Mineral Resources Property Owners' Rights

The Colorado oil and gas conservation commission (commission) may enter an order combining the ownership interests of 2 or more owners of mineral interests located on separate tracts (drilling unit) to authorize the drilling of an oil and gas well on the drilling unit (pooling order). Under certain circumstances and after notice and a hearing, the commission may enter a pooling order for a drilling unit, which order includes an owner of mineral interests that does not consent to the drilling for oil and gas on the mineral owner's tract (forced pooling order).

The bill changes the commission's process for entering a forced pooling order by:

• Requiring an applicant for a forced pooling order to prove that owners of more than 45% of the mineral interests to be pooled consent to pooling by submitting to the commission a third-party expert's title report or title opinion;
• Requiring the commission to determine if the minerals in the drilling unit may be extracted without disturbing a nonconsenting mineral interest owner's mineral rights and, if so, requiring the commission to include in the forced pooling order a condition that the nonconsenting mineral interest owner's mineral rights not be disturbed. Alternatively, if the commission determines that the minerals cannot be extracted without disturbing the nonconsenting mineral interest owner's mineral rights, the commission is required to make explicit findings of that determination.
• Requiring that a forced pooling order be issued in a manner that protects and minimizes adverse impacts on public health, safety, and welfare; the environment; and wildlife resources and that protects against adverse environmental impacts on any air, water, soil, or biological resources resulting from oil and gas operations;
• Reducing the amount of production costs that consenting mineral interest owners in a drilling unit may recover from a nonconsenting mineral interest owner in the drilling unit; and
• Prohibiting the commission from entering a forced pooling order that includes an unleased, nonconsenting mineral owner that is a local government or a school district, including a charter school or an institute charter school.

Additionally, the bill requires that the commission issue a pooling order before any minerals that are subject to the pooling order are extracted or any well is drilled to access the minerals. The bill also authorizes a nonconsenting owner to audit or cause to be audited certain records of the oil and gas operator no more frequently than every 3 years but before any costs are recovered from the drilling unit.

(Note: This summary applies to this bill as introduced.)