Pooling Included in Marcellus Shale Commission Recommendations

[Eric Boehm is a reporter for PaIndependent.com]

Pooling of natural gas reserves will be recommended in the Marcellus Shale Advisory Commission’s final report, despite some commission members saying not enough time was dedicated to the controversial topic during the past four months. 

“I think it requires a much more thorough study of the issue involved,” said Ronald Ramsey, a commission member and senior policy adviser for The Nature Conservancy, an environmental policy center. “I wish we had been able to plumb those depths before being asked to vote on this.” 

Pooling--sometimes called “forced pooling” by opponents and “resource pooling” by the drilling industry--would allow gas companies to combine separate leases to drill in multiple locations from a single drilling pad. Technological advances, like horizontal drilling, have allowed for a single pad to access gas in an area larger than 1,200 acres from a single drilling site. The Legislature held hearings on pooling last year, but it did not pass any bills. 

Without pooling, drilling companies could not tap gas reserves beneath properties that are leased to other companies or that are not leased at all. 

Pooling is one of a multitude of natural gas regulation, development and taxation issues, addressed by Gov. Tom Corbett’s commission, that include practices in other states, property tax rules and ways to pay individuals who did not sign leases but would still share in royalties from gas extraction. 

The commission held its final meeting July 15 and the final report it submits to the governor will include nearly 100 recommendations on workforce development, environmental protection, fiscal considerations, emergency management and regulatory processes. 

Lt. Gov. Jim Cawley, commission chairman, said he was surprised to hear concerns over the pooling issue because it was not discussed during any of the previous commission meetings or in private conversations between commission members. 

“I’ve not heard this until today, so I guess I’m somewhat at a loss,” Cawley said. “This is the first step or an ongoing step in a much longer process that is going to include a great level of that detailed inspection and introspection.” 

The 30-member commission voted to approve the pooling provision with only two members standing in opposition. 

The drilling industry says pooling allows for greater access to resources and fewer surface disruptions, but opponents say pooling violates individual property rights, because drillers would be permitted to drill beneath land where no lease has been signed to access gas from an adjacent leased property. 

The state does not allow pooling, but the natural gas industry has been pressing for changes to the 1961 state law to allow for the more efficient method of gas extraction in the state’s vast Marcellus shale reserves.

Terry Engelder, a Pennsylvania State University geosciences professor and commission member, said pooling is the commission’s most controversial recommendation because of the implications for property rights and the potential savings the drilling industry could realize by having a law in place. 

Patrick Henderson, the governor’s top adviser on energy issues, said the pooling recommendations were meant to guide policymakers as they draft legislation. 

Terry Bossert, president of Chief Oil and Gas, one of the drilling companies operating in the state, and a commission member, said the industry wants more information on pooling, but supports the concept. 

Commission members said pooling was recommended to ensure all parties were compensated when drilling takes place beneath land that is not leased. 

Jeff Wheeland, a Lycoming County commissioner who sits on the commission, said the pooling issue and others may have to be revisited at a later time.

“It truly is the end of the beginning. There is a lot that is going to happen in the future,” Wheeland said.