Protections Mineral Interest Owners Forced Pooling

Under current law, when 2 or more separately owned tracts are within an oil and gas drilling unit (unit) established by the Colorado energy and carbon management commission (commission), in the absence of voluntary pooling and after a reasonable offer to lease, made in good faith (offer to lease), current law allows the commission to enter an order pooling the mineral interests of those tracts (pooling order) for the development and operation of the unit if the applicant for the pooling order:

• Owns more than 45% of the mineral interests in the unit (requisite ownership); or
• Obtains the consent of the owners of more than 45% of the mineral interests in the unit (requisite consent).

The bill changes current law by:

• Requiring that a pooling order application include an affidavit that declares that the applicant has the requisite ownership or obtained the requisite consent (declaration), which affidavit must include certain leasing and well information;
• Allowing an unleased mineral interest owner (unleased owner), at least 60 days before the first noticed hearing date, to file a protest with the commission disputing the applicant's declaration (protest);
• Requiring the commission no later than January 1, 2025, to adopt rules establishing a fair process for resolving a to resolve a bona fide protest and allowing an unleased owner that files a bona fide protest to review certain leasing information;
• If a unit contains the mineral interests of an unleased owner that has rejected an offer to lease, prohibiting an oil and gas operator, on and after January 1, 2025, from drilling or extracting minerals from a drilling unit owned by the unleased owner and not voluntarily pooled before a pooling order is entered by the commission;
• Prohibiting the commission from entering a pooling order that pools the mineral interests of an unleased owner if the unleased owner is a local government that has rejected an offer to lease and the minerals subject to the unleased owner's mineral interests are within the local government's geographic boundaries (local government unleased interest); and
• If a pooling order application proposes to pool a local government unleased interest and the local government has rejected an offer to lease, requiring the commission to deny the application unless the applicant amends the application to no longer pool the local government unleased interest.

(Note: Italicized words indicate new material added to the original summary; dashes through words indicate deletions from the original summary.)

(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)