Oil, gas industry foresees plan on split-estate bill
DENVER – Oil and gas industry officials on Monday said they are willing to put into state law the requirement that companies pay when drilling activities damage private property, a concession that could solve a growing rift between the industry and landowners.The move is “a fundamental concession” the industry feels impinges on its property rights and will likely cost the Colorado Oil and Gas Conservation Association some members, said Ken Wonstolen, the group’s general counsel.”We’re willing to pay the surface owner to exercise our existing property to right to the reasonable use of the surface to access the minerals. That’s a property right we own, that we paid for, acquired,” Wonstolen said in an interview with The Associated Press.And while industry officials don’t necessarily believe they should have to pay to use what they own, the tradeoff is more certainty and clear guidelines on when compensation is due, Wonstonlen added.He was joined by Greg Schnacke, the group’s executive vice president.The two have been negotiating with landowners, environmentalists, home builders and others on legislation intended to give landowners more legal protections when facing energy development on their property. The bill has cleared the House and will be heard by a Senate committee Thursday.At issue is the so-called “split estate” – when one party owns the surface and another owns the minerals underneath. Companies that lease or own the minerals have the right to extract the minerals, and while they often negotiate agreements with the surface owners, they’re not required to.That would change under the bill. The push to give surface owners more say has gained momentum as the pace of drilling has escalated in Colorado and elsewhere.In Wyoming, landowners and industry officials hashed out an agreement on compensation approved by the Legislature and signed by the governor last year.Last year, COGA opposed a bill by Rep. Kathleen Curry, D-Gunnison. Schnacke said events in Wyoming helped prompt the industry this year to sit down with various groups to forge an agreement.A potential obstacle is an amendment to the bill, again sponsored by Curry. The clause says companies should pay damages subject to their right of “reasonable use” of the land to drill the gas.Critics contend that might exempt companies from covering damage from roads or well pads because they’re needed to produce the gas. Groups unhappy with the current version have pledged to campaign for an initiative on the November ballot if the language isn’t changed.Wonstolen called concern about the amendment “a red herring,” but added that his group has agreed to deleting that section. Sen. Jim Isgar, D-Hesperus, the bill’s co-sponsor, confirmed Monday that a compromise is in the works.”It will clearly state that the operator’s right of reasonable use is subject to compensation,” Wonstolen said of the proposed replacement language. “We have agreed to pay surface owners to access the minerals.”That’s a big shift for the industry, Schnacke said. Landowners and companies agree in more than 90 percent of the cases on compensation for use of the surface, but it’s not required.Companies can now post a bond and drill if they can’t strike a deal with landowners.”I’m always a little bit suspect when the industry says it’s going to give us something,” said Duke Cox, a home builder and president of the Grand Valley Citizens Alliance, a Garfield County group that’s part of a coalition pushing for the bill.Cox added, though, that if the change is made and the lawyers are content, “Then heck, we’re after some progress here. We want to level the playing field.”
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