It would be nice to say that Colorado Law allows a landowner to ignore oil companies completely; to let his neighbors lease their rights to gas and oil companies and sit secure on his front porch with a view of other people's land populated by derricks before the Rocky Mountains, but that's not the case, according to CO 34-60-116: Involuntary Pooling; and its ramifications were discussed and presented at Casey Jones Pavilion on Friday night, November 18, 2011, by Tom Kerr, Colorado Oil and Gas Conservation Commission (COGCC), to a crowd of approximately 50.
Jim Duvall, co-founder of the Elbert County Oil and Gas Information/Investigation Committee, (ECOGIG), introduced Mr. Kerr by pointing out that he hoped the information presented would influence legislators to tip the law in the landowner's favor, instead of the gas/oil companies' favor.
With that, Tom Kerr, whose 18 years with the COGCC has included working with the permit process, data analysis, and the vagaries of the Force Pooling law, presented a PowerPoint outlining the finer points.
The Oil and Gas Commission, Kerr explained, is composed of public officials, oil company representatives, and experts on the issue, and they rule on violations, penalties, and permits based on the recommendations of their staff. They meet ten times a year in all parts of Colorado, dealing with parts of mineral rights legislation that likely the crafters never imagined; one of the most significant being Forcepooling.
Even if a landowner/mineral rights owner decides to "holdout," or not to lease, as his neighbors are, he can be "force pooled" into a group of adjacent properties that all have leases. He is then responsible for paying drilling costs and equipment costs and will receive 1/8 of the profits of the well or wells, while the other 7/8 of the profits are the oil company's. The size of a force pooling can be as small as two parcels of leases or hundreds around the "holdout."
Kerr pointed out that because the cost of exploration as well as equipment and drilling is shouldered by the oil company, the profits, in the main, should go to the company; but that landowners have some rights that are sometimes ignored: the right to break the lease if the well is not producing in a specified/contracted amount of time and that whatever is underneath a landowner's land is his rightful share.
An original lease, once the well produces, Kerr added, will be continued even after it has expired as long as the well is producing, and there's little the landowner can do about it.
Like Marsha Looper emphasized a few nights before, the owner needs to make sure all transactions are recorded with the County. Kerr also added something that surprised many in the audience: an appraisal recently conducted in Garfield County revealed that real estate profits did not dip because of oil equipment on the property; it remained at the same valuation. He refused to speculate why; for instance, was the appraisal made by oil and gas producers or by people wanting to move to a quiet place?
Mr. Kerr summed up his presentation, as he frequently did throughout the meeting, with the fact that he was presenting information; that he was not an advocate or a public official, and citizens responded respectfully.
"Force Pooling" and ECOGIG: A Drowning In Colorado Law
By William C. Thomas