Monday, April 29, 2013

The Ins and Outs of Ohio's Forced Pooling Laws

From the Youngstown Vindicator:
In Portage and Stark counties, on a vast stretch of 958 acres straddling Lake and Suffield townships, natural gas company Chesapeake Energy had a plan to drill six horizontal shale wells — all from one pad. 
It was still early in the Utica Shale play in 2011.The company set out to secure all the mineral rights it could across the plot, but ran into a problem: 23 landowners and homeowners who could not be reached or had no interest in selling the oil and gas reserves thousands of feet below their property. 
So in November 2011, for the first time in the Utica Shale play, the company turned to a rarely used section of Ohio law governing the development of the state’s mineral resources: It filed a request for unit operations with the Ohio Department of Natural Resources Division of Oil and Gas Resources Management.
Eight months later, in July 2012, the division approved the request, forcing those 23 holdouts, accounting for 70 acres, into a single drilling development. 
Chesapeake’s move is comparable to mandatory pooling, but when it turned to Ohio Revised Code 1509.28, referred to as “unitization,” it used a law that was designed for an entirely different purpose. 
“They’re bending and twisting it every way but Sunday to apply it to what they think they need for horizontal-shale drilling development,” Alan Wenger, an attorney at Harrington, Hoppe & Mitchell, said. Wenger represents landowners. “The underlying rationale for the law is being followed, but when it was drafted in the 1960s, lawmakers didn’t have the foggiest dream of what’s happening now.” 
Since Chesapeake’s application, ODNR has received 11 requests for unit operations, four of which have been approved. Five are pending, and two were resolved outside the agency.
Read this excellent in-depth article in its entirety by clicking here.

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