(April 26) – A bill to reform an antiquated law that compels mineral right owners to allow exploitation of their oil and gas passed the House today on a vote of 36-29.
Under Colorado’s current “forced pooling” statute, if a company drilling for oil and gas secures a lease agreement with one owner of a mineral right, the company can compel neighboring owners to allow their oil and gas to be extracted.
This practice was less of an issue when oil and gas wells were drilled straight down into the ground, but now that the standard practice for oil and gas extraction is horizontal multi-well drilling under a surface area of several square miles, a single lease can trigger the forced pooling of entire communities consisting of hundreds or even thousands of owners.
“Some may want to wait for a better deal or a better market; others may view a mineral right as something to pass on to the kids or grandkids,” said Rep. Dave Young, D-Greeley. “Under our existing forced pooling statute, an oil company may unilaterally take that option away at any time.”
HB17-1336, sponsored by Reps. Young and Mike Foote, D-Lafayette, would set a 90-day deadline for mineral owners to respond to lease offers. The current 35-day deadline is used by oil and gas companies to pressure mineral right owners into making decisions without careful consideration and legal advice.
“Taking people’s mineral rights is nothing but corporate eminent domain,” Rep. Foote said. “If an oil and gas company wants to do this, the least we can do is allow for proper notice and transparency.”