This website uses cookies to analyze traffic and for other purposes. In many states—including Kentucky, Ohio and Virginia—compulsory pooling orders may only be made once a certain percentage of landowners in a proposed unit have signed drilling agreements. This approach heavily favors the non-consenting landowner, but also has the effect of discouraging voluntary pooling agreements by creating favorable conditions for hold-out landowners. 24665 as a system of gas capture to reduce the volume of natural gas flared in the state. If an integration order is entered, the operator may charge each interested owner only for the actual reasonable expenditures required for the development of the resource. In Alaska, non-consenting landowners may be charged only for the costs of production attributable to their proportionate share in the event that the drilling is successful. Spacing Unit Description. In such circumstances, often one landowner, (Farmer A) is approached by an extraction company and asked to lease or sell his mineral rights. Order today and get the highest quality sign for … mexico, new york, north dakota, ohio, oklahoma, oregon, south carolina, south dakota, tennessee, utah, vermont, washington, west virginia, wyoming b. states without forced pooling statutes there are 17 states without forced pooling statutes *6-9 williams & … Pooling Agreement Application Form. These mandatory unitization laws require the pooling of mineral interests into a drilling unit by the extraction company before resource extraction may occur (Figure 1). Colorado uses a risk-penalty approach, wherein any non-consenting landowner must pay for 100 percent of his share of equipment and operating costs for the well as well as 200 percent of his share of costs incurred in well exploration (this is the risk penalty). This scheme is also unique in that it allows landowners to drill on their individual parcels in the event that a voluntary pooling agreement cannot be reached and the conditions are not met for a compulsory pooling order. (Fla. Stat. Registration Open for the Williston Basin Petroleum Conference | May 11-13, 2021 | Bismarck, N.D. Under this approach, a non-consenting owner is subject to a “risk penalty” to reward the extraction company for bearing the risks associated with drilling. "Producer" means the owner of a well or wells capable of producing oil or gas or both. ... Belcourt, North Dakota … ”µöoxúJä¦y7Ü 2ºÿ#Òv‰Ô{‰t^W¹÷ éù‰…N}á°DCËBÓ/¿Gûµ×9amahµáž2Hü~. How is my interest in a well calculated? Under the Nevada compulsory pooling law, non-consenting landowners may be forced to pay a penalty of up to 300 percent of the costs of production, to be calculated based on the cost of extraction from that owner's land. *Pennsylvania and West Virginia include statutory language that exempts compulsory pooling laws in the the Marcellus Shale region. If neither of these methods of pooling occur, North Dakota law allows the North Dakota Industrial Commission to issue a “force pooling order” which consolidates all the interests in the spacing unit. Following the filing of the application, notice … Some additional states, like Florida, have laws governing pooling and unitization but do not have compulsory pooling laws currently in effect. 24889 for the Sanish-Bakken Pool to terminate two … One possibility is that compulsory pooling orders are not retroactive at all. In North Dakota, for example, the state force pooling statute provides that the operator has “a lien on the share of production from the spacing unit accruing to the interest of each of the other owners for the payment of his proportionate share of such expenses.” Difference between Pooling and Unitization Both pooling and unitization are legal structures which allow for the combination of mineral and/or oil and gas leasehold interests in order to … combustion at all times (North Dakota Administration Code Title 33, Article 15, Chapter 7, Section 2; Chapter 3, Section 3.1; Chapter 20). This is particularly relevant where there is one holdout landowner among many consenting owners. Compulsory pooling occurs most often in areas with high levels of hydraulic fracturing. The risk-penalty approach is thought to encourage voluntary pooling agreements by landowners who want to avoid paying a risk-penalty—which can sometimes be as high as 300 percent of the reasonable costs of production. 21151 for the Elm Tree-Bakken Pool to terminate an overlapping 2560-acre spacing unit comprised of Sections 17, 18, 19, and 20, Township 153 North, Range 93 West, McKenzie and Mountrail Counties, North Dakota (Sections 17, 18, 19, and 20), and amending Order No. Compulsory pooling in North Dakota: should production income and expenses be divided from date of pooling, spacing, or First Runs The Nebraska statute describes a complicated risk-penalty scheme that calculates the risk-penalty owed by non-consenting owners according to the depth of the well at issue. Non-consenting owners have the option to either sell or lease their mineral interest to a participating owner OR share in the proceeds from the pool minus 200 percent of his share of the total production costs. In the absence of voluntary pooling, the Commission, upon the application of any interested person, shall enter an order pooling … This percentage varies among states, with Ohio’s law requiring the consent of 90 percent of landowners and Virginia’s law requiring only 25 percent before other landowners may be obliged to enter into the mandatory pool. Kansas has strict requirements that must be met before a compulsory pooling order will take effect; however, once granted, the non-consenting landowner may be required to pay up to 100 percent of his share of the aboveground drilling costs and 300 percent of his share of the physical drilling and underground pipeline costs. oil and gas case no. Many states have adopted laws—in addition to mandatory unitization laws—to govern circumstances in which neighboring landowners disagree about whether or not to extract mineral resources from common pools underneath their land. These statutory schemes generally reflect one of the following three approaches to compensation for non-consenting landowners: Under “costs-only” statutory schemes, the non-consenting owner is held liable for production costs only if the extraction is successful, without bearing any of the risks associated with extraction. Bruce E. Hicks, Assistant Director Oil and Gas Division. Washington, D.C. 20001 In the event of any dispute as to such costs, the commission shall determine the proper costs. Alabama uses a risk-penalty approach, wherein any non-consenting landowner who does not agree to pay a prospective proportionate share of drilling and completion costs is subject to a risk penalty of 150 percent of the tract’s share of the reasonable costs of drilling and production. This meant that neighboring landowners often raced one another to extract the most oil or natural gas from a common pool underlying two properties, since the first to extract the resource was entitled to the profits. 25417 in the matter of a hearing called on a motion of the commission to consider amending the bakken, bakken/three forks, three forks, and/or sanish pool field rules to establish oil conditioning standards and/or impose such provisions as deemed appropriate to improve the North Dakota oil and gas attorneys. A. The Upper Midwest Order (F.O. Without compulsory pooling laws, state governments miss out on revenues from state severance and income taxes, and, because a portion of the oil or gas resource cannot be developed, the remainder of the land cannot be drilled in the most efficient manner. § 377.28). Non-consenting owners, under the Nebraska scheme, may have to pay from 200-500 percent of their share of the costs of drilling and production applicable to his interest in the well. Pooling and unitization laws replace this common law tradition, thereby protecting the rights of landowners who are not the first to drill. North Dakota requires pool owners post pool rules and instructions in a conspicuous place. Idaho law provides that a landowner whose land is subject to a mandatory pooling order (an order of commission according to the statute) may either: 1) Choose to participate in the costs and risks of production or 2) Choose to sell his leasehold interest to the participating owners for just compensation. Mobile Phone (Optional) Name And Title. This is particularly relevant where there is one holdout landowner among many consenting owners. The specific provisions vary from state to state, but drillers can generally extract minerals from a large area or "pool" -- in most states a minimum of 640 acres -- if leases have been negotiated for a certain percentage of that land. Compulsory pooling, also known as forced, statutory or mandatory pooling, forces landowners—who do not wish the mineral resources underneath their land to be extracted—to become part of a drilling unit. You consent to the use of cookies if you use this website. Pennsylvania's statutory scheme provides for several different alternatives for non-consenting landowners, including the option to participate in the operation of the well (paying some up-front costs); the option to lease their rights to participating landowners; and the option to accept royalty payments minus the costs of production and a risk-penalty assessment. However, it has been criticized as being too favorable to extraction companies. Tel: 202-624-5400 | Fax: 202-737-1069, Research, Editorial, Legal and Committee Staff, E-Learning | Staff Professional Development, Communications, Financial Services and Interstate Commerce, Compulsory Pooling Laws: Protecting the Conflicting Rights of Neighboring Landowners. There are a number of possible answers to these issues. Email Address. (The most common approach—used by most major oil and gas producing states, including Alabama, Colorado, North Dakota, and Texas). U.L. Farmer B, however, is worried about the effects of extraction on his land and does not want to lease his mineral rights to the extraction company. Adopted on March 3, 2014 and effective § 45.1-361.21Bottom of Form. Almost all major oil and gas producing states—with the exceptions of California and Kansas—have adopted some kind of mandatory/compulsory pooling scheme. The following map and chart details current state compulsory pooling laws. The non-consenting owner’s share of the production costs are carried by the operator and the owner is only responsible for the proportionate share of the costs of drilling if the well is successful. Minnesota's statutory guidelines do not specifically allow for mandatory pooling; however, the statute indicates that such rules "may" be adopted by the state commissioner of natural resources. N.D.C.C. In addition, non-consenting owners may be required to pay up to 200 percent of their share of any new equipment costs. Michigan Department of Environmental Quality. A non-consenting landowner in Montana may be required to pay up to 100 percent of his share of the costs of the operation of the well, plus 100 percent of his share of any equipment acquired to drill and operate the well, plus up to 200 percent of the costs of staking and well-site preparation. 43-02-03-99 Commission Order From Examiner Hearing 43-02-03-100 Hearing De Novo Before Commission [Repealed] 43-02-03-101 Prehearing Motion Practice 43-02-03-01. This form is a North Dakota Lease agreement wherein Lessor grants, leases, and lets exclusively to Lessee the lands described within for the purposes of conducting seismic and geophysical operations, exploring, drilling, mining, and operating for, prod The company will apply to the respective state agency that governs oil and gas to obtain what is called a “pooling order”. In the absence of special orders, no portion of the horizontal interval shall be closer than ... Statutory or “forced” pooling of mineral interests within a large spacing unit raises issues related to providing all miner- "Pool" means an underground reservoir containing a common accumulation of oil or gas or both; each zone of a structure which is completely separated from any other zone in the same structure is a pool, as that term is used in this chapter. Baker, Lucas P, COMMENT: FORCED INTO FRACKING: MANDATORY POOLING IN OHIO, 42 Cap. Each such pooling order must make provision for the drilling and operation of a well on the spacing unit, and for the payment of the reasonable actual cost thereof by the owners of interests in the spacing unit, plus a reasonable charge for supervision. Docketing procedure: North Dakota Century Code (NDCC) Section 38-08-11. Code § 14-37-9-3. Arizona uses a free-ride approach, by which non-consenting landowners may be charged for the costs of production attributable to their proportionate share only in the event that the drilling is successful. Field Name. Rather, they require oil companies and consenting landowners to limit the amount of wells they drill. §38-08-08: statute authorizes voluntary pooling, authorizes compulsory pooling, and addresses application for pooling, notice, hearing, allocation of cost, and imposition of risk penalty; N.D.A.C. Landowners who do not ultimately consent to participate in a voluntarily pooling agreement retain all rights to surface access to their land—mining operations subject to a compulsory pooling order may only access a non-consenting landowners land under the surface (Figure 2). The terms used throughout this chapter have the same meaning as in North Dakota … 3. Field Orders, Case Files, and Hearing Audio Files ... Production and injection histories are available on a well, unit or field-pool basis. Compulsory pooling orders also serve as anti-holdout laws, protecting the right of landowners to exploit their own mineral rights even where their own land is of insufficient acreage to allow for extraction under state law. They are displayed in a table format with the most current data displayed at the top of the table. No legislation is currently pending in North Carolina. New York Environmental Conservation Law § 23-0901. North Dakota Pool Code. An overview of the mineral resources of North Dakota, with photographs, maps, and references. Ind. Company Name. Milk Market Administrator - Upper Midwest Federal Order 30. a. (Pennsylvania, Virginia and West Virginia). Advocates of this option stress that giving landowners options best reflects the actual marketplace by allowing landowners to choose the option that most benefits them. The North Dakota Industrial Commission (NDIC) established Order No. In most states, non-consenting landowners must either pay an up-front cost to compensate the drilling company for bearing the costs and risks of production, or must pay these costs out of their share of the mineral profits. Phone. Difference between Pooling and Unitization; History; Importance/Effect 1. We are the nation's most respected bipartisan organization providing states support, ideas, connections and a strong voice on Capitol Hill. Wyoming uses a risk-penalty approach, through which non-consenting owners may be required to pay their full share of the costs of production, plus up to 300 percent of their share of the costs and expenses of drilling, reworking, deepening or plugging back, testing and completing. Va. Code Ann. Field Order Number. In cases where Farmer B’s land is positioned so that, in order for the extraction company to include Farmer C and other landowners in the drilling unit, they must have access underneath Farmer B’s land, Farmer B’s land may be forcibly included in the drilling unit by the state. Unitization laws are mandatory but do not force landowners who do not wish to extract minerals from their land to participate in the process. In this case, such a landowner would be allowed to extract only an amount of oil or gas proportionate to their share of the overall drilling area. 23084 order no. order of the board amending any applicable orders for the table mountain field to pool all interests in an overlapping 1280-acre spacing unit described as sections 15 and 22, township 22 north, range 3 east, harding county, south dakota; and for other relief as the board deems appropriate. Communitization provides for the pooling of federal and/or Indian lands, with other lands, when separate tracts under such federal and Indian lands cannot be independently developed and operated in conformity with an established well-spacing program. Solving Resource Disputes: Drilling Unitization and Pooling, Pooling of Properties for Oil and Gas Production. The increase in the use of horizontal fracturing has made mandatory pooling laws particularly relevant. Pooling: During the pooling process, extraction companies purchase or lease mineral rights from multiple landowners and ‘pool’ them to form a drilling unit upon which they can legally place a drill rig. Mineral interests are “pooled” when extraction companies purchase or lease mineral rights from multiple landowners until the extraction companies own the rights to enough land to start drilling operations. BISMARCK, N.D. – Insurance Commissioner Jon Godfread today announced the North Dakota Insurance Department is seeking to work with a consultant in order to perform actuarial and other analysis of state proposals to reform North Dakota’s individual health insurance market. In order to prevent over-drilling, limit the number of wellheads on a parcel of land and protect the sub-surface mineral rights of neighboring landowners, many states have adopted minimum ownership requirements, mandating that oil and gas operators have control over a minimum amount of land before they can begin drilling operations.