OKLAHOMA ENERGY FACT CHECK: OEPA’s Baseless Claims about Oklahoma Pooling Laws | Oklahoma Oil & Gas Association

OKLAHOMA ENERGY FACT CHECK: OEPA’s Baseless Claims about Oklahoma Pooling Laws

As the voice of Oklahoma’s energy industry, representing active vertical and horizontal producers, midstream operators, and supply chain small businesses, OIPA-OKOGA engages in a fact-based dialogue aimed at strengthening Oklahoma’s oil and natural gas industry and overall economy. In support of that mission, we’re launching the Oklahoma Energy Fact Checker – an online resource to explore facts around responsible, job-creating Oklahoma oil and natural gas development.

We’ll use this resource to rate claims, correct the record, and hold folks accountable to ensure we all engage in a fact-based, honest discussion.

We kick things off with a look at recent claims by a small group of producers, who account for only a small fraction of oil and gas development in Oklahoma.

OEPA CLAIM: Forced pooling in Oklahoma allows a company that wants to drill a horizontal well… to tak[e] the oil and gas the vertical well owners have the right to – and oftentimes compensating them little or nothing. Forced pooling is used only in Oklahoma to allow horizontal drillers the ability to drill through someone else’s oilfield.”

THE FACTS:

In 1935, the Oklahoma legislature enacted the Well Spacing Act, first establishing Oklahoma’s laws around pooling and spacing. This law, which has been updated and modernized since, reduces surface land impacts, protects all mineral owner interests and ensures fair, efficient oil and natural gas development.

Pooling – a process by which operators purchase or lease mineral rights from multiple landowners and “pool’ them into a drilling unit – is an important law that benefits all parties – operators, mineral rights owners, taxpayers – by ensuring fair royalty compensation.

According to the non-partisan, independent National Conference of State Legislators, 34 states, including all the major oil and natural gas producing ones, have pooling statutes on the books.

When mineral owners in a pool can’t be located, are deceased, or, in a few cases, opposed to having their minerals developed, Oklahoma has a fair pooling process – overseen by the Oklahoma Corporation Commission, the statewide agency charged with regulating oil and natural gas development – ensuring that property rights of all owners in the pool are protected. Otherwise, it would be a violation of private property rights, if the other parties in the drilling unit were prevented from realizing the full value of their minerals.

Here’s how it works: A company will first work with each mineral owner to negotiate a lease agreement. If a company can’t get an agreement with all members of the pool, it can apply to the Corporation Commission to have everyone pooled together. This application starts a hearing process at the commission, where an administrative law judge hears testimony from all sides to determine whether the unit should be pooled. The judge then sets a fair lease for the parcel of land that couldn’t reach an agreement, so development can move forward.

And moving forward with energy development benefits royalty owners, operators, and taxpayers.

OUR RULING:

OEPA continues to ignore state law, advancing a false, unsupported narrative around Oklahoma’s pooling and spacing statutes. As a result of OEPA outrageously and egregiously misrepresenting the facts, we award this claim FOUR RIGS.

 

 

About our scale:

  • ONE RIG: Given to claims that are mostly true and needing very little context.
  • TWO RIGS: Significant omissions, exaggerations or mischaracterizations and maybe some factual error.
  • THREE RIGS: Mostly false claims that contain major factual errors.
  • FOUR RIGS: Completely false, deeply misleading claims.

Want to learn more about Oklahoma’s pooling process? WATCH this short whiteboard video: