Real Estate & Property Law

Forced Pooling

By Alan Ackerman

Forced pooling of minerals has been in existence for generations.  The question is, what is the fair value for the royalty interest of the mineral owners and whether mineral owners should be paid an amount to become part of the drilling unit?  These issues are not easy to deal with.  However, if there is to be forced pooling, one would expect some type of separation tax be paid to the government because the government retains a right to the property subject to the public use of just compensation provisions of the various state statutes.

Northcentral PA

The issue which one group calls fair pooling, is referred to by most as forced pooling. It is a system where landowners who have chosen not to lease their land for drilling or other industry activity, may be forced to lease merely because their neighbors have done so, and the locations of adjacent properties is convenient for the industry's planned activity. An individual's right to use his or her  property as he or she chooses is at issue.
The Marcellus Shale natural gas industry wants to see legislation attached to any severance tax adopted by the state that would force property owners who refuse leases to allow drillers to gather the gas beneath their land, an industry coalition leader said Monday. Calling it the most economical and conservative land-use approach to drilling for gas, David Spigelmyer, Chesapeake Energy's regional vice president for government relations, said in a Times-Tribune editorial board meeting that "forced pooling" is a key element of any legislation the state's Marcellus drillers could support and is actively being discussed during budget negotiations in the capital. Mr. Spigelmyer said he does not expect forced pooling to be adopted in the coming days as part of budget talks, but he said "an agreement" likely will emerge with the budget "to talk about (the severance tax) holistically" with other industry-supported legislation on forced pooling.

Full post as published by National Eminent Domain Blog on July 16, 2010 (boomark / email).