Extraction’s Failure to Follow Forced Pooling Law Detailed in Testimony at COGCC Rulemaking

This Citizen Blog by Wildgrass mineral owner Jean Lim contains her testimony at the Colorado Oil and Gas Conservation Commission (COGCC) on October 3 as the COGCC held a hearing at the end of a forced pooling rulemaking process.  It includes some details of Extraction’s failure to follow SB 18-230 despite its implementation into law on June 1.  Jean Lim testified as a citizen witness for the League of Oil and Gas Impacted Coloradans (LOGIC) and was joined by citizen witness Kathy Mendt of Weld County and attorney Mike Chiropolos.

My name is Jean Lim and I live in the Wildgrass subdivision of Broomfield.

Thank you for giving me the opportunity to speak today about changes that are needed to forced pooling regulations, a process I have been involved in for over two years.  I am one of 500 homeowners in my Wildgrass subdivision who received a surprise lease offer from Extraction Oil and Gas in our mailboxes almost two years ago.  As mineral owners in the Lowell South Spacing Unit, we appeared before the Commission almost a year ago with evidence that many owners and our attorney had not been served with a hearing notice by Extraction Oil and Gas.  After being granted a continuance for good cause by the Commission, the Lowell South Spacing Unit was subsequently approved on December 11, 2017.

I took an active role in advocating for forced pooling changes at the Statehouse, testifying in both the Senate and House for SB 18-230.   I was present on June 1 when SB 18-230 was signed into law to require operators to provide notice to mineral owners 60 days before any hearing on an application for a forced pooling order and ostensibly to hold non-consenting mineral owners harmless for operating spills and accidents.

My experience as a mineral owner confirms that the 60-day statutory period must be strictly construed to ensure that the full 60 days is provided in all circumstances.  Despite the fact that SB 18-230 was already implemented into law, Extraction sent a July 17 election letter to Wildgrass mineral owners insisting that they respond within 35 days and elect to either participate in Livingston wells (actively or passively) or actively refuse to consent and be subject to a “200% non-consent penalty.”  This first letter contained many deficiencies, including the fact there was no oil and gas lease contract included to even examine if it was a reasonable lease offer.

In response to our communications to Extraction about the deficiencies in the July 17 election letter, Extraction responded with disdain and then with a second election letter sent on August 27.  Perhaps you can imagine the confusion in our neighborhood as we tried to field questions as to what these two piecemeal election letters meant.

In Extraction’s forced pooling order application dated August 31, there are 975 mineral owners listed who will be force pooled in the Lowell South spacing unit alone.  Many mineral owners received notice weeks after the August 31 filing date, and some have still not received notice. Some recent mailings required signatures and some did not, even varying in the signature requirement within different parts of the same spacing unit.  The Broomfield post office is still reporting that it has a huge stack of undelivered mail from Extraction.  Yet the COGCC hearing for Extraction’s forced pooling application is scheduled for October 29 and 30.  Our experience clearly proves that mineral owners need at least 60-days to receive the notices and understand their options.

Additionally, I appreciated that SB 18-230 gave force pooled mineral owners immunity from costs arising from operating spills and accidents as non-consenting owners.  However, after passage of the bill, questions arose if the current rules still imposed liability when the mineral owner became a working interest owner after the penalty phase.  Several oil and gas attorneys with whom we spoke could not rule that out.  I would like to urge the Commissioners and COGCC Staff to ensure that the rules are careful not to include language that could create additional uncertainty or somehow increase potential liability. I understand the statute is controlling, but I remain concerned that the rules could be drafted or misconstrued to the detriment of mineral owners.

Furthermore, any effort to allow citizens to meaningfully participate in COGCC decisions is a move in the right direction as oil and gas development moves into residential neighborhoods where citizens lack knowledge of the process and regulations.  If the COGCC is interested in promoting health and safety, then it should invite increased participation to allow for a greater possibility that any citizen misconceptions about the COGCC can be dispelled.

There are many additional improvements that need to be made in the future to forced pooling regulations, but thank you for your time and effort to engage in this rulemaking process.