A bill passed unanimously by the Ohio House of Representatives early last year that would help oil and natural gas companies more easily form drilling units by allowing them to unitize state-owned land such as roads, universities and wildlife areas, remains stuck in the Senate Energy and Natural Resources Committee.
The legislation (HR 8) was pushed as a benefit to landowners with property near public land that has in some instances prevented them from being included in drilling units. It would allow “mineral owners to be able to benefit and profit from the minerals they have,” said Ohio Oil and Gas Association (OOGA) Executive Vice President Shawn Bennett during a legislative update at the organization’s winter meeting last week. Without the bill, Bennett added, some land would be “sterilized” if operators can’t access the subsurface rights to roads owned and operated by the Ohio Department of Transportation, for example.
“HB 8 is still very necessary legislation that needs to be passed,” Bennett said. “We’re working on kind of getting it moving through the Senate this year, but it’s currently stalled.”
One of the bill’s primary goals is to fast track the unitization process. Under current law, the Ohio Department of Natural Resources (ODNR), which regulates the state’s oil and gas industry, does not have to decide on unitization requests within a certain time frame. That has left some landowners waiting on decisions for years.
The legislation would require ODNR to hold hearings on requests within 45 days of receiving them and issue final decisions within 30 days after the hearings. HB 8 would also clear the way for operators to unitize state-owned land, which lawmakers have said is becoming a hurdle for development of some acreage in the state (see Shale Daily, Nov. 17, 2014).
Similar to forced pooling, unitization allows operators to gather landowners into a unit, in which they proportionately share royalties based on acreage they own within it. The law was passed in 1965, and unit requests have spiked in recent years with the rapid development of the Utica Shale.
HB 8 was referred to the Senate energy committee in March 2015, shortly after it passed the House 96-0 (see Shale Daily, March 19, 2015). Bennett said a hearing on the bill was held the next month, but added that there has been no movement since.
“I can’t remember the last time an oil and gas bill passed unanimously in the House during any year,” he told OOGA members. “Thankfully, everybody saw the benefit of this bill and they knew that this is not only about the oil and gas industry, but about landowners and royalty owners.”
The Senate committee began work on the bill as the legislature was ramping-up debate on the state’s two-year budget. The unitization legislation was not rolled into that omnibus legislation, and Bennett said that, surprisingly, there has been no oil and gas legislation included in this year’s mid-biennium legislation.
While the bill excludes state parks and has protections for state-owned forests, it would allow ODNR to approve unit requests for other land, like municipal parks, without permission from cities and townships. That has rankled some local governments in the state. Last July, the Akron city council passed a resolution opposing the bill (see Shale Daily, July 15, 2015).
Bennett said lawmakers on the energy committee “want to rework the bill,” assign it a Senate number, pass it through their chamber and then back to the House. While he said it would be a “very tight timeline,” if that happens, OOGA is hoping for passage by year’s end.
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