Whether the land owners want it or not – via privatized eminent domain, aka “compulsory integration.” The frackers are teeing up vast amounts of North Carolina to be fracked– by using compulsory integration / compulsory pooling – without the land owner’s consent, and even without the approval of the state’s minerals management agency. Follow the political payoffs on this one.
Compulsory pooling does not apply – either geologically or legally – to the extension of a horizontal well – that has to be drilled directly under an adjacent property in order to extract the oil or gas.
As we have explained in some detail here, apply compulsory integration to shale wells is simply privatized eminent domain – the state giving the frackers the legal ability to seize mineral rights at the lowest possible price under the worst possible terms – without the owner’s consent:
And as attorney James Bacon details here, applying compulsory integration to extend a horizontal lateral under a neighboring property would be illegal under New York law:
And I demonstrate in a video, which shows how pooling is legitimately applied to vertical wells :
By John Murawski — email@example.com
RALEIGH — North Carolina landowners would be forced to sell the natural gas under their homes and farms – whether they want to or not – under a fracking recommendation approved Wednesday that’s expected to be enacted by the state legislature this fall.
The proposal by a state study group endorses a rarely used 1945 law that’s never been tried here on the kind of scale that would be required for shale gas exploration, or fracking. Thousands of property owners could potentially be affected in the state’s gas-rich midsection in Lee, Moore and Chatham counties.
The recommendation, dealing with one of the most emotional fracking issues, bypasses the N.C. Mining and Energy Commission, which holds regular public hearings on protecting the public and safeguarding the environment, and goes to the legislature.
“We are talking about a for-profit industry taking away personal freedoms with the blessing of the government,” Therese Vick, a community activist with the Blue Ridge Environmental Defense League, told the Compulsory Pooling Study Group. “Personal freedoms are seldom on the radar when the gas companies come to town.”
The panel does include four members of the Mining and Energy Commission, some of whom were deeply conflicted.
“I find it abhorrent personally that a simple majority of landowners could dictate what I can do with my land,” said James Womack, chairman of the Mining and Energy Commission and a member of the Lee County Board of Commissioners.
But Womack voted for the practice, called forced or compulsory pooling, saying there are compelling reasons to justify it. Forced pooling protects local residents from inadvertently having their gas sucked out without compensation and keeps neighbors from profiting from resources under someone else’s land.
Legislature has final say
However, the state legislature is not bound by the recommendations and will be able to set its own standards, using other states as guides or relying on its own collective judgment.
Pennsylvania and West Virginia, do not allow forced pooling in the Marcellus Shale region, one of the most intensively fracked regions in the world.
Forcing property owners into a drilling pool, typically 1 square mile from which shale gas would be extracted, raises another problem: How much should they be paid for their gas? Unlike their neighbors who voluntarily signed leases with royalty terms, people in compulsory pools never agreed to any terms.
(As a practical matter, the frackers will sign the cheapest leases first, then force adjacent owners in under those terms. Meaning the lowest common denominator governs the rest. And, of course, the fracker can be a scam operator. JLN)
The study group recommended that such property owners be given the option of accepting a standard royalty of 12.5 percent on the value of their prorated share of the gas for as long as the well produces gas.
Another option is to pay them a fraction of the value of the gas until the energy company recovers that property owner’s presumed share of the cost of drilling the well. After the well is paid for, the landowner would be paid the full value of their share.
It could take a forcibly pooled property owner months or even years to pay off the bill: Drilling a well roughly costs between $8,000 and $12,000 per acre in a 1-square mile drilling unit.