Pooling is the process of combining multiple leased lands which are adjacent to each other in order to drill oil or gas from those lands at a single shot. The combined area is termed as unit or pool and hence the word pooling is used to describe this process. Pooling helps the mining companies to use single production unit to drill out the minerals from adjacent lands which saves their time and production costs. Basically, there are two types of pooling processes which can be seen in the pooling clause of the agreement. They are the voluntary pooling and the compulsory pooling. Let us see them in detail.
Voluntary pooling: This is the first type and the best situation which is frequently used to subject the land lords for pooling on the leased land. This kind of pooling is a kind of free consent for pooling given by the land owner to the mining company. In this the land owner can also include some provision to make the deal even more beneficial. Again in this clause there are two types. One is limited access of leased land for pooling and the other is the unlimited access of the land for pooling. In limited access, either the company specifies the acreage of the land which they want for pooling or the land owner can modify or reduce the acreage and can specify his own limit. With this the mining company can be able to use the specified amount of land in pooling. Secondly, unlimited access allows the mining company to extend the coverage area to the entire leased area with out any limitation.
Compulsory pooling: The name itself says that the pooling is compulsory and this rule is applicable whenever the state law has been satisfied for oil and gas leases. Many of the states have this provision which compels the land owner to enter into pooling. In this kind of pooling the mining company requests for a pooling order, which provides for the surrender or sharing of interest by the land owner. The state and the production company together issues the cost formula in these situations.
These are the two types of pooling which are in practice while doing oil and gas lease agreements.
Voluntary pooling: This is the first type and the best situation which is frequently used to subject the land lords for pooling on the leased land. This kind of pooling is a kind of free consent for pooling given by the land owner to the mining company. In this the land owner can also include some provision to make the deal even more beneficial. Again in this clause there are two types. One is limited access of leased land for pooling and the other is the unlimited access of the land for pooling. In limited access, either the company specifies the acreage of the land which they want for pooling or the land owner can modify or reduce the acreage and can specify his own limit. With this the mining company can be able to use the specified amount of land in pooling. Secondly, unlimited access allows the mining company to extend the coverage area to the entire leased area with out any limitation.
Compulsory pooling: The name itself says that the pooling is compulsory and this rule is applicable whenever the state law has been satisfied for oil and gas leases. Many of the states have this provision which compels the land owner to enter into pooling. In this kind of pooling the mining company requests for a pooling order, which provides for the surrender or sharing of interest by the land owner. The state and the production company together issues the cost formula in these situations.
These are the two types of pooling which are in practice while doing oil and gas lease agreements.
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