Pennsylvania

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DEP postpones hearings on forced pooling request in western Pa.

A growing controversy surrounding a company’s request to drill for natural gas without some property owners’ consent has moved the Department of Environmental Protection to postpone a set of hearings on the issue.

Hilcorp Energy Company asked DEP in July to approve Utica Shale drilling units for 3,267 acres in Lawrence and Mercer counties – all but 35 acres of which the company has under lease. Hilcorp is invoking a 1961 state law that allows “forced pooling” or the combining of adjacent tracts of land even if landowners have not signed leases or hold leases with other companies. The Oil and Gas Conservation Law only applies to drilling in the Utica Shale and not the better-known Marcellus formation.

However, when it comes to interpreting the 53-year-old law for modern shale drilling, state environmental regulators have been proceeding with caution. As StateImpact Pennsylvania has previously reported, the DEP originally deferred the decision to the Environmental Hearing Board. Last November, the board ruled the department must respond to Hilcorp’s request.

Scott Perry, the DEP’s deputy secretary for oil and gas management, has said previously that the legislature should update the law to consider new techniques that allow companies to drill horizontally under adjacent parcels of land.

The DEP has moved two public hearings on Hilcorp’s request to May 7 and 8.

“The postponed hearing sessions will give the department time to personally notify all potentially impacted royalty owners and operators well in advance of the hearing proceedings,” Perry said in a statement.

The Associated Press recently talked to frustrated landowners on both sides of the issue:

Suzanne Matteo, one of the four who has refused to sign a lease, said she is furious that the company may be able to drill under her property without her permission.

“It’s un-American,” she said.

On the other side are many neighbors who have signed leases, such as Bruce Clingan, who owns the roughly 200-acre Tanglewood Golf Course with his wife, Jody. They signed a lease with Hilcorp a few years ago and received a signing bonus of more than $500,000, plus 18 percent royalties on future production.

“I don’t understand how people that own 4 acres of ground can hold up such a big thing. I don’t agree with that,” Clingan said.

While “forced pooling” is not allowed for drilling in the Marcellus Shale, Pennsylvania does allow companies to combine existing leases for horizontal oil and gas drilling. Governor Tom Corbett signed the “pooling” legislation last summer and has said he would not support a measure to allow drillers to take gas from landowners who have not leased.

For more information about the DEP’s Hilcorp hearings, click here.

Comments

  • NorthernTier

    The 1961 law applies to extraction of gas from a “pool” (of gas). Hilcorp appears to attempt to get around this – shale rock is not a fluid substance – by defining a specific shale formation within the Utica as the target pool.

    Ironically, one of the stated objectives of conventional well forced pooling laws was to protect landowners. In rule-of-capture states like PA, gas from a pool that included their property could be extracted without compensation.

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