Energy, Utilities & Water  April 27, 2017

Watered-down bill to curb ‘forced pooling’ passes House, heads to Senate

DENVER — An amended version of a bill that would have raised the threshold to a majority of mineral-rights owners needed before an oil-and-gas company could submit an application to the Colorado Oil and Gas Commission for a forced-pooling order, passed the state House of Representatives on Wednesday by a vote of 36-29.

But House Bill 17-1336, sponsored by Mike Foote, D-Lafayette, and Dave Young, D-Greeley, had been watered down before the vote, when a committee removed the proposed threshold and returned the threshold to its original requirement of one mineral-rights holder in a designated area.

Forced pooling is when mineral-rights owners are forced by state law into participation in an oil and/or gas producing unit. Pooling is a technique used by oil and gas development companies to organize an oil or gas field that can me made up of multiple mineral-rights owners.

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As the bill heads to the Senate for a vote on Wednesday, what remains is:

  • A requirement that a notice must be given at least 90 days before an application hearing, up from 35 days.
  • Before entry of a pooling order, the drilling operator must give the affected interest owners a clearly stated, concise, neutral explanation of the laws governing forced pooling.
  • The operator, before beginning drilling, must file an electronic report with the commission that states the number and location of nonconsenting owners.
  • The commission must post the reports in a searchable database on its website.

Foote on Thursday said via email that having a minimum threshold is an important part of reforming forced pooling.

“Unfortunately, the oil and gas industry is very good at making a relatively simple concept sound complicated and also very good at lobbying. We had to amend out that provision in order to advance the notice and transparency improvements of the bill.  Certainly we will look again at the threshold issue for a future bill.”

Foote posted this on his website Wednesday concerning the bill:

“Today Rep. Dave Young and I passed our bill out of the House to reform corporate eminent domain, otherwise known as “forced pooling” by the oil and gas industry. The term describes when an operator forces a property owner to lease their mineral rights. It could be a mineral rights owner who wants to sell at a higher price, wants to pass down their investment to their kids, or doesn’t want to sell at all (like school districts or local governments with open space). None of that matters: the Industry can force that owner to lease their mineral rights anyway.

“Take a look at the video from the debate attached below and you can judge for yourself their arguments against the bill.

“We believe there are many things we could do to reform the practice and level the playing field between owners and operators. But this bill focuses on two simple things: better notice and transparency. Yet the Industry doesn’t want either of those things and it has fought the bill at every possible turn.

“I’m not aware of any instance where the rhetoric we hear is so different from the reality than with the oil and gas industry. They spend millions on commercials telling us how they love to work with local communities, yet when it comes to those same neighborhoods asking for modest reform in corporate eminent domain, the Industry laughs it off. They know they have a stranglehold on the Capitol right now, so they can (and do) tell us all to pound sand. Well, maybe that will work for the time being, but as we all know political circumstances eventually change. Let’s just make sure that happens sooner rather than later.”

 

DENVER — An amended version of a bill that would have raised the threshold to a majority of mineral-rights owners needed before an oil-and-gas company could submit an application to the Colorado Oil and Gas Commission for a forced-pooling order, passed the state House of Representatives on Wednesday by a vote of 36-29.

But House Bill 17-1336, sponsored by Mike Foote, D-Lafayette, and Dave Young, D-Greeley, had been watered down before the vote, when a committee removed the proposed threshold and returned the threshold to its original requirement of one mineral-rights holder in…

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