Texas lawmaker pushes majority rules in the oilfield

Texas state Sen. Van Taylor believes in majority rule when it comes to the oilfields.

The Republican senator from Plano has filed a bill that would make it easier for energy producers to tap established oil and gas reserves when it can convince a super majority of the owners in a mineral rights pool to agree to the project.

Called the Majority Rights Protection Act, or Senate Bill No. 177, if adopted it would require 70 percent of those with a working or royalty interest in a play to approve. Currently, state law requires everyone to agree.

“The Majority Rights Protection Act would unlock hundreds of billions of dollars of energy production by establishing a proven legal framework successfully used in 29 other states,” Taylor said in a statement. “Passing this bill has the potential to be the biggest job creation, investment expanding, and revenue generating legislation in a generation.”

The bill only applies to what are called secondary or tertiary recovery efforts, or those using new drilling techniques such as hydraulic fracturing, to tap oil and gas reserves.

Currently, a single owner, or group, can block the redevelopment of an oil reservoir, according to Taylor. Geologists predict that an additional 10 to 20 billion barrels of oil worth over $1 trillion will come out of the ground if the bill is passed, according to a release from Taylor’s office.

“New techniques in oil extraction continue to offer our state and nation immeasurable opportunities, however Texas law has failed to keep up with those advancements,” Taylor said. If adopted, Texas would have a standard of agreement equal to or greater than 26 of the 29 states that have similar legislation in place.

While you might think that this idea would sail through the Texas Legislature, which does all it can to support the energy industry, think again. The bill touches on the prickly property rights issue, which might explain why the Texas Independent Producers and Royalty Owners Association neutral stance.

“Unitization or forced pooling has been a contentious issue with operators, royalty owners and the legislature for several decades,” said TIPRO President Ed Longanecker, who said their membership has “historically been divided” on the issue.

And a story by the Texas Energy Report quoted a statement from the Committee of Texas Independents which said that the bill provides a “way for private oil and gas businesses to enhance their pocket books by imposing their will on other (usually smaller) oil and gas producers and royalty owners by a taking of their private property, using the brute force of government.”

This story was originally published November 25, 2016 at 4:07 PM with the headline "Texas lawmaker pushes majority rules in the oilfield."