Shale panel revives concept of pooling land
HARRISBURG - The governor has said he won't sign it. Top lawmakers call it a deal-breaker. Yet, the Marcellus Shale Advisory Commission has revived a debate over whether to allow areas of Pennsylvania rich with natural gas to be gathered into large land "pools," even against property owners' wishes.
HARRISBURG - The governor has said he won't sign it. Top lawmakers call it a deal-breaker.
Yet, the Marcellus Shale Advisory Commission has revived a debate over whether to allow areas of Pennsylvania rich with natural gas to be gathered into large land "pools," even against property owners' wishes.
The practice, referred to as pooling, sparked controversy when it began circulating in Harrisburg last year. Opponents portrayed it as a grab by drillers at private property rights. Top Republican rejected it even as some rank-and-filers began drafting a measure.
"If you are going to take their property, you better take their guns first," House Speaker Sam Smith, then GOP minority leader, sarcastically quipped to reporters in the fall.
Now, the proposed policy is being recast as a way to protect property owners from having their natural gas stranded - costing them royalties - because of an uncooperative neighbor or competing company that can't resolve leasing disputes.
A new proposal would allow pooling only for areas where all property owners have leased their gas rights, an approach that Gov. Corbett's spokesman has said could change the governor's antipooling stance. Only drilling companies would be forced to allow pooling, not property owners who haven't signed leases.
The shale commission called pooling a win-win. It argued that updates to the state conservation law would maximize gas production while minimizing costs and the amount of land disturbed.
"The stranding of gas correlates with lost jobs," said Pennsylvania State University geologist Terry Engelder, a commission member.
On its most basic level, pooling involves combining the mineral interests of two or more parties in order to drain gas from a certain amount of land, said Bruce Kramer, a retired Texas Tech University law professor who specializes in oil and gas cases.
Traditionally, those gas units have been up to a square mile in size, helping to space wells efficiently.
With pooling, the company controlling a majority of the mineral rights within a unit gets a contiguous piece of property to drill. The company must compensate the other firms involved by sharing the profits or trading another property, and providing a royalty payment to any landowners who had not leased.
Companies benefit by drilling from one well pad rather than from the multiple pads that would be required to work around land controlled by uncooperative parties.
"We make more gas, we sell more gas, and you as a landowner in turn get more money," said Matt Pitzarella, a spokesman for Range Resources.
Other states manage their pooled units in different ways, but every major gas-producing state has some form of pooling statute, Kramer said. Those laws date to the 1930s and '40s.
Rep. Garth Everett, a Lycoming County Republican who proposed a pooling bill last year, said he was the subject of a severe backlash from people who viewed the proposal as an eminent-domain procedure for private companies.
He said he was not interested in forcing landowners opposed to drilling into a unit. Instead, he said, the focus should be on tracking how companies are piecing together their parcels of land.
A current bill from Sen. Gene Yaw (R., Lycoming) would do that. If all the property in a unit is under lease, a company controlling at least 65 percent could apply to the Public Utility Commission to "pool in" the properties leased by other companies.
Proponents say that process would remedy many land-use disputes by working out company-to-company issues.
But Kramer disagrees, noting that all other states with pooling include both leased and unleased land. He said more problems arise with an unwilling landowner than in dealing with other companies.
"If you just limit it to leased interests, to me, you would not be solving the problem," Kramer said.
