DENVER
08/15/2011 10:26 am ET Updated Oct 15, 2011

Oil And Gas Industry Using 'Forced Pooling' To Force Landowners Into Signing Leases

We've learned the basics of fracking and the hazards of deepwater exploration, but there's a new oil and gas term on the block: 'forced pooling.'

Originally put into law in the mid-1930s (though it varies from state to state), 'pooling' allowed oil and gas companies to combine leases to drill on adjacent properties. In best case scenarios, 'pooling' multiple properties into one increases efficiency as extraction companies are able to tap into one underground reservoir. This results in less rigs and, ideally, less intrusion on landowners' property.

As ProPublica points out however, pooling can also take the form of 'forced pooling,' where landowners are coerced into a lease if a certain percentage of their neighbors have signed as well. The company can then harvest gas from the entire area, regardless of consent.

Oklahoma-based Chesapeake Energy Corp. has begun employing the 'forced' version of pooling in Colorado, according to the Denver Post. Property owners in Colorado's Elbert and Douglas counties have been told to sign leases allowing access or be forced into a pool, without any option to say 'no.'

Many contend this amounts to an abusive eminent domain law, though it was never intended to be used as such. Colorado state law allows for pooling 'to prevent or to assist in preventing waste, to avoid the drilling of unnecessary wells, or to protect correlative rights.' However, in the absence of voluntary pooling,

the commission ... may enter an order pooling all interests in the drilling unit for the development and operation thereof. Each such pooling order shall be made after notice and hearing and shall be upon terms and conditions that are just and reasonable, and that afford to the owner of each tract or interest in the drilling unit the opportunity to recover or receive, without unnecessary expense, his just and equitable share.

The law exists in addition to the 'Rule of Capture,' which allows oil and gas companies to extract gas that flows from a non-leased property into a property they already harvest from.