Oil And Gas “Unitization” Paves Way For More Drilling
BY NICK ROGERS
CHARDON, OHIO - Ohio Citizens whose properties lie above rich oil and gas deposits are facing stringent legal pressure from the Ohio Department of Natural Resources (ODNR) in the form of a long-existing-but-only-recently-common legal process called “unitization.” Contrary to wind and solar projects which are regularly stalling due to public opposition and greater powers given to county commissioners, property owners who oppose oil and gas drilling on their land are finding it extraordinarily difficult to stop these undertakings with what some say is an insurmountable legal precedent.
The main fundamental foundation of unitization – a legal process that has been around since 1965 but only consistently utilized over the past decade due to improvements in oil and gas technologies which have allowed companies to access previously inaccessible or unknown deposits – compels land owners to “pool” their oil and gas resources when a “drilling unit” falls on multiple properties and 65% of those property owners consent to the drilling.
Patrick Hunkler and his wife Jean Backs have opposed drilling on their Belmont County property. A 2018 unitization order was issued for their property but, fortunately for Hunkler and Backs, the developer canceled the project. The couple are an anomaly when it comes to projects being haulted.
“All the cards are stacked against us,” Hunkler said. Backs added, “Our experience at the unitization hearing was that oil and gas runs the show.”
These ODNR hearings, says Cleveland State legal professor Heidi Robertson, do not take into environmental impacts of the drilling – a common practice under the 1969 National Environmental Policy Act (NEPA) which require environmental impact statements – but rather the considerations have focused on whether or not “…adding this land to the unit [will] make it easier for the developer to more efficiently and more profitably get the oil and gas out of the ground…”
112 unitization orders took place in 2022; 98 in 2023, according to Andy Chow of ODNR. Chow said that only one application has been denied since 2012. The process, says Ohio Oil and Gas association president Rob Brundrett, ensures that “…a small minority of owners … cannot stop everyone else from realizing the full potential of their property and minerals.”
While some land owners – like Hunkler and Backs – are concerned about possible environmental hazards caused by drilling (like methane release), other land owners are holding out for more money. As things stand, a 12.5% royalty is available to those who find themselves in the crosshairs of unitization.
The pressure on land owners is not just coming from ODNR. A ruling is pending after a March 27th hearing in which AEP energy called for a hefty financial penalty to be levied against Citizens who refuse to lease their land for drilling purposes; allowing their company and others to recoup lost revenue caused by the sometimes-drawn-out unitization process. A 2022 revision to the unitization law has, however, sped things up.
Just like homeowners who decline smart meter installation, Citizens who oppose oil and gas drilling seem to be running into impenetrable walls of compromised regulators and high-powered lawyers. Regarding the latter, Robertson said, “This isn’t something any lawyer can handle. You have to be an expert in this stuff, and all the experts are on the other side, because that’s where the money is.”
Once again, the “little man” finds himself relatively powerless against mega-industry and the revolving door of government regulation/bureaucracy. Do you, land owner, consent? It seems that ODNR and oil/gas drilling companies don’t care if you do.
