Forced pooling is a procedure established by the Oklahoma legislature in 1945 to facilitate and simplify the exploration for oil and gas in the state. The forced pooling process is controlled by the Oklahoma Corporation Commission, the agency with primary regulatory power over the state’s energy industry. Once a unit has been spaced (Note: see related article on Drilling and Spacing Units), forced pooling provides a means to coerce all of those with rights to drill in the spaced unit to participate in the cost of drilling a well. Absent forced pooling, development of a unit could be delayed, or even prevented all together, if those with rights to drill in the unit could not agree on a development plan.
Why do we have forced pooling? From 1935-1947 Oklahoma law provided a procedure for landowners to voluntarily pool their lands together into drilling and spacing units. After seeing the delays and problems caused by co-tenants unwilling to pool their interest in a drilling and spacing unit, the Oklahoma legislature realized there was a significant need for a forced pooling provision and passed Senate Bill 190 in 1947, which would later be codified as 52 O.S. Section 87.1.
If the Applicant cannot successfully get all the owners within the unit to agree as to how to develop the unit, they can apply to the Commission to have those people, as well as other oil companies who have not agreed to the terms, force pooled into the unit. In theory, force pooling allows working interest owners to acquire the right to explore for oil and gas on lands where a mineral owner is unwilling to accept a reasonable offer to lease or where the owners cannot be located. The governing statute for the forced pooling process can be found at 52 O.S. Section 87.1(e). It should be noted that only formations that are spaced can be force pooled. (Note: see related article on Drilling and Spacing Units).
To better understand why there is a need for forced pooling it might be beneficial to run through a quick hypothetical. Imagine there are 100 different mineral owners who own in interest in a drilling and spacing unit. 99 of the 100 owners have agreed to pool their interests and develop the property, but there is one owner that will not agree to pool their interest. Without a forced pooling procedure, the single withholding owner would be able to either stop the development of the unit, or, in the alternative, allow the other mineral owners to assume all the risks associated with the development, and then enjoy the same benefits as every other owner if there is a producing well.
What is the process of forced pooling like? The forced pooling process contains three key parts: the Notice, the Hearing and the Order. Any party that owns a right to drill within a unit can bring an application for forced pooling before the Oklahoma Corporation Commission (OCC).
The Notice sets forth several pieces of valuable information. The Notice will inform the owners of the party seeking the application, the lands that will be covered by the pooling, the size of the proposed drilling and spacing unit, and the date, time and location of the pooling hearing.
8 Comments on “Forced Pooling in Oklahoma”
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