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WVSORO has said in the past that a good forced pooling bill could be a good thing. Not anymore. For one thing we have yet to see a good forced pooling bill offered by the drillers. And they have not even offered to negotiate with us or mineral owners before the Legislature started. Instead they introduced two bills late into this year’s delayed legislative session that are perhaps the worst ever. Go here to see more details of why we now oppose all forced pooling bills And keep scrolling down to see what other organizations think — and for an invite to a Farm Bureau meeting on the subject.
PLEASE CALL YOUR LEGISLATORS
RE: HB 2853 & SB 538
These bills severely limit the mineral owner’s ability to negotiate a fair lease. Passage of the bill would dramatically devalue people’s private property which constitutes a taking by the government.
PLEASE CALL YOUR LEGISLATORS and tell them you oppose House Bill 2853 & Senate Bill 538!
PLEASE CALL NOW!
West Virginia Farm Bureau
Come out and hear how HB 2853 & SB 538 are trampling your private property rights!
West Virginia Farm Bureau supports the development of our oil and gas industry; however, we must have faithful and reasonable negotiations. West Virginia property owners deserve the right to a modern and fair oil and gas lease.
Please come and join us!
Mask and social distancing will be required.
Proposed Changes to HB 2853 and SB 538
1. Require information regarding operator’s actions to show reasonable good faith negotiations with all executive interest owners prior to submission of the application to the OGCC and empower it to dismiss applications that they decide do not meet a reasonable and good faith effort.
2. Raise the threshold from 65% to 75% to be the same threshold as in the Cotenancy Act.
3. Limit the size of units to 1280 acres.
4. Add a mineral owner member to the OGCC who is not affiliated or has been employed or paid by an operator as a subcontractor for at least 5 years.
5. Include in the public policy declaration royalties paid in the state of WV be done wo without post-production costs and calculated at the first sale that is an arm’s length transaction to an unaffiliated third-party purchaser.
6. Require information regarding the operator’s actions to locate unknown and unlocatable interest owners of the tracts or portions of tracts sought to be included in the unit.
7. Require non-consenting owners be paid a bonus equal to the highest paid bonus of the consenting owners within the unit.
8. Require non-consenting owners be paid a royalty rate equal to the highest royalty rate of the consenting owners and be without post-production cost and calculated at the first sale that is an arm’s length transaction to an unaffiliated third-party purchaser.
9. Lower the risk penalty for those that elect a carried interest to 150%.
10. Prohibit binding arbitration clauses, storage clauses, and schedule of payment clauses that do not conform with § 37C-1-1, § 37C-1-2, § 37C-1-3.
11. Require shut-in royalty clauses with shut-in payments and terms being the most favorable among the consenting owners of the unit.
12. Require the lease provided by the operator for use with the non-consenting owners contain a liability shield for the non-consenting owner.
13. Require the lease provided by the operator for use with the non-consenting owners contain a provision that sets aside monies for the full cost of reclamation of the well should the operator go bankrupt or abandon the well so that the non-consenting owner cannot be required to do reclamation of the abandoned well in the future.
14. Require an auditing provision that allows the non-consenting owner to audit the operator once every three years at the cost of the non-consenting owner.
15. The leased threshold requirement (65%) will only apply to leases executed after the effective date of the statute.
HB 2853 and SB 538 Talking Points
1. These bills severely limit the mineral owner’s ability to negotiate a fair lease. Passage of the bill would dramatically devalue people’s private property which constitutes a taking by the government.
2. These bills heavily weight lease negotiations in the favor of massive oil and gas companies that already have an advantage over mineral owner’s in access to information, access to legal expertise, and access to capital.
3. Setting the royalty for non consenting owners at 12.5 percent creates a royalty cap where none currently exists, and it is common for royalty owners to negotiate 18 to 20 percent royalty rates in counties with what is called core Marcellus.
4. The bill lets the industry determine lease terms, with only minor discretion given to the commission which is the opposite of the recently passed co tenancy law that contains many protections for non consenting owners.
5. The bill allows the fraudulent practice of gas companies selling gas to a subsidiary to defraud non consenting owners of a true market value gas price.
6. The bill only requires 65 percent of owners to be leased or forced into a lease via co tenancy. That means that 35 percent of people can easily be forced into a terrible lease. Co tenancy had a 75 percent threshold.
7. There is no requirement to show good faith negotiations with all mineral owners, only a requirement that they “attempted to lease all owners”
8. The Oil and Gas Conservation Commission has no landowner member to represent the interest of private property owners, but it does have multiple industry representatives.
9. Gas production in WV is at a record high, and prices are at historic lows due to over supply and weak demand. It is unwise economically to have your minerals developed at this time, especially as horizontal wells give the large production numbers in the first three years. Forcing owners into unfavorable leases at this time punishes people for being wise stewards of there private property and ends free market negotiations.
10. The bill does not require royalties paid to non consenting owners be free of post production expenses.