What Is Forced Pooling? Forced Pooling and Your Mineral Rights

If you’re a mineral owner, it can be difficult to know what to do with your oil and gas resources, especially when complex laws could impact your ability to make choices freely. In particular, the majority of states in the U.S. have what is known as forced pooling laws that can limit your options.

‍

Keep reading to learn more about mandatory pooling and how it can affect your drilling rights.

‍

What Are Forced Pooling Laws?

‍

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. Forced pooling may impact mineral rights owners who otherwise would not choose to pool their rights.

‍

While statutory pooling or forced pooling has drawn pushback, voluntary pooling is also a practice sometimes seen in the mineral industry. The production process for owners who voluntarily pool is the same as that for involuntary pooling, but the difference is that all owners agree to the single drilling unit system without legal pressure, ensuring there are no nonconsenting owners in the deal.

‍

Why Mineral Owners are Upset by Mandatory Pooling

‍

The forced pooling process has brought criticism from mineral interest owners. 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. Nonconsenting owners may be forced to participate.

‍

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 compulsory pooling allowances. 

‍

How Forced Pooling Orders Work

‍

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 conservation commission will likely contact you in an attempt to settle a negotiation for a reasonable offer.
• 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.

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 (866) 322-8136 today. We can help you access qualified buyers to get a fair deal on your rights.