Replies to This Discussion

Permalink Reply by intrepid on March 13, 2013 at 19:37

Nichols represents Shelby and much of East Texas. Please contact him and let him know you are opposed to the Senate version of HB 100 which is SB 136.

After spending all afternoon, until after about 6pm, listening to testimony I saw an awful lot of warts on this bill.

They sell it as limited to secondary and tertiary recovery only but that limitation is not at all strong enough. There were a lot of good arguments against the bill and it was left pending in committee. That doesn't mean it was killed. It could still be voted out and there will be a committee substitute bill from Rep. Van Taylor.

I do want to commend Rep. Paddie for showing interest in the discussion and for sticking it out to the final word of testimony.

I feel more strongly, after the hearing, that this is a bad bill for Texas mineral owners and urge every mineral owner to carefully consider the information posted above from very knowledgeable sources.

Please contact any Senator on the list above who you may know and ask them to oppose SB 136. Please continue to work your individual House members to keep them from signing on to this bill. If they agree to support it then it may be too late to stop it by the time it comes up and you have the chance to contact them.

• ▶ Reply

Permalink Reply by adubu on March 14, 2013 at 1:07

Intrepid-- did you attend hearing or listen on line somehow?

• ▶ Reply

Permalink Reply by adubu on March 14, 2013 at 3:06

intrepid--- i found the webcast site on Texas Legislature Web site

• ▶ Reply

Permalink Reply by Robert L Call on March 14, 2013 at 2:12

After further reading of the comments posted under this thread I find that I am trying to put an orange into the apple barrel.  This discussion and the proposed bill pertain to enhanced recovery forced unitization whereas I was talking about E&P drilling unit forced pooling.  Two different animals.

Currently an operator can form an enhanced recovery unit that encompasses an unleased tract.  The unleased tract does not participate in the unit expenses or income.  The unleased mineral owner has the option to lease or to participate as a working interest owner.  To me it is a no brainer if I am an environmental Nazi mineral owner.  I sign an oil and gas lease containing prohibition of the use of the surface of the tract for any oil and gas operations, and, I get to share in the unit royalty.

In theory an unleased tract inside the exterior boundaries of the enhanced recovery unit could be drilled by the mineral owner or his lessee and unfairly benefit from the effects of the enhanced recovery operations.  Therefore, the reason the operators want forced unitization to protect against the possibility of such unfair benefit by an owner of a non-ratifying tract.  For that reason I would support a force unitization law.

Again, going back to Oklahoma.  It has forced unitization that required the consent of 65% of the working interest and/or unleased mineral owners to make application to the OCC for a unitization order.  Royalty owners must then ratify the unitization agreement in order to participate in the unit royalty.

• ▶ Reply

Permalink Reply by Robert L Call on March 13, 2013 at 7:45

In my 50 years in oil and gas land work I have been exposed to operations in all producing regions of the US and have used the "force pooling" option in most states that have such.  In my experience the Oklahoma spacing and pooling statutes and Oklahoma Corporation Colmmissikon (OCC) rules and regulations are the best of the lot. 

If Texas operators want a workable force pooling statute they need to study the Oklahoma statutes and the OCC rules and regulations and pattern a statute like the Oklahoma statute.  There is no need to create an new agency to administer such statute as it could be incorporated within the authority of the RRC. 
The RRC has geologists and engineers that have the expertise to review spacing applications.  Currently oil and gas hearings are held in Austin.  Hearings could be shifted to each of the nine district oil and gas offices and hearing examiners to hear the testamony in field rules and well spacing, location exception, pooling change of operator hearings could be scheduled weekly in each RRC district office.  If activity justifies such, then like Oklahoma there could be a daily hearing docket.  The OCC has hearings in Oklahoma City and Tulsa but due to the size of Texas the nine RRC district oil and gas offices would be better suited than the current single hearing office in Austin.

The basics of the Oklahoma pooling statute is to encourage the development of oil and gas resources.  Well drilling and spacing (proration) units are determined by the common source of supply hydrocarbon classification, gas or liquid, and estimated depth below the surface, Any entity with a right to drill into a common source may make application to establish drilling and well spacing units, not unlike field rules.  At the public heraring the applicant and any interested party submits geological and engineering testamony and exhibits which the hearing examiner uses to make his recommendation to OCC commissioners.  Likewise and entity that has a right to drill in spacing unit, either unleased mineral owner or mineral leaseholder, may after bona fide attempt to get 100% consent to drill, may apply for a hearing to force pool the non-agreeing or unlocatable owners.  The applicant presents testamony of the proposed well location, depth, estimated costs, efforts to lease or obtain mutual agreement to drill, and bonus and royalty options offered in lieu of participating in the drilling.  The hearing examiner may require the landman to submit proof of his contact, leasing and joint operation efforts.

The benefit to the mineral owner over negoiating an oil and gas is if they elect to take the bonus and/or royalty options they are receiving the highest bonus and/or royalty paid in the unit, their interest is deemed to be leased only as to the common sources force pooled and for a term of 180 days from the effective date of the pooling order, and so long therafter as producing if the well is successful, and it is limited to the well drilled so any future infill well or new common source proposed in the unit is a new game.

Any ruling buy a hearing examiner and the ensuing orders may be appealed to the Commissioners en banc.  Any order by the commissioners may be appealed to the District Court of Oklahoma County in Oklahoma City.

Currently in Texas if an operator wants to be protected from suits by an unlocateable owner or the estate of a deceased owner they must apply to the District Court for a appointment of a receiver on behalf of the unlocated owner and to conduct a lease sale under the approval of the court.  This can be a costly and time consuming action that is no longer necessary with the Oklahoma force pooling statute as the OCC has the authority to adjudicate equities in the drilling and spacing unit.

If Texas operators are serious about streamling the well proposal and drilling preparation procedure they need to look closely at the Oklahoma statutes and rules and regulations.

• ▶ Reply

Permalink Reply by W. Marshall Shaw on March 14, 2013 at 4:48

I think Louisiana has the best "free-rider" laws.  Big oil companies don't like them because they protect small landowners and mineral rights owners, but if you want to bulldoze the rights of private property, maybe we ought to look towards Venezuela instead.

• ▶ Reply

Permalink Reply by W. Marshall Shaw on March 14, 2013 at 4:45

I thought that Texans disagreed with using state power in order to expropriate private property, especially when the expropriation is solely for the purpose of enriching private people.  This is a bad bill for a lot of reasons, but it is also unconstitutional to those of us who do not believe the state should be expropriating private property without adequate compensation for the enrichment of a few well-connected corporations.

• ▶ Reply

Permalink Reply by gary brannon on March 14, 2013 at 5:04

Guys,

This is much ado about nothing!  The HB100 and the identical SB is for forming secondary and tertiary recovery units.  It is not for forced pooling.  It is for creating field-wide units out of EXISTING units and wells being produced on a lease basis.  This legislation will ease the difficulty and expense of creating field-wide units.  Such units are typically formed to manage a LARGE PRODUCING geological structure as one unit rather than multiple units.  Managing multiple units as one allows operators to create waterflood/fireflood for oil and maintain bottom hole pressures fo gas units. 

If you are included in a field-wide unit chances are your lease is many years old and the production has declined.  These units are designed to increase the ultimate recovery of hydrocarbons, not screw the landowner out of their bonus and production payments.       

• ▶ Reply

Permalink Reply by adubu on March 14, 2013 at 5:26

Gary--- I understand what you are saying, but the one point that bugs me is Why does State want their Minerals to be Exempt from Bills?-- this smells ?About 10 years ago a landsman found a small 2/3 Acre of minerals in a lot I inheirted in Joaquin, TX ( Shelby County) that KCS was to drill another TP Well and this was a infield well in a Unitized large unit of about 3500 acres ( has about 45 wells in it) put together some decades before. They sign a lease with me for this well Small Bonus + 25% R and future proproduction in the Joaquin Gas Unit and i get small check now annually enough for Dinner. No back royalty even though I was unknown  a ULMO for years.

• ▶ Reply

Permalink Reply by Andrew on March 14, 2013 at 8:06

There is nothing in the text of HB100 that I've found to limit this to field-wide units. Can you show us where you are getting this?

• ▶ Reply

Permalink Reply by intrepid on March 14, 2013 at 18:03

Then why is the State exempt? Why do they set the royalty at 1/6? Why is it "forced"? Why do they have the right to change lease terms?

Biggest question is the forced issue and that there is no real choice in this bill.

Gary, you bring up the point that the proponents were making at the hearing and that the minerals are there, they want them cheap, and the pesky mineral owners just keep refusing to take what the companies want to give them and, dammit, they should just be forced to take it and like it because, dang it, 'we' need the minerals. Oh yeah 'we' need a place to store CO2 also.

Too many why's and not enough clear sensible answers.

• ▶ Reply

Permalink Reply by intrepid on March 16, 2013 at 8:03

NEW ALERT! CONTACT YOUR TEXAS STATE REPRESENTATIVE NOW!



HB 100, the forced unitization bill, was left pending in the Energy Resources Committee this week, but the language of the bill could be tacked on as an amendment to the Public Utility Commission Sunset bill in the House next week.

It is critical that you let your State Representative know that you oppose the bill not only as a stand-alone piece of legislation, HB 100, but also that you oppose forced unitization as any form of amendment to the Public Utility Commission Sunset bill, the Railroad Commission Sunset bill, or any other piece of legislation to which it may be germane.

At the Energy Resources Committee hearing on Wednesday, two things became very clear:

1. Forced unitization in Texas is entirely unnecessary. The stated purpose of HB 100 is to increase production from tertiary recovery, but Texas is already the world leader in enhanced oil recovery. Our state has achieved unrivaled success under a purely voluntary system that obviously works well and does not need "fixing."

2. Trying to pass off HB 100 as a bill to develop natural resources for the public good and to benefit the school children of Texas is just a red herring. HB 100 is meant to make money for one company that has staked its claim in CO2. Texas does not need laws that pave an easy path for one corporation to profit at the expense of the fundamental property rights of hardworking land and mineral owners.

Time is of the essence! Forced unitization could come up in the House at the beginning of next week. Please call or write to your state representative TODAY, and ask them to vote NO on HB 100 on its own and as an amendment to any other bill.

Go to http://www.txdirectory.com/online/txhouse/ to find contact information for your representative. If you don't know who your representative is, you can type in your home address here to find out: http://www.house.state.tx.us/members/find-your-representative/

• ▶ Reply

• ‹ Previous
• 1
• …
• 3
• 4
• 5
• 6
• 7
• Next ›
• Page