Posted on 03/31/2014 5:22:00 AM PDT by thackney
An energy company is dusting off an old, unused state law that can force property owners to accept oil and gas drilling under their land, pitting neighbor against neighbor in a Pennsylvania community and raising the possibility that lawmakers will have to take sides.
Houston-based Hilcorp seeks to use a 1961 Pennsylvania law to drill under the property of four holdout landowners in New Bedford, near the Ohio border an hour north of Pittsburgh. The concept, known as “forced pooling,” means that people who don’t sign leases get bundled in with those who do, to make drilling more efficient and compensate all the landowners.
The stakes are high. Property owners can reap royalties totaling hundreds of thousands or even millions of dollars from drilling in the Utica Shale formation, which lies below the better-known Marcellus Shale.
Suzanne Matteo, one of the four who has refused to sign a lease, said she is furious that the company may be able to drill under her property without her permission.
“It’s un-American,” she said.
On the other side are many neighbors who have signed leases, such as Bruce Clingan, who owns the roughly 200-acre Tanglewood Golf Course with his wife, Jody. They signed a lease with Hilcorp a few years ago and received a signing bonus of more than $500,000, plus 18 percent royalties on future production.
“I don’t understand how people that own 4 acres of ground can hold up such a big thing. I don’t agree with that,” Clingan said.
Hilcorp said that 99 percent of the property owners in the 3,267-acre tract have signed leases, and that drilling would occur a mile or more under the surface of the holdout’s property. Invoking the old law, the company said, would ensure that “all participants, leased or unleased, are compensated for the...
(Excerpt) Read more at fuelfix.com ...
The article does not say why Suzanne Matteo does not want to lease a portion of the land. Why would she not want to receive hundreds of thousands of dollars. Obviously, someone fed her a bunch of propaganda that oil drilling will doom the planet.
Yes. If forced pooling didn’t exist, environMENTAList could buy a square foot of land every mile or so and shut down all drilling.
They should just take it from her, she obviously doesn’t know what’s good for her.
The problem is, she keeps her neighbors with much more at stake from selling theirs.
They’re not taking anything from her, she’ll get her bonus and royalties. I’ll bet she cashes the check’s also.
I believe, if she refuses to sign a lease, there is no bonus or royalties payment.
After all expenses are paid, and some specified profit (usually a factor of the expenses) she will receive 100% of her share of the production, her acreage/divided by the unit acreage.
It seem like the Kelo decision would allow the local government to bulldoze her property, make it a public park and put the royalties into their treasury.
Not that I advocate such a course of action.
Send the oil companies to my neighborhood. I’ll let them drill a mile down for a signing bonus & 18% royalties!
She won't get a bonus. That's for signing a lease. She will, however, get 100% of what they pull from her land instead of maybe 25% for leasing. She essentially becomes a partner in the well with the driller.
If a well costs X million to drill her royalties will be used to pay off her share of the well. Then she will start receiving 100% of her royalties.
Well, hell. I should have read one more comment. I posted almost the same thing you did.
Yeah, pull a Kelso vs. New London. She’s denying the state prospective tax revenue. The town could take it via Eminent Domain.
How will she ever cope with such an increase in her carbon footprint? She must be deeply distressed by all this. Oh, I know, she can spend her royalties on Carbon Credits to offset the production.
18%?
You would be getting screwed.
Most leases are now 20-25% depending on the area.
Oh please come to my town and find oil under my land. Hundreds of thousands of dollars + royalties?
Where do I sign and then I am so outta here....
“They’re not taking anything from her, she’ll get her bonus and royalties. I’ll bet she cashes the check’s also.”
Exactly. Also, though I’m no expert on PA’s forced pooling statute, a nonconsenting landowner gets to elect among a number of options: (i) lease (or be deemed to have leased), in which case they get bonus and royalty, (ii) take a carried interest, or (iii) participate for the amount of net acreage they have in the unit. Usually, if they refuse to elect, they will be deemed to have leased their interest, in which case they will be compensated like the other owners.
Assuming their tract is intersected by a lateral well, which is unlikely for a small tract owner, the well will be a mile under their property.
But for forced pooling statutes, one whacko could keep an entire community from reaping the proceeds from oil and gas under their property.
who care why she don’t. Its her land. She owns it and pays the taxes.
You don’t pay taxes on mineral interest unless it’s producing.
If you owned 99.99% of the mineral interest in a piece of land and she owned just .01% mineral interest in the same land, should her .01% interest be allowed to control 100% of the interest, or should your 99.99% interest be the controlling interest?
How do you feel about a 1/4 acre owner preventing her neighbor from selling the mineral rights to their 100 acres?
confirmation is a good thing...
Cheers
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.