Fighting for Your Mineral Rights: What to Do if You’re Being Pushed

Mineral rights owners need to be aware of their rights and protections. Mineral rights rules and regulations are constantly updated and vary from state to state.

What rights do you have?

In addition to so many situations where a landowner’s rights might be violated, consider this:

Recently, nationwide, a controversial tool called forced pooling is being used more and more as drillers work to gain access to minerals located under the surface of private property, oftentimes without the permission of the landowner.

In some circles, forced pooling is compared to eminent domain. In other circles, it is referred to as compulsory integration. Forced pooling means that, under certain circumstances, landowners and their neighbors are compelled to join gas-leasing agreements. Forced pooling is prevalent in well-established oil and gas states and has become more common, which has become disconcerting to homeowners whose drilling history is minimal and they must suddenly hurry to understand all the complexities behind protecting their mineral rights.

When it comes to forced pooling, drills are typically allowed to extract minerals from a “pool,” otherwise known as a large area comprising a minimum of 640 acres. Under these circumstances, if a lease has been negotiated for a certain percentage of the land, the company can then extract gas from the entire area. In this case, because drillers aren’t allowed to build surface wells on unleased land, they have resorted to using horizontal wells, or possibly some other way, to collect the minerals. Currently, 39 states have some form of forced pooling law. Most mineral rights contracts have a voluntary or forced pooling clause.

In places like New York, 60 percent of a landowner’s acreage, involved in the proposed drilling area, must agree to lease their land before the state oil and gas board will consider a driller’s petition for forced pooling. In Virginia, the leased land requirement is only 25 percent.

In states where these laws apply, drillers must notify landowners of a hearing before the oil and gas board, or whatever type of regulatory agency has been created for this purpose. Upon approval of the driller’s petition, landowners have these options:

  • contribute to the cost of the well and share the profits from the gas sales
  • not pay for the well and share the profits after a “risk aversion” penalty is deducted
  • receive a state-mandated minimum royalty payment
  • be enrolled in the state-mandated minimum royalty payment if an option is not selected
  • opting out is not an option.

While a landowner cannot prevent forced pooling, voluntary pooling can increase landowners rights and work to protect rights that might make the transaction more satisfactory for the homeowner.

When it comes to mineral rights, particularly when push comes to shove, knowing all of your rights is vital in this industry.

Is someone causing you distress in applying pressure within your mineral rights agreement? Call Gallatin Natural Resources today and let us help you learn what your rights are and how to apply them at  (214) 414-0387 (Dallas) or (432) 203-0007 West Texas.