Forced pooling occurs when mineral owners are forced to allow the pooling of oil on their land. Pooling is an economical drilling technique, in which pipes are run horizontally from a single well to collect oil within a pooled area around that well. It is much cheaper than drilling vertically, which requires multiple wells to be built to extract the same amount of oil.
Why People are Upset
Forced pooling is allowed by state law in certain areas and has been for many years. However, many people are only recently starting to be affected by the law, as the oil industry is taking a huge hit from plummeting gas prices. The modern horizontal drilling technique has also made pooling more effective, giving oil companies more incentive to take advantage of forced pooling allowances. There are a few steps that an oil company must take before they can force pool from your land:
- The oil company must exercise an effort, in good faith, to pool elsewhere before the forced pooling can be granted.
- An oil company must notify the landowner with the permission letter multiple times before forced pooling can begin. The company must also attempt a lease negotiation in the letters.
- If you do not try to negotiate a lease with the company that contacted you, your state oil and gas commission will likely contact you in an attempt to settle a negotiation.
- If after the prior measures have been taken and you have still not managed a negotiation, forced pooling can begin. You will receive royalties, but only after (and if) profits allow.
While owners can turn down negotiations or refuse to be a part of a lease, they cannot escape forced pooling if the state approves it. The issue of forced pooling may cause you to decide it is best to sell your mineral rights. If this is the case, contact the experienced professionals at The Mineral Auction by calling (512) 698-2802 today.