Local coverage on the forced pooling issue

The Sanford Herald did in fact report on the Compulsory Pooling Study Group meeting last Friday (find the link to the story here). Good to see that the mortgage lending issue was discussed, and that Lee County at least has mapped where split estates lie along with what mineral leases are in place.

The Sanford Herald also have a piece in today’s paper on the Landowners’ gathering in Sanford last night. Presenters spoke about their experience or their reasons for weariness of fracking in the area: are adequate protections in place for the environment? are adequate protections in place for property owners? are adequate protocols in places for when (not if, but when) something goes wrong? The highlight of the evening came when the co-founder of NC Oil and Gas, Rob Knight, challenged the interpretation of SB 820: Mr Harris, who organized the meeting, responded very even-keeled by turning the page in the document and read directly from the bill. The two exchanged words very respectfully on the interpretation of the bill, each saying the other was wrong.

Here’s the problem: Mr. Knight was saying that Mr. Harris was wrong, but it was Mr. Harris who was reading the law. If Mr. Harris was indeed misinterpreting, and Mr Knight knew where the interpretation was off, then he needs to clarify that point, and do so with documentation in the legislation itself. He claimed that NC Oil and Gas was formed to help protect landowners, and if they have protection to offer the weary people gathered in that room, they need to state what resources they can offer. Unfortunately, when Mr. Knight had the attention of the room, he was preoccupied trying to give a history lesson on North Carolina’s antiquated oil laws and the technology of fracking instead of speaking on what property owners’ current situation is.  I commend Mr. Harris for not only running a good meeting with some vocal people in attendance but also for being informed.

For now, there seem to be some very profound questions for property owners that the Compulsory Pooling Study Group, MEC, or the Attorney General’s office needs to address and communicate to the public:

  • What is the status quo in regards to forced pooling?
  • What course of action will a property owner have when compelled to pool his/her mineral rights? (In other words, once compelled to pool their rights, will the compelled owner have time to negotiate terms of the pool’s lease? Do they have time to negotiate their own lease?)
  • What is the threshold to compel property into a pool? What will the basis of that threshold be: number of properties with a lease? amount of acreage with a lease? amount of mineral resource under/not under lease? access to other resources or infrastructure, like water or roads?

This is not an exhaustive list of questions, but these seem like some basic questions that property owners in the area should have answers to, or at least know that these questions are being discussed.

BT

Advertisements

5 thoughts on “Local coverage on the forced pooling issue

  1. John Humphrey

    Bob,

    Thank you again for your efforts in reporting on what is happening on the Mining and Energy Commission’s deliberations.

    One question I have from your most recent post is what the controversy on the law was. Could you clarify? If there are misunderstandings in the community about what the current laws related to compulsory pooling or other matters are, it would be good to ask Lynn Weaver of the Department of Justice Consumer Protection Division, who is a member of the Compulsory Pooling Study Group, to indicate what her view of it is and for the Compulsory Pooling Study Group to be informed of it.

    The three questions that you posed are all right on target. The first one was discussed in some detail at the January 11 meeting. Lynn Weaver, Ted Feitshans (of NC State and attorney advisor with the NC Cooperative Extension Service), and I all indicated that we understood the current statutes, which have existed since the 1945 Act and essentially were re-enacted by S. 820 with the exception of moving the authority from the Department of Environment and Natural Resources to the Mining and Energy Commission, gave the state the general power to pool properties despite not being the model of clarity when applied to unconventional gas circumstances. The lack of clarity arises primarily from their being written to address conventional gas situations where there is a pool of oil or gas that is somewhat mobile and so can move from underneath one landowner’s property to another’s. However, in spite of this statute, at the moment no forced pooling can occur we all noted, because there is no regulatory mechanism in place to accomplish it. The General Assembly has directed the Mining and Energy Commission to make recommendations about what that regulatory mechanism should look like and what the standards for any pooling should be.

    The second question that you raise regarding lease negotiation after a pooling order is critical, too. I would broaden it some to ask, if a regulatory structure is created and there is a circumstance in which a pooling order is issues, what protections will the state put into place, including the option of negotiating a lease, to protect landowners. One of the problems with negotiating a lease after a pooling order is one of relative bargaining power between the landowner and operator. Before a pooling order, the landowner is in a much better position because the operator wants the mineral rights and potentially surface access. After a pooling order, the landowner has significantly less leverage to negotiate compensation for the leased rights and protections of the property and landowner. Thus, simply providing the opportunity to negotiate a lease may not be sufficient. It will be necessary for the state to establish other forms of protection to ensure that the landowner, after being forced to give up property rights to the state and having them transferred to another private party, will be able to protect her property. You’ll see from the presentation that I made to the Study Group on January 11 (which you can link to from http://portal.ncdenr.org/web/mining-and-energy-commission/cp-1-11-2013), there are a substantial number of issues relating to the protection of landowners and the environment that will need to be addressed in this regard. The Study Group will have a lot more to discuss on this front.

    Finally, the third issue you raise is also an important one that the Study Group will have to address. What the standards would be for issuance of a pooling order will be an essential question for the General Assembly and therefore for the Commission and the Study Group. There are a wide range of approaches and requirements imposed by various States, and the Study Group will need to review them, consider them, and decide which approach, or whether any of the approaches, make sense for North Carolina.

    Thank you again for continuing to cover these issues. These issues are complicated, and it is critical that landowners and other members of the community learn about and weigh in on them by participating in the meetings or raising questions with the staff or members of the Commission. Mr. Covington has made a point of holding meetings in the affected communities to ensure that the people will have the most possible opportunities to learn and weigh in on these issues, has created multiple ways for people to ask questions in the Study Group meetings, and has repeatedly provided his personal phone and email contact information to encourage people to contact him directly by phone or email to address questions and concerns and to feed them back into the Study Group process as he did in asking me to look into and report back at the February meeting on the mortgage and insurance questions raised in comments by the public at the January 11 meeting. As a result of those inquiries, he also added representatives of the North Carolina Realtors Association, North Carolina Bankers Association, State Employees Credit Union, and Commissioner of Insurance to the Study Group between the January and February meetings.

    Please do continue covering these processes and helping members of the community to become informed on these issues and engage the process more deeply. I’m always available to talk with you about any of these or other issues at your convenience.

    Best,

    John Humphrey

    Reply
    1. rgt7670 Post author

      John,

      Thanks for your thorough comment here: I may cut and paste this to include in a fresh post so it is more visible. But to answer your question about the nature of the disagreement, it’s an odd one. Ed Harris was merely commenting on aspects of compulsory pooling as he understood SB 820, and that was when Mr. Knight politely exclaimed that he was wrong. Ed then actually read from the law he had printed out (I believe it was a passage on page 14, and then page 16). It wasn’t so much an argument over the facts as it was an argument over interpretation and implications. I honestly believe the disconnect involves split estates, which will be a very divisive issue in the community.

      So, I agree that you, Ted Feitshans, and Lynne Weaver each explained the forced pooling situation as it stands, and the MEC has to clarify that issue to move forward. I posed those questions here to help direct the discussion in a productive manner, so to speak, so this study group can get effective recommendations to the MEC by October. I do plan to get these questions and pertinent thoughts via discussion here to Ray Covington.

      -BT

      Reply
      1. Ed&Doris Harris

        I will try to be more clear.The problems that i have with FRACKING are many but the main one’s are,and i am refering to SB820 here,: In section 2(d) On page 12,paragraph “C” seems to indicate that the M.E.C cannot make a decision that gives a landowner an advantage over an oil/gas producer: Part IV,Section3(a) paragraph(a)page 16 makes the landowner responsable for all of the drillers cost but does not address the question of “what happens if the driller does not access enough gas to pay his cost”?? Do the property owners then have to pay the expenses of the driller?? Are landowners who are compulsory/forced pooled supposed to to pay the cost of the driller who took over their land by force of law?: Part V,Section 4(a) Paragraph {b} page 18 does not address the difference between properties that are severed/split estates and properties that are compulsory/forced pooled.Forced pooling is un-american,unacceptable and unnecesary! the technology exist for the oil and gas industry to go around landowners ,who refuse to sign contracts,without disturbing their gas reserves or the surface of their land: Paragraph (B),same section,page 18,makes the landowner responsable for the oil and gas company employee’s safety while they are on his land.If your land is compulsory/forced pooled these people are invaders not your guest. your homeowners insurance will not cover them. Your farm liability insurance will not cover them because they are not your employee’s .Instead of fast tracking this process we need to slow down and take a good look at what the oil/gas industry and their cronies in state goverment are trying to do to us.One other thing tht just came up in SB76.INJECTION WELLS.! HELL NO!!!and of course they don’t address wheather it be used ONLY for NC fracking waste fluid.We could become the disposal site of choice for waste foom other states!!

  2. Ed&Doris Harris

    The taking of private property. by the state and giving that property to a private company is unacceptable especially when the oil and gas company has the technology and means to go around the discenting landowner.The use of compulsory/forced pooling in this case only saves the oil and gas industry the cost of reconfigureing their field or pool,.If forced pooling is finally allowed it should be restricted to access to the gas by horizontal drilling and not include surface rights. We’re talking about peoples homes here folks!!

    Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s