A bipartisan statutory pooling bill to better protect Colorado mineral and royalty owners is on the desk of Gov. John Hickenlooper, who is expected to sign it.
State Senate Bill (SB) 18-230 would regulate how mineral and royalty owners would fairly divide products and profits without inhibiting energy development. Forced pooling gives oil and gas companies the right to access underground minerals owned by others, when some of the mineral rights owners or leaseholders have consented to exploration and production.
State Sen. Vicki Marble (R-Fort Collins) sponsored the Senate measure, while state Reps. Lori Saine (R-Firestone) and Matt Gray (D-Bloomfield) carried the House version.
Under the legislation, “mineral owners will have better protections against oil and gas companies engaging in high-pressure tactics to force owners into hasty decisions,” Gray said.
The law would require oil and gas operators that are seeking state forced pooling orders to make reasonable leasing offers to affected mineral rights owners at least 60 days before a Colorado Oil and Gas Conservation Commission hearing on the proposal. Under current law, offers can be made within 35 days of a hearing.
The legislation also would require that all offers include a copy or link to a brochure completed by the Colorado Oil and Gas Commission that describes pooling procedures and the mineral rights owners' options.
In addition, any pooling order by state regulators would have to specify that a nonconsenting mineral rights owner forced to join the drilling pool would be immune from liability for costs arising from any spills, releases, damages or injuries resulting from energy operations at the drilling unit.
The immunity from liability followed claims about scare tactics used by some operators to convince mineral rights owners that they could be held liable for accidents that occurred during oil and gas operations unless they consented.
The House approved the final version by a vote of 64-1, while the Senate’s approval was 28-6.
“We are thrilled to see this bill head to the governor’s desk for signature as the natural gas and oil industry supported improvements to the pooling statute that ensured increased protections for mineral and royalty owners,” said Colorado Petroleum Council (CPC) Executive Director Tracee Bentley. CPC is a unit of the American Petroleum Institute.
“CPC took the lead on this important bill and elected officials who supported this bill should be applauded for forgoing political partisanship to support a system that is more understandable and fair for all involved.”
Colorado is the sixth largest natural gas producer and seventh largest oil producer in the country. The state’s energy sector employs more than 234,000 people, and most recently provided nearly $23.1 billion in wages while producing a total economic impact of $31.4 billion.
“With months of stakeholder input in mind, this bill was a forward-looking collaboration between industry and stakeholders that will foster transparency and will strengthen partnership through energy production,” said Bentley. “The industry remains committed to continuing to work with communities and regulators to make modifications that best benefit all stakeholders while maintaining focus on production and public health and safety.”