A renewed oil rush has begun in Colorado. Oil companies are competing to obtain leases from mineral owners in order to exploit a mineral formation known as the “Niobrara” which stretches across large portions of Colorado. The rush began with the drilling of the spectacular “Jake” well in Weld County in 2009 and has been fueled by advances in drilling technologies including horizontal drilling and hydraulic fracturing.
As a result, mineral owners including homeowner associations are being contacted by oil companies and presented with proposed leases. The Denver Post reports that landmen hired by oil companies are increasing using the threat of a controversial provision of the state’s 1951 Oil and Gas Conservation Act known as “forced pooling” to obtain leases from mineral owners. Forced pooling essentially allows a driller to recover minerals from private property without the landowner’s consent. Critics contend that forced pooling amounts to an abusive eminent domain law. Proponents argue that is necessary for the orderly development of the state’s natural resources. No matter your position on the issue, given the substantial amount of oil that is estimated to be recoverable from the Niobrara formation, debate on this issue will continue.