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Follow TURFBarnett Shale tricks of the trade aid gas companies over homeowners
Posted Thursday, Jan. 13, 2011
By Mike Norman - Star-Telegram
I apologize.
Last week in a column about urban drilling in the Barnett Shale, I likened the Railroad Commission's Rule 37 to the use of eminent domain to seize private property for commercial purposes. Natural gas companies use Rule 37 to get official sanction for walking over property owners who don't sign drilling leases.
I apologize for the comparison. I should not have sullied whatever good reputation eminent domain has left.
In fact, I gave Rule 37 too much credit. A full range of laws, rules, court precedents and traditions give gas companies their immense power over recalcitrant property owners, especially individual homeowners in urban areas.
The companies are adept at using those tricks of the trade. And if what some homeowners say is true, some industry representatives are not shy about threatening to deprive people of any financial benefit from the gas under their property unless they accept the company's terms.
Yes, they can do that.
Blame the "rule of capture." This accepted legal doctrine says anyone can drill on their own land and, so long as they do it safely and without waste, can pull up and sell anything that comes out of the hole. The Barnett Shale is a mile deep, which means the gas there is under tremendous pressure and will migrate toward that hole if given the opportunity.
That means the first one to drill gets the gas, even if before the drilling that gas was under somebody else's property. Hydraulic fracturing -- injecting huge amounts of water and sand into the well to break open cracks in the gas-bearing shale -- is OK even if some of those cracks cross property lines.
The rule of capture is a cousin to, but ends up carrying more weight than, the doctrine of correlative rights, which says that everybody has claim to the minerals under their property.
In rural areas where people own large tracts of property, the theory is that each of them has an equal shot at being the first to drill and get the gas. That theory turns to vapor in urban subdivisions. Nobody can drill in their own back yard.
Also in theory, Rule 37 would protect owners of small tracts. For the Barnett Shale, it says somebody else's well bore can't come within 330 feet of your property line (after extending that property line from the surface to the earth's core) without a lease. But gas companies are honing their skills at getting the Texas Railroad Commission to grant exceptions to that limit.
Even better for them, in 2005 they got a commission ruling (the "take point" rule) that allowed them to wire around the 330-foot barrier. It's called a "no-perforation zone."
Drillers blast holes in (perforate) a well's underground casing to let the gas in. So long as none of those holes are within 330 feet of your unleased property, you lose. The gas companies don't even dispute that they'll still be taking at least some of your gas. Boo-hoo for you.
For the first time since that 2005 ruling, the Railroad Commission is about to take an in-depth look at no-perforation zones and decide whether they really are fair.
A week from today, the commission is scheduled to publish draft rule revisions in the Texas Register. It will accept comments on those revisions until March 22.
The way the draft is written, no-perforation zones will survive. Whatever protections are provided by Rule 37 will be gutted. Gas companies will pay a little more for permits, about $100 per application. They'll pay about $25 more to provide the commission with a plat to show where the perforations are. They'll avoid Rule 37 hearings, which can cost them $50,000 or more.
It's pretty certain that the comments from gas companies will be favorable. But anybody else can comment, too, even homeowners.
Mike Norman is editorial director of the Star-Telegram / Arlington and Northeast Tarrant County.