filthy pool

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Forced pooling isn’t some kind of college pool party that jocks compel nerds to attend, resulting in wacky hijinks. It’s a grim legal tool, dating back nearly a century in some states, that allows drillers to tap the fossil fuels beneath a reluctant landowner’s property — if enough of their neighbors sell their drilling rights. The philosophy of such laws is that subterranean pools of oil and natural gas pay no heed to property lines.

As hydraulic fracturing takes grip across the nation, frackers are taking advantage of state laws that were drafted to allow forced pooling for conventional gas and oil drilling.

Newsweek took a trip to Marcellus Shale country and interviewed Suzanne Matteo and Bob Svetlak, two of the residents who’ve been stymieing drilling plans by refusing to sign agreements that would allow Hilcorp to frack their land in Pulaski Township, Penn., in exchange for per-acre payments and royalties:

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[L]ate last August, the company filed an application with the state to drill on a large swath of land that includes property owned by Bob Svetlak, 73, … and now the company was trying to use a 1961 “forced pooling” law to access the natural gas beneath his 14.6 acres without his consent.

Matteo says that when she heard about Hilcorp’s move on Svetlak’s property, she knew hers would be next. She, along with Svetlak and two other property owners, represent 35 holdout acres within the 3,267-acre area that Hilcorp has proposed as a drilling unit. Sure enough, a neighbor who had leased to Hilcorp soon showed Matteo a letter from the company encouraging leaseholders to attend a meeting before the state Environmental Hearing Board to cheer on its forced pooling application (referred to as a Well Spacing Application).

“By integrating the tracts in red, Hilcorp can potentially drill twice as many wells into your unit, allowing Hilcorp to fully develop the minerals beneath your land,” the letter said, adding that without forced pooling, more wells would need to be drilled and less gas would be produced. In short, the letter implied to the leaseholders, unless their holdout neighbors were forcibly pooled, their own future royalties would be in jeopardy.

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The letter included a map, with Matteo’s land as well as three other unleased tracts clearly identified in red. …

After seeing the letter sent to her neighbors, Matteo and two other holdout property owners filed a lawsuit against Hilcorp, the Pennsylvania Department of Environmental Protection and the state attorney general, alleging that the forced pooling law is a violation of their constitutional right to private property, as well as a violation of state eminent domain law, which stipulates that any taking of private land must be for a public, not private, purpose. …

Despite the health concerns, some of Matteo’s neighbors are frustrated with her and others for holding up the royalties they will receive once the gas starts flowing. Bruce and Jody Clingan, who own a 200-acre golf course nearby, received a bonus of over $500,000 when they signed with Hilcorp, plus 18 percent royalties on future production. Bruce Clingan told CBS that he couldn’t understand why “1 percent” of landowners in the proposed unit could prevent drilling to which the other “99 percent” have consented.

Which is why Matteo believes her lawsuit is just the beginning. “I know I’m screwed, no matter what,” she says. “There’s going to be wells near me no matter what. There’s a large landowner behind me and across the street that would probably love the money for a well pad. But I know we’re getting used as a precedent. If they get away with this with us, it’s going to happen everywhere.”

Forced pooling laws are currently on the books in 39 states, with different states requiring different thresholds of consent among landholders before drilling can be forced upon all of them. Some lawmakers are trying to rein in such laws, while others are trying to introduce new ones.