Pennsylvania

Energy. Environment. Economy.

Corbett Signs Controversial Bill Giving Drillers Power To Pool Leases

Governor Corbett says he does not believe the bill will adversely impact the rights of landowners.

Marie Cusick/ StateImpact Pennsylvania

Governor Corbett says he does not believe the bill will adversely impact the rights of landowners.

Governor Corbett signed a controversial bill into law today, giving drillers the power to combine or “pool” leases for horizontal oil and gas drilling.

The legislation was originally promoted as an effort to bring more transparency to the deductions companies take out of royalty payments. Complaints over those deductions lead to a recent Senate hearing on the issue.

An organization representing Pennsylvania’s mineral owners was angered over language added later on, which allows pooling of some leases. They complained the measure sailed through the state legislature during budget negotiations and didn’t receive enough scrutiny.

“We are not pleased.” says Jackie Root, president of the Pennsylvania Chapter of the National Association of Royalty Owners (NARO-PA). “It is so vaguely written and so broad.”

The organization has argued the measure could adversely impact some people who signed contracts years ago and didn’t anticipate modern shale gas drilling. They say it leaves landowners at a disadvantage– hindering their ability to renegotiate old leases.

“This pooling language had no place in this bill,” NARO-PA vice president Trevor Walczak wrote in an email, ”If you wanted to address pooling, we should have been doing it in a stand alone bill we could debate, not hiding it in here and fast-tracking it through.”

Governor Corbett has said publicly he would not sign any legislation that allows “forced pooling” –which would give drillers the right to take gas from a property owner who has not signed a lease.

This bill only applies to existing leases. It allows companies to combine land parcels for horizontal drilling, unless it’s explicitly prohibited in the lease.

Sen. Gene Yaw (R- Bradford) introduced the bill. He doesn’t feel the measure is unfair to landowners.

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

Rep. Garth Everett (R- Lycoming) who sponsored the controversial amendment was quoted in the Pittsburgh Tribune-Review last week saying he wasn’t sure where the idea came from.

Corbett issued a statement today acknowledging the concerns over the bill. However, he contends the language will enhance the efficient extraction of oil and gas, while protecting the rights of landowners.

“I do not believe anything in Senate Bill 259 expands the ability of an oil or gas operator to define the size of a drilling unit, or to expand the ability of an operator to hold by production any parcels of leased land.”

You can read the governor’s full statement below:

Comments

  • Celia Janosik

    Is there any doubt that this Governor is owned lock stock and barrel by the Fossil Fuel Empire. They say jump, he says, how high?

    • landownerscrewed

      and so it begins, the first lawsuit against landowners… poor landowners are loosing their land rights, the PA government has sold them out so they themselves can prosper.

  • http://westchestergasette.blogspot.com/ WCGasette

    His statement clearly shows he has no idea what he just signed into law. And that’s how these things get done. In the dark of the night and with willful ignorance.

  • Dana Leigh Dolney

    Watch Gasland 2. Understand who your reps work for. It’s not in your best interest, but in the interest of their campaign contributions, their future. Corbett and his cronies should be in jail for what he has done to this state. Yet they just continue marching down the same, long path. Make it all good for industry at the expense of public health and safety and then when the public finally can’t take anymore and you loose your election, you get a much better, higher paying job now working for the industry. What an awesome reward for you Tom Corbett, just like Krancer, Rendell, RIdge and all the gas lackeys before you. Sell us out; leave us with years of clean up and sickness; destroy the ecosystems and the inherent beauty of our state for trumped up jobs and profit that benefit very few people.

    It’s the death of democracy in the birthplace of liberty, how fitting.

  • Geo

    This law harms anyone that has an old gas lease on their property by giving gas companies the right to unitize when the terms of the lease did not allow for it. Why pay the property owner for that right when your friend Tom Corbett will sign a law giving you that right for free? When the Governor says he did not harm property owners in western Pennsylvania, he is either completely out of touch with reality or lying. I’m not sure which is worse.

  • brasch

    In my book, FRACKING PENNSYLVANIA, I discuss the problems of forced pooling and related acts. At the book’s deadline, Corbett had said he opposed pooling. I guess he’s changed his oily mind.

    • KeepTapWaterSafe

      Wow, so difficult to believe that Corbett, or any politician for that matter, would go back on his word!

    • http://westchestergasette.blogspot.com/ WCGasette

      This is not “forced pooling,” it’s combining old leases that were originally intended for “vertical drilling” into new units intended for “horizontal drilling.” It is clearly some smoke and mirrors since combining leases post-production changes the lease and potential royalty significantly. It sets a misleading precedent and needs to find its way quickly to the courts.

  • Puzette

    Tom Corporate and most of the other Republican “representatives” in PA are big oil/gas shills who are just looking to line their own pockets.

  • Ladderback

    I think this bill is more complex than you gave it credit for. Pooling (by that I mean setting up drilling units) is going on now. If by pooling you mean forced pooling, I don’t think that this is allowed now or before. Frankly, there is something missing in this and all the reports I’ve seen on this bill since it seems to enact what is already happening in the State. Perhaps you could do a follow-up story after talking about it with those in favor and those opposed to help us understand what it really means.

    • mariecusick

      Hi,
      I have not heard from a landowner who is supportive of it, although that doesn’t mean they don’t exist.
      The Corbett administration is making the distinction that this is not “forced pooling” (someone without a lease is not forced into anything). However, it is a form of pooling. You correctly point out, that’s already happening.

      The argument from NARO-PA is that the language in the bill is broad enough that gas companies may not need to negotiate with some landowners anymore. In their view, pooling can be a good thing for the companies and the leaseholders, but they feel this bill gives the industry the upper hand.

      Here is the part of the bill in question:

      “Where an operator has the right to develop multiple contiguous
      leases separately, the operator may develop those leases jointly by horizontal drilling unless expressly prohibited by a lease. In determining the royalty where multiple contiguous leases are developed, in the absence of an agreement by all affected royalty owners, the production shall be allocated to each lease in such proportion as the operator reasonably determines attributable to each lease.”

      Are you a leaseholder who supports it? Or know someone who is?

      Happy to discuss it more: marie_cusick@witf.org

      • Ladderback

        Thanks Marie. However, I think that the language that you quote is what is happening now. I believe (prior to the law being signed) that a gas company would set up a “Unit” for purposes of drilling which would include a number of Lessors who all had leases with that gas company and whose land might total a sq mile in size. The individual lessors may be notified of the unit being created, but I am quite sure that they are not asked to give permission (unless they have individual lease language that I have never seen in a lease). Since this law apparently does not force lessors to be in a unit/pool when they don’t have a lease with the company drilling, what does it do?

        Maybe I’m being thick here (a real possibility), but I still don’t see what changed. I know that some object because they lose bargaining power, but I don’t understand how that happens either.

        Thanks for your response.

        • mariecusick

          From what I understand, this applies to a particular subset of leaseholders — people with older leases, signed before the recent natural gas boom. Those contracts are often silent on pooling and don’t contemplate horizontal drilling.
          In that case, companies would go back to the landowners and renegotiate to get them into a pool, which they may not have to do anymore.

  • lee

    when something else that is wanted from beneath the ground is found are the mineral rights going to be adjusted again? the original leases were for oil not natural gas two different items.

  • Patrick Henderson

    It is quite clear that SB 259 – which passed pretty overwhelmingly in the General Assembly, including twice in the PA House and by a vote of 48-2 in the Senate, is not “forced pooling”. When one steps back, they will realize this law is not actually all that controversial. It does not change the terms of any lease; does not reduce royalty payments; and does not compel anyone who has not entered into a lease to permit oil and gas development. Further, if a landowner’s lease precludes integration, then SB 259 specifically acknowledges that the lease may not be integrated. It is unclear why some think drilling multiple vertical wells on every single leased parcel is preferable, rather than one horizontal well, to extract the same gas, minimize environmental impact and maximize landowner royalties.

    It is ironic that Pennfuture, which claims to be an environmental organization, condemns a bill that will result in fewer well pads, fewer stream crossings, fewer access roads, less forest fragmentation and less earth disturbance. Mr. Jurgovic (who apparently does not abide by StateImpact’s rules of identifying oneself and their affiliation when commenting) may feel the need to lash out at the Governor because his organization no longer receives unaccounted for “grants” from taxpayers, and had to return $140,000 in taxpayer money that his group misappropriated). Or perhaps its because, under Gov. Corbett’s watch, environmental standards have actually been raised substantially in Pennsylvania. And he just can’t come to grips with that reality.

    Patrick Henderson, Energy Executive

    Office of Gov. Tom Corbett

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