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West Virginia Landowner Pooling Legislation Fails Again

Just hours before concluding this year's first regular legislative session, the West Virginia House of Delegates on Saturday rejected a bill that would have allowed exploration and production companies drilling the Marcellus Shale and other shallower formations to pool landowners into units.

It was the latest failure of forced pooling legislation in the state in recent years. This time, delegates failed to agree on several amendments added to the bill by state Senators earlier in the day, which resulted in a rare 49-49 tie and defeated the legislation. The last time West Virginia lawmakers rejected a bill on a tie was in 2011.

Earlier this month, just weeks after it was introduced, the state House passed HB 2688 60-40 (see Shale Daily, March 6Feb. 18). On Friday, just a day before the legislature was to adjourn, the bill seemed guaranteed to pass given how quickly it moved from the House to the state Senate (see Shale DailyMarch 13). On Saturday, that chamber passed the bill by a vote of 24-10, tacking on several amendments to the legislation before sending it back to the House. Those amendments delayed debate in the House and helped defeat it.

For years now, similar measures have failed over concerns about property rights (see Shale DailyApril 17, 2013Feb. 1, 2011). Although this year was the first time in decades that Republicans controlled both chambers of the legislature, the party had its reservations, with one Republican lawmaker reportedly calling the bill "a gross violation of property rights" and others agreeing that it gave too much leeway for operators to take advantage of landowners.

Forced pooling is allowed in the state for deep wells below the Marcellus, such as the Utica Shale, as well as shallow secondary oil recovery and coalbed methane wells. Under current law, the state does not allow pooling for wells targeting other shallow formations such as the Marcellus.

Pooling allows landowners to gather both consenting and nonconsenting landowners into a unit in which they share royalties and production costs. Dozens of states have similar laws, including Ohio, where proponents say the practice reduces surface disruption and maximizes oil and gas production. HB 2688 would have required an operator to lease or acquire at least 80% of the net acreage in a proposed unit before applying with the state for pooling.

SB 423, however, which was also down to the wire and sought to amend the state's Aboveground Storage Tank Act, passed after amendments added in the House cleared the Senate. Among other things, that legislation will change the definitions of an aboveground storage tank, require owners to register them and allow the state to evaluate and certify the equipment. 

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