O.T. - Drilling for gas

[CB in central NY]

I am wondering if anyone here has had any similar experiences. A fellow came to my door yesterday. He said he represented a company that was signing agreements with landowners in my area so that a different organization could come in and test-drill for natural gas. They way he explained it, if any useful gas were found on or under your property, you would get a cut of the profit. In addition, the company would improve whatever existing access roads on your property so that they can get to the site. They way he explained it, the well itself would be a very small concrete patch that the company would fence in.

It sounds like possibly a good deal but what are the risks? You are basically granting the company an easement on your land and a lease.

In addition, is there any risk to the water table or the aquifer? My water supply is a natural spring, so I am always concerned about messing around with anything underground, especially if it gets close to the spring.

Any thoughts from folks with experience in this matter would be greatly appreciated, as always. Thanks in advance.

 

[supergrumpy]

long time ago I heard about those small natural gas deposits around the finger lakes, most were too small to retreive commercially, supposedly people would plumb them to their houses for free heat

anytime you mess with the underground you take a risk, is the risk worth the result, your decision

 

[Coloken]

Sounds like the normal thing. Yes , but they are responsible for all damage. Here, there are all kinds of state regulations to protect water etc. Don't know there. I am supprised to find that there might be oil/gas in NY. It gets too complicated for all the advice you will probably get here. All I can say is an oil well sure beats farming. Wish I had one.

 

[Joe(TX)]

A lot of variables here.
Does the person represent a drilling company or is he just buying leases to resell?
Is this a mineral lease(do you have the mineral rights), or is a surface lease for acces only?
To get paid for the gas you have to have the mineral rights. It will take a full acre for the well site plus additional for the pits required while drilling. You pretty much lose control of the property. Have specific terms for cleanup, location, maintaning the site, etc. Time limits on cleanup are important.
There should be no problem with ground water if done properly.
I would talk to an lawyer as well as others in the area you have experiance. Differant area get differant amounts for the lease, property damage(there will be some), royalties, easments, etc.

 

[greygoat]

Check with your county agent to see if this is
legit. or a scam

 

[philcaseinWPA]

I just recently signed a lease with a gas drilling company. There are a lot of things to consider. A typical lease will run 5 years and pay so much per acre per year + some sort of bonus per acre for the first year. How much they are willing to pay depends on how interested they really are. They then have 5 years to drill and find gas. If they don't do anything in the 5 years then you can have the lease written to expire and they have no claim to your gas. If they drill and find gas then you are entitled to a certain amount of the money the gas is worth. How this is figured and what costs can be deducted can vary and should be specified in the lease. A typical payment would be 1/8 th (12.5%). State laws vary but in PA that is the min but usually all you get. Get a lawyer who is familiar with gas leases. Search the internet, talk to neighbors who are also being approached probably. Don't be pressured to sign up today or miss out. A 'landman'came around to me 3 or so years ago and then never returned my calls. I figured it was a dead issue then last year another one showed up from the same company and made a lot better offer. He made several trips back then I did not hear from him for a while but finally we got together and signed in Jan. They may offer to pay the entire 5 year lease up front. They will also probably offer either free gas if they find any or payment for the equivalent. Figure 2-3,000,000 cu ft / year.
Check out these web sites:
http://naturalgaslease.freeforums.org/
http://naturalgaslease.pbwiki.com/
http://www.glossary.oilfield.slb.com/search.cfm
Do a google search. I had a lot more info than these sites but do not have them book marked.
Proceed with caution and good luck.
Phil

 

[philcaseinWPA]

The other comments are good. Get all the information you can. Lots of ways to get taken advantage of but a good lease can protect you.
Actually in NY state there is a lot of gas. North of central PA they are drilling 5+ miles deep into what is called the Trenton Black River and where they hit gas landowners are becoming millionaires. This interest has spread into PA and Penn State became involved and some extention agents started the forum I listed in my other post.
Phil

 

[nsmall21]

yeah, sounds about right. i just signed last august. i got 4 times what my nieghbors did the year before. now another nieghbor is negotiating at 2.5 times what i got per acre. they have drilled 3 wells about 4-8 miles from me in the last year, and are drilling ten more this year. the land man told me that was as high as they would ever go when i signed. gues i shoulda been smarter, as they told the nieghbors the year before the same thing. the lease i signed also alows them to build a pipeline accros my property, as they will not be trucking any of this out. i figured if they didnt drill on me, there was still a chance they could put a line accross, and i had better take whatever they were offering because they could use eminent domain to dig a line and i wouldnt get anything. im in ne pa.
nate

 

[Walt Davies]

I lived in the Delta in California and there are hundreds of gas wells in the area some good some not so good. But they don't make to much of a mess and when gone there is only a small place where the well head is. you can make a ton of money or nothing and everything in between. But its all worth it if you want easy money to flow your way.
Walt

PS hope they don't have a well fire the one in the Delta when i lived there was so load that you not talk over it a half mile away. It could be seen by planes coming in from Hawaii to Frisco.

 

[EWS]

See this link to see what is happening in Arkansas.
Eric
Untitled URL Link

 

[JK-NY]

Not sure where you are located , but there is a LOT of nat.gas exploration going on in Southern Cayuga, Tompkins Countys and points west in the FingerLakes area. There has been alot of people being approached and signed up . They havent come up into my area yet. I know of a couple sites in the Lansing / King Ferry NY area where they have found good amounts of gas and have put in wells.The NYSDEC is in charge of this sort of thing in NY, I would check online or call your local DEC office for info, along with checking out the websites mentioned.

 

[Anonymous-0]

That's the way the oil and gas business normally operates. Landman negotiates the leasing, then the company comes in and drills. The amount of royalty you can retain and the lease bonus depends on your negotiating skills and what the going rates are in your area. The company has an idea of how much gas they might find, and that determines how much they are willing (how much they can afford) to negotiate. Hiring a lawyer is always good advice but how much land do you have? If less than 5 or 10 acres, then it might not pay to involve a lawyer. If more, then a lawyer would probably be a wise investment, but make sure you find a lawyer that knows oil and gas, otherwise you will be paying for him to get an education.

If you only own a small amount of acreage, then your acrege would be "pooled" with your neighbors to create enough acreage to justify drilling. So your interest would be proportionately reduced, and your neighbors may not necessarily have the same lease terms - they may get more or less.

And of course there may not be any gas down there, so they will just plug the well and that's the end of it.

It would take several books to discuss this topic, but chances are this could be a good deal.

A good resource for you is:

http://www.wvsoro.org/oil_and_gas_guide/index.html

Good luck.

 

[Anonymous-0]

I didn't read all the other posts but I know up here that anytime a company is considering doing any drilling or similar work, they have to send out a notice detailing what they want to do, to all nearby land owners so any concerns or objections can be heard. It also has to be approved by the Gov't. and county it's in. Dave

 

[Bill in Colo]

We currently have two wells on our ranch and plans are for several more,none in production yet but will be by July. Gas co is in proccess of premitting a compression and treatment facility,state and fed regs.
1.leases are based on mineral acres owned, we have alot of land in the west with the Gov holding the minerals.Old leases were 10 per acre bonus and 1 per year.. Accept nothing less than 50 per acre per year or longer than than five years make sure that if a well is shutin you still get annual payment of the mineral acre amount.
2. Ask for 20% interest and accept no less than 15% the old days of 12.5% are gone.
3.If you only own small acreage it it possbable to have a no drill lease.
4. You may want to make certain areas of your farm off limit to surface disturbence. All planned wells in this area are directionaly drilled.
5.Get togather with your neighbors I negoiated the lease for about 20 + mineral holders.
6. You may want to set damage rates for pipeline and other facilities ahead of time.
7.Don't get in a hurry if they want it they will pay.

 

[MadMallard.....NY]

I was apporached by a landmen for two different gas companies. I gave a copy of my addendum to each. One said he be in touch in four days-that was 9 months ago. The other company was willing to negotiate. We bypassed the landman and talked directly to the gas company. The one thing I did was to talk to my neighbors to pool our property, over 450 acres, and negotiate as a unit with individual leases. We got four times the going rate for our leases then property owners that negotiated on their own. Get everything in writing no matter how minor. That's what the addendum is for. If you have to go to court and it's in the addendum you at least have a leg to stand on. Good luck.

 

[kyplowboy]

We don't have a whole lot of gas round here but there has been several oil booms over the years. Here is what I learned from my grandfather who worked in the oil field for over 40 years. DON'T SIGN NOTHING!!!!! WITH OUT AN ATTORNEY LOOKING IT OVER AND PUTTING IT IN TO PLAIN ENGLISH FOR YOU. It my cost you a few hundred to get a lease looked at but that in nothing compared to the cost of cleaning up a mess you may get left with. Remember the "right" to look around under your place should be worth something to them. "If they ain't got front money, they ain't got money to do anything when they find something." There are alot of well getting going round here now. Some of the old wells that made 3 barrels a week 20 years ago have been setting idle. Looks like with oil pushing $100 these people could put down some rock and not have people drive'n round in corn and hay fields cutting ruts 3' deep. Just a daily observation.

Dave

 

[2x4]

NO they cannot use imminet domain. They will tell you this or hint at it but they cannot use it in your case. It only applies to large interstate pipelines. It cannot be used on small local lines. They will probably use 2 inch plastic to go thru you. 30" steel line for immenent domain.

 

[RayP(MI)]

Just exactly what Plowman says - GET AN ATTORNEY. It will pay you in the long run. Be sure you get one experienced in such leases.

 

[Alex.C]

My dad is in oil&gas and unless you own a potion of the minerals which is the ownership of rock under the soil at least here in Texas you can't get any money or deny access to the well or drill site and you got to remember if you do own a part of the minerals, if they do find gas you get mineral interest which is dished out according to the amount of the minerals you own. If you don't own any of the minerals and the mineral owner gives them permition to drill all you can do is sit back and watch. Have the company owner(if its a small company) come and tell you what there going to do and all the hazards like blow outs and such.

 

[Anonymous-0]

From the Cornell Cooperative Extension, some other links in there, might be some help...
Natural Gas Leasing in South Central NY State

 

[S.Crum]

Interesting thread! A company just finished seismic surveys in this area and across my property here in northern central Pa 5 miles south of the NY border. Fella stopped by a week ago to have me sign off on a form that no damage was done to my property. While I was reading it I asked if they found anything. He only stated that there would big some big changes in my life in the next 3 to 4 years. Hmmm

 

[ny bill]

some good advice already here. don't sign anything until a lawyer EXPERIENCED IN GAS LEASING looks at the lease. until the lease agent is on your porch once a week, they're just fishing anyway. the first offers are way too low for what they're willing to actually pay. there is deep gas in the trenton black river part, but there is also shallow gas that could stretch pumping out for years. both levels of gas need to be covered by the lease. new york farm bureau has worked on this issue extensively in the southern tier. contact your county president.