Gas drilling company withdraws application for forced pooling in Western Pennsylvania
A fight over whether a Texas company can drill for oil and gas in Western Pennsylvania without consent from some landowners ended on Friday, a state regulator said, when the company withdrew its application for forced pooling.
Hilcorp Energy Co. of Houston had reached agreements with most owners of gas rights in Lawrence and Mercer counties where it wants to drill, and asked the state Department of Environmental Protection for access to gas under remaining properties as part of a 1961 law that it claimed allows the practice.
Hilcorp said it withdrew its application with the DEP “in order to move forward with development operations and in keeping with the best interests of its lessors.”
Morgan Wagner, a DEP spokeswoman, said Hilcorp filed written notice to withdraw its application, and the agency submitted a letter to hearing officer Michael L. Bangs of Cumberland County to cancel public hearings and to delete the case from the docket.
The hearings, postponed several times, were scheduled for Oct. 27 and 28.
The issue simmered since Hilcorp applied on Aug. 26, 2013. In May, property owners — Suzanne and Martin Matteo, Robert and Carole Valentine, and Steve Emery, all of West Middlesex — challenged the 1961 law in Commonwealth Court. None of the landowners could be reached for comment.
Last year, Suzanne Matteo told the Tribune Review: “It's almost like Hilcorp is bullying me and targeting me and other landowners. It doesn't seem constitutional.”
The Matteo family has four acres of land with a small garden and doesn't want the industrial work of a drill site with traffic, lights, noises and smells close by, she said.
In a statement, Hilcorp said oil and gas production will continue on its leased property in that area. It will reorganize production units to exclude unleased tracts, and start drilling when the DEP and local officials issue permits.
Hilcorp had asked for an order allowing access on 3,267 acres for Utica shale drilling in Pulaski, Lawrence County, and Shenango, Mercer County. It negotiated leases on all but 35 acres.
Hilcorp claims its target is more than 7,400 feet deep, a shallow part of the Utica. A test well averaged about 1.8 million cubic feet of gas and 33 barrels of oil a day for about four months this year, state records show.
Experts say forced pooling applies to the Utica formation but not the more shallow Marcellus in Pennsylvania, largely because when Pennsylvania passed its law, the state's oil and gas industry rarely drilled that far below the Marcellus.
Hilcorp said it “remains committed to its legal position ... and is confident the company would have ultimately prevailed on the application as a matter of law.” The decision to withdraw “is solely a business matter, not a legal one,” the company said in the statement issued by Vince Bevacqua, executive vice president.
“I would expect that someone else will raise this issue sometime in the future,” said Ross H. Pifer, a Penn State University law professor who follows shale drilling legal issues. “The law is very old, and the procedures have not been utilized in a long time. ... I understand the company wants to move forward, but it would be advantageous to have clarity on this.”
Forced pooling laws of varying strength exist in nearly 40 states, according to a 2011 count by ProPublica, a nonprofit investigative news agency. Most laws passed in the mid-20th century to promote conservation and end the days when derricks competed side by side to drink oil from the same underground pool.
“The compulsory pooling law is seen as a company versus landowner issue, but it is more nuanced,” Pifer said. There are many reasons why landowners may oppose or welcome pooling, ranging from economic to philosophical.
“The most important thing is for landowners' rights to be considered and to have rules so they are being treated fairly,” he said.
Bob Svetlak, whose Lawrence County property is part of acreage in Pulaski and neighboring Shenango, said Friday that “if you want to sell your mineral rights, I should have the same privilege to sell or not. The way they want to force people to sell here is not the way I want to do that.”
Travis Windle, a spokesman for the Marcellus Shale Coalition, said pooling “enables the responsible, efficient and well-regulated development of shale gas, which is crucial to maximizing these shared benefits across the entire commonwealth.”
Windle said Hilcorp's decision to continue production on leased property while excluding tracts that it did not lease could reduce its production capability and reduce royalties it can pay to landowners who signed leases.
Hilcorp said it remains committed to working in Western Pennsylvania and eastern Ohio.
John D. Oravecz is a Trib Total Media staff writer. Reach him at 412-320-7882 or email@example.com.