TX Pore Space Bill

[LanaStraub]

CALLING ALL TEXAS MINERAL OWNERS - Please contact Legislators NOW and tell them you OPPOSE SB 2107 & HB 4484 (PORE SPACE BILLS) They are the most extreme forced pooling and anti-mineral legislation in the country. CONTACT House and Senate Committee on Natural Resources & Economic Development members TODAY to OPPOSE these bills!

The Texas State Senate – Senate Committee on Natural Resources & Economic Development

Texas House of Representatives : House Committee on Natural Resources

Here are the talking points to discuss with them. Once you call - please send a follow-up email.

[Wade_Caldwell]

UPDATE: SB 2107 was heard today and received a lot of hard questioning and opposition. Sen. Nichols has promised a committee substitute that will address some of the concerns but we have not seen it yet, nor do we know if it addresses everything. Myself for NARO, Texas Forestry Assoc., Texas Cattle Raisers and TLMA all testified against the bill, and both the sponsor and those testifying got a lot of questions from some very engaged and concerned committee members. Concerns about property rights, putting liability on the state ultimately for these projects, whether the fund to handle clean up will be adequate, and the forced pooling aspects were all center stage.

[KellyH]

Thank you Wade for testifying against this bill. Let us know if their is anything people, including those not living in Texas, can do to help fight this bill and support your efforts.

Edit: Please keep in mind you do not have to live in Texas to call and state your opposition. Please call and state you oppose this bill!

[AJ11]

What is thought to be a non-productive zone today might one day be tapped using new technology as we have seen with horizontal drilling. How can mineral owners know unknowns, and how would the Texas Legislature/RRC be able to predict the future? At the barest minimum, mineral owners should own 1/2 of the pore space and be compensated as it is proposed for surface owners.

“5) the injection and geologic storage of carbon dioxide will not endanger or injure any oil, gas, or other mineral formation in any material respect, or has been addressed in an arrangement between the applicant and the mineral lessee or mineral owner;”

[Wade_Caldwell]

It is going to be very difficult for mineral owners to get ownership of any of the pore space in this bill, because the Texas Supreme Court ruled a few years ago in Lightning Oil that the surface owners own the pore space. You can change this by specifically reserving the pore space when you also reserve minerals in your deed when you sell surface.

The focus of our efforts are to make sure this bill does not impede the ability to produce or develop minerals. Also, if the CO2 is going to be injected into a hydrocarbon bearing strata and be put off limits for future production the mineral owners must be compensated fairly, plus future technology may come up with a way to produce that oil without allowing the CO2 to escape.

[KellyH]

I let my family know to call. @LanaStraub made a video on who to call. You do not need to be from Texas to mention your dissent. You can mention you own minerals and how it hurts you.

Lana S. posted on LinkedIn

@Wade_Caldwell made some important comments too about why even those without interest but live in Texas should be concerned too.
“The focus of our efforts are to make sure this bill does not impede the ability to produce or develop minerals. Also, if the CO2 is going to be injected into a hydrocarbon bearing strata and be put off limits for future production the mineral owners must be compensated fairly, plus future technology may come up with a way to produce that oil without allowing the CO2 to escape.” (March 30th, 2023 on this forum).

PLEASE CALL, ESPECIALLY IF YOU LIVE IN TEXAS! IT DOES MAKE A DIFFERENCE! They have already made changes because NARO members have called in. Help the effort and spread the word!

[AJ11]

Look at Kinder Morgan’s greenfield ROZ “Tall Cotton” CO2 project in Gaines county. “Greenfield” means that there was never any conventional primary production. As I understand, the geology was the equivalent of “goat pasture.” But Kinder Morgan has produced millions of barrels of oil from it. From zero value to being worth millions in a twenty year window? So the legislature and RRC will allow the experts from the CO2 injection company to claim the pore space is a formation devoid of value to the mineral owners for all time? The mineral owners own the non-hydrocarbon minerals deep down and forced C02 storage unfairly immobilizes said minerals without compensating the owners. Sounds patently unconstitutional.

[Wade_Caldwell]

We are asking for clear language that: 1) no wells will be shut in: 2) You can continue to drill above, through and under the sequestration unit; and 3) mineral owners get compensated if the injection is going to be in a hydrocarbon bearing formation. There is a big concern about the forced pooling in the bill.

[Wade_Caldwell]

The Senate version of the pore space bill, SB 2107, was heard on 3/29/23 in the Natural Resources and Economic Development Committee. In its current form, this is a very bad bill, worse than any other law passed in any other state that has oil and gas production. Revisions have been promised but we have not seen a revised bill yet. Talking points on why we oppose the bill are listed below.

PLEASE CALL THE MEMBERS OF THE NATURAL RESOURCES AND ECONOMIC DEVELOPMENT COMMITTEE TODAY AND TELL THEM YOU ARE OPPOSED TO THE CURRENT VERSION OF THE BILL. ASLO CALL THE SPONSOR, SEN. NICHOLS.

SPONSOR - Sen. Robert Nichols

(512) 463-0103 (ask for Tina)

Chairman Sen. Brian Birdwell (Granbury)

Phone: 512.463.0122

Email: brian.birdwell@senate.texas.gov

Vice-Chair Sen. Judith Zaffirini (Laredo)

Phone: 512.463.0121

Email: judith.zaffirini@senate.texas.gov

Sen. Carol Alvarado (Houston)

Phone: 512.463.0106

Email: carol.alvarado@senate.texas.gov

Sen. Kelly Hancock (Tarrant, Dallas)

Phone: 512.463.0109

Email: kelly.hancock@senate.texas.gov

Sen. Cesar Blanco (El Paso)

Phone: 512.463.0129

Sen. Brian Hughes (Tyler, Mineola, Marshall)

Phone: 512.463.0101

Email: brian.hughes@senate.texas.gov

Sen. Lois Kolkhorst (Brenham, Victoria, Katy)

Phone: 512.463.0118

Email: lois.kolkhorst@senate.texas.gov

Sen. Borris L Miles (Houston)

Phone: 512.463.0113

Sen. Kevin Sparks (Midland)

Phone: 512.463.0103

The reasons we oppose this bill are:

1. It may transfer the mineral interests in a “Geologic Storage Facility” (“GSF”) to the State after the facility is full of CO2 and turned over to the state to manage. See. Pg. 18, (23) includes “subsurface stratum, formation, cavity or void” in its definition. Under 124.004(a), pg. 9 it says the GSF is transferred to the state. It tries to say the state does not get “any property interests or rights that the party does not own or have legal authority to transfer”. That is a far cry from saying mineral rights are not transferred, when the GSF specifically includes “formations”, etc.
2. There is not clear statement that protects existing wells or the ability to drill under the GSF horizontally, even if you take precautions to case and prevent escape of CO2.
3. 125.001 – pg. 12 – No clear statement that it is not intended to impede the ability to produce or develop minerals.
4. Starting page 12 is the forced pooling provisions. They can force pool as long as they get 60% of the “ownership of the pore space”. So mineral owners are not even included in achieving the 60%. Page 15. No notice to royalty owners required only the “mineral estate”. No time requirements for the “fair and reasonable offer” (7) and it only has to be made to the “pore space owners”. Mineral owners are not included. Only “pore space owners” are entitled to “equitable compensation”. No requirement to locate “unknown or unlocatable owners” only an add in the local paper. No requirement to match the best offer or other offers, the nonconsenting offers only have to be “made in a similar manner”.
5. Sec. 7 - 5.0015 – No statement of right to produce minerals or access to do so.
6. No compensation to mineral owners if the CO2 is going to be injected into a hydrocarbon bearing strata, therefore putting it off limits for future production.

[Wade_Caldwell]

Another copy of Committee members with additional emails-

Chairman Sen. Brian Birdwell (Grandbury)

Phone: 512.463.0122

Email: brian.birdwell@senate.texas.gov

Vice-Chair Sen. Judith Zaffirini (Larado)

Phone: 512.463.0121

Email: judith.zaffirini@senate.texas.gov

Sen. Carol Alvarado (Houston)

Phone: 512.463.0106

Email: carol.alvarado@senate.texas.gov

Sen. Kelly Hancock (Tarrant, Dallas)

Phone: 512.463.0109

Email: kelly.hancock@senate.texas.gov

Sen. Cesar Blanco (El Paso)

Phone: 512.463.0129

Email: cesar.blanco@senate.texas.gov

Sen. Brian Hughes (Tyler, Mineola, Marshall)

Phone: 512.463.0101

Email: brian.hughes@senate.texas.gov

Sen. Lois Kolkhorst (Brenham, Victoria, Katy)

Phone: 512.463.0118

Email: lois.kolkhorst@senate.texas.gov

Sen. Borris L Miles (Houston)

Phone: 512.463.0113

Email: borris.miles@senate.texas.gov

Sen. Kevin Sparks (Midland)

Phone: 512.463.0131

Email: Kevin.Sparks@senate.texas.gov

[TODD_M_Baker]

I never have understood why states don’t take policy that is working in other states & put it to work for themselves. But lawyers would be put out of work & we can’t have that. Oklahoma can learn from Texas and vice versa.

[c_b]

Wade, you indicated that when a surface owner sells property they can “specifically reserving the pore space when you also reserve minerals in your deed when you sell surface.” i am very interested in this issue. Do you know if there is a legal precedent for reserving pore space rights when a surface owner sells surface property?

we presently have a pore space lease on our property in Rankin county MS. We would like to keep our pore space rights if and when we sell the surface property. thanks, claude bowie jr.

[Wade_Caldwell]

Good news on the Pore Space bill, SB 2107. Everything has been stripped out except a general statement that the surface owner owns it absent a contract, deed, etc that says otherwise.

@c_b - It would depend on what state law says. If state law is silent on the issue, then by contract you should be allowed to reserve pore space in addition to the minerals.

SB 2107 substitute

[AJ11]

So surface owners will be able to hijack / lock-up the production potential of a significant volumes without any compensation for mineral owners? That sounds as though it should be unconstitutional. Wasn’t the Sprayberry Trend once dismissed as being non-economic before hydraulic fracturing and horizontal drilling? Non-surface mineral owners should be compensated, 50-50 split.

[KellyH]

It is better then the original bill but I am unsure if this bill should still get passed. Doesn’t this concede that the pore space belongs to the mineral owner unless stated otherwise?

[AJ11]

Did HB 4804, companion of the Senate pore space bill, fail to make it out of the Energy Resources Committee by a hard deadline?

[Wade_Caldwell]

HB 4804 appears dead.

[Wade_Caldwell]

Kelly- It does. Unfortunately there is a Texas Supreme Court opinion, Lightning Oil, that makes it hard to argue the mineral owners own the pore space.

[Wade_Caldwell]

SB 2107 is also dead, most likely. Industry pulled their support after it got stripped won to ownership only. Look for it to be included in a special session, though. A lot of “We can’t be left out of this great opportunity” boosterism behind it.