Energy companies use shady tactics to get landowners to allow fracking

Energy companies employ persistent and personalized pressure tactics to persuade landowners to permit hydraulic fracturing (fracking) on their properties when signing oil and gas leases.

Even when landowners decline, these companies often use legalized compulsion to proceed with fracking, according to a new study.

“Hydraulic fracturing is a controversial issue, but a lot of the controversy has been focused on the big-picture consequences, for the climate and the economy,” said Benjamin Farrer, the study’s lead author and a former PhD student at Binghamton University.

“One of our hopes for this paper is that it will encourage policymakers to pay more attention to the individual experiences of the people who are closest to the issue.”

Compulsory unitization in fracking

Led by researchers at Binghamton University, State University of New York, and the University of Nevada, Las Vegas (UNLV), the study uncovered various types of shady and unsavory practices employed by oil and gas companies against landowners.

Because many fossil fuel reservoirs in the United States are located under private land, energy companies must negotiate with landowners, offering compensation for access to the minerals beneath their properties.

However, a well is only economically viable if it can drain a large spatial area, which requires pooling multiple mineral claims into a single working contract.

Landowners may hold out for various reasons, including concerns about health risks, financial dissatisfaction, or simple unavailability.

This is where compulsory unitization comes into play. In many oil- and gas-producing states, this law permits companies to compel remaining landowners to join a drilling project if a certain percentage of the land atop a reservoir has already been leased.

For instance, if 65% of the landowners on top of a gas deposit have given permission, the remaining 35% can be legally compelled to comply.

Vertical and horizontal drilling

“Under conventional vertical drilling, the use of compulsion generally was a net positive for mineral owners — it prevented holdouts looking for better contract terms from tanking a project, and it allowed small properties or properties along the border of a drilling area to force themselves into a contract if the drilling company tried to shut them out,” explained Robert Holahan, associate professor of political science at Binghamton University and co-author of the study.

“Under fracking, though, where the drilling happens horizontally under multiple properties, compulsory unitization can force mineral owners who otherwise don’t want to lease their property to do so.”

Fracking practices on Ohio landowners

The research team, which included Holahan, Farrer, and former Binghamton students Kellyanne Allen and Tara Riggs, analyzed data from Ohio, a state that experienced a fracking boom in the 2010s.

They obtained the full database from Ohio’s Department of Natural Resources, covering compulsory unitization applications from January 2014 to April 2021.

The team reviewed a random sample of 37 applications, which documented each time a landowner was contacted about leasing, including the method, date, and outcome of the contact.

Examples of fracking pressures on landowners

In one notable case, a landowner opposed to signing a lease was persistently pursued by a company representative, or “landman.”

Despite the landowner’s refusal to engage, the landman continued to call, send letters, and even visit her home. When the landowner did not answer the door, the landman spoke with her neighbors and family members.

In another case, a landman contacted a landowner undergoing radiation treatment at a hospital. The landowner expressed interest in discussing the lease after returning home, yet the landman continued to press the matter while the landowner was still hospitalized.

“Overall, we find widespread use of personalized tactics like phone calls and visits, as well as evidence that these tactics are used persistently, as landmen make multiple attempts over multiple months to contact landowners. We also find that many negotiations end in compulsion rather than in consent,” the researchers noted.

Broader implications for energy policy

The study’s findings indicate that compulsory unitization is being utilized not only with economic holdouts and unreachable landowners but also with various types of landowners, underscoring the widespread use of these pressure tactics.

“Legal instruments, like compulsory unitization or pooling, are often designed to solve one type of problem (ensuring all mineral owners get a fair share of revenues from an oil or gas well), but eventually can be used for other purposes (forcing mineral owners to lease their rights),” said Holahan.

“Effective resource policy requires a continuous updating of the law as technologies change.”

Ongoing research and future studies

The research team is conducting a follow-up survey with individuals whose conversation records were analyzed in the study to verify the accuracy of their findings.

Additionally, Holahan and his colleagues have surveyed 3,000 residents in the Twin Tiers of New York and Pennsylvania to gauge opinions on drilling and wind turbines, aiming to better understand how, or if, ‘green energy’ is viewed differently from ‘conventional energy’ among property owners.

The full study was published in the journal Natural Energy.

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