral tracts into organized rectangular areas, sign up at least 80 percent of the owners in that space and petition the West Virginia Oil and Gas Conservation Commission to force the remaining people to sign a lease.

If passed, the law would have ensured that drilling in West Virginia was as efficient as possible, reducing the amount of time and number of wells needed to get the gas out of the ground. Opponents of the law balked at the sections of the bill that required unwilling owners to sign a lease with gas companies. So, instead, gas companies have relied on the tools they do have at their disposal — namely partition lawsuits — to buyout or lease portions of shared minerals. The costly litigation can often take over a year to resolve, but industry officials say that, in the absence of forced pooling, the lawsuits are the only means available to open up mineral acreage for drilling.

In many ways, the lawsuits achieve the same goals that pooling would, but on a case-by-case basis in the county courts. One of the few differences is that the lawsuits can’t be filed against people who own 100 percent of their minerals, while forced pooling could.

“It is an indirect way to achieve what pooling would do,” said Jay Leon, a lawyer from Morgantown who has represented mineral owners in partition lawsuits. “The point is that it is a blunt instrument to get the property into production.”

Kevin Ellis, president of the West Virginia Oil & Natural Gas Association, said the need to remove the holdout owners — some of whom live in other states — is the only way to ensure that the cooperating property owners can profit from the minerals.

“It doesn’t make sense that litigation is the only way that you can get 100 percent development,” Ellis said, adding that the industry would rather use pooling, which he said would be a quicker and fairer process.

In West Virginia, all people with shares in a co-owned piece of property need to sign leases before a company can drill and hydraulically fracture a well. That can make it difficult for companies to secure those minerals.

While a gas company needs partial ownership in a tract of minerals to file a partition lawsuit, the development of those minerals has almost been guaranteed once it does.

In every case reviewed by the Gazette-Mail, Antero began by having one of the already-leased mineral owners sign a small portion of the property over to the company. Without that ownership — usually about 1 acre — the company can’t file the lawsuit. Lisa Ford, an attorney from Clarksburg, said the practice is an example of companies acquiring a “minuscule” interest and asserting what she believes is a perceived right to file a lawsuit. “While sitting on inventories of hundreds of thousands of acres, companies allege that individuals who ask for a square deal are refusing to cooperate in development,” she said.

Once a property transfer is finalized, there is very little the holdout owners can do, besides sign a lease or accept whatever price the court decides the minerals are worth. Even if the unwilling owners make up more than 48 or 50 percent of the ownership in a tract of minerals, court records suggest the companies have the upper hand.

Of the 16 Antero lawsuits reviewed from Doddridge County, at least 10 were dismissed after holdout mineral owners relented and signed leases. “It’s like any other type of negotiation; it comes down to leverage,” said Leon, who is representing Krafft in her lawsuit against Antero.

In cases where the court does determine a price for the minerals, court records show that the price is usually set around $2,500 per acre, and that the valuation often is based on evidence presented by the gas companies. Ellis, who also is an employee of Antero, said those numbers are based on the prices paid for other minerals in the immediate area, which court records show is normally previous purchases made by the same companies. “It’s no different than the sale of a house,” Ellis said. “You base it on what’s comparable in the area.”

Dave McMahon, a Charleston lawyer who represents mineral owners in the state, said that when clients have approached him in the past and asked how to handle a partition lawsuit, he told them to negotiate for the best lease terms they can get and sign with the company. McMahon, who is a founder of the West Virginia Surface Owners’ Rights Organization, said it’s often not worth fighting the company and losing out on the money that can be made from gas royalties.

For any of the owners, the decision between selling out or leasing can be difficult, but for people who object to drilling for conscientious reasons, like environmental or human-health concerns, the choice can be particularly hard to swallow.

‘A tangled mass of weeds’

In West Virginia, partition lawsuits — meant to resolve disputes between co-owners of land and minerals — are well established in the legal system. They’re relics from English law, passed down from when the state was still part of Virginia. But while the law has been used for decades to settle land disputes and open up minerals for mining and drilling, some people involved in the lawsuits have recently questioned if the right to partition gas minerals is guaranteed and whether the gas companies’ particular use of the law is actually legal or not.

In September, Judge Timothy Sweeney issued a decision in a Pleasants County Circuit Court case — Elder v. Diehl — that challenged what has been an almost guaranteed right to force the sale of other people’s minerals. “Partition is not an absolute and unqualified right,” Sweeney wrote in the decision, which denied a private mineral owner’s request to sell off a co-owner’s portion of the property.

Sweeney, who has presided over numerous partition lawsuits in the past couple years, also called on the West Virginia Supreme Court to review the case. He wrote that the use of the law to partition minerals is like fitting a “round peg into a square hole.”

“The current state of partition law in West Virginia is a tangled mass of weeds,” Sweeney wrote. “The court finds this to be especially true with regard to oil and gas minerals.”

Sweeney’s opinion immediately caught the attention of law firms that represent the gas companies in the state. They quickly posted messages that warned of the possible implications the decision could have for the industry. They argued that it was evidence of the need to convince the Legislature to pass a forced-pooling bill.

Still, industry officials remain confident in their legal right to file the lawsuits. “The Supreme Court has already ruled on the validity of the partition statutes,” Ellis said. “I am aware of the case in Pleasants County. He has an opinion. It’s out there. To my knowledge, the partition statute is applicable to oil and gas, the same as it is to the utilization of the surface.”

But Judge Sweeney is not the only person who has reservations about the recent number of partition lawsuits that have been filed in county courts. Numerous lawyers who have represented mineral owners, including Attorneys Leon and Ford, argue that the way the companies file the lawsuits might not be exactly legal, according to their reading of the law.

In every case reviewed by the Gazette-Mail, the companies named as defendants only the owners who wouldn’t sign leases, which Ford said was a type of “procedural Hail Mary.” Leon said that practice might go against the basic purpose of the partition law, which is meant to leave the entire property in the hands of a single owner. “That’s not what the statute was meant to do, in my humble opinion,” Attorney Leon said.

In Krafft’s case, several of her relatives who signed leases and shared ownership in her tract of minerals were named as plaintiffs against her. She said they were never consulted by the company about the lawsuit and wouldn’t have consented to their names being used in a case that was seeking to force the sale of her property.

If the companies were forced to name all owners as defendants, the attorneys said, even the people who signed leases with the company would be forced to sell their minerals, making it more difficult for companies to get people to sign over an acre of the property to begin with.

But without a case being appealed to the state Supreme Court, Attorney Jay Leon said, the attorneys, judges, companies and property owners involved in the lawsuits are left to operate in an unclear legal environment. “For the most part, these are 100-year-old concepts that are being applied in a unique environment,” he said. “When these laws were created, they didn’t foresee horizontal drilling. The law is playing catch up a little bit. It’s a new wrinkle to an old problem.”

Attorney Lisa Ford maintains that the lawsuits are illegal and violate the rights of property owners. “This suspect partition practice is causing great harm to West Virginians. Companies are taking mineral interests without affording West Virginia mineral owners their constitutionally guaranteed due process of law,” she said. “In my opinion, there are holes in the industry’s scheme to take mineral properties with our partition statute that are big enough to drive a water truck through.”

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