DATE: June 15,2010 SUBJECT: Request for Co~Sponsorship -Conservation Pooling
LABOR RELATIONS, MAJORfTY VICE-CHAIRMAN CONSUMER AFFAIRS. SUBCOMMITTEE
CHAIR ON TELECOMMUNICATIONS GAME & FISHERIES PROFESSIONAL LICENSURE POLICY
PENNSYLVANIA LEGISLATIVE SPORTSMEN'S CAUCUS, MAJORITY CHAIRMAN
ALLEGHENY COUNTY DEMOCRATIC DELEGATION
We intend to introduce legislation that enhances conservation efforts and protects landowners affected by the ongoing development ofthe Marcellus Shale. This legislation -entitled the "Conservation Pooling Act" will achieve multiple compelling policy goals, including:
Minimizing the surface impact of Marcellus Shale drilling by limiting the number ofwell pads (usually 5 acres) necessary to develop a drilling unit (usually 640 acres)
Maximizing the opportunity for landownerllessors (i.e., royalty owners) to obtain full economic benefit from their Marcellus leases
Protecting non-mineral interest owners from having natural gas developed from under their property under the Rule of Capture without fair compensation
Ensuring no surface trespass for non-mineral interest owners who are pooled into a unit
The title of this legislation -"Conservation Pooling Act" -is especially appropriate since the Commonwealth has been a signatory to the Interstate Compact to Conserve Oil & Gas since 1941. The purpose ofthat Compact is to conserve oil and gas by preventing physical waste from any cause.
Leaving recoverable gas in the ground would be a physical waste of the valuable resource. Worse yet, it makes absolutely no sense to require the construction of multiple well pads to develop a minimum of 640 acre drilling unit when a single pad may be sufficient.
Given the technological advances in horizontal drilling, Pennsylvania has the opportunity to reach vast areas of natural gas reserves while minimizing surface impacts and avoiding the waste of natural gas from leaving significant untapped areas. This approach also allows the greatest number of willing mineral interest owners to realize the value oftheir resource and protects non-mineral owners from not being compensated for natural gas they would otherwise own by eliminating the existing Rule of Capture.
However, to reach these four important goals operators must be able to form effective and efficient drilling units that recognize the geography and geology ofPennsylvania. Such units must include all of the mineral interests within the boundaries of the proposed units in order to create the "pool".
Our legislation will provide a fair and open process for establishing units and obtaining approval from the Commonwealth for each unit after all interested and affected parties have had an opportunity for their views to be heard. In addition, before the state approves any pooling unit, the applicant will be required to already control a super majority of the mineral interests with in the proposed unit.
Our legislation will achieve these four important policy goals and we urge you to join us in co-sponsoring this important piece of legislation and ensuring its prompt enactment by the General Assembly. Ifyou are interested co-sponsoring. please contact Brandi Kennedy in Rep. Gergely's office by phone at 783-1018. in-caucus extension 6481. or by email [email protected]