Our little corner of Northeast Ohio is experiencing a new wave of oil and gas exploration, as new drilling and production technologies make extraction of oil and gas from the shale deposits deep beneath the land more accessible. Over the past 18 – 24 months, energy company “landmen” and leasing agents have been talking to area residents, offering landowners leases for what seems like good money, when compared to the twenty-dollar-an-acre leases of several decades ago. But the reality is that your mineral rights can be worth much more than what many of these leases will offer. And the environmental concerns resulting from potential drilling is often not addressed. To further complicate the issue, some of the companies that approach you may actually be contracted by a large energy company. Others may hope to shop your lease to the highest bidder at a later date, and at a much higher price than what was paid to you. So where can a homeowner turn for help?
A Shalersville resident found herself asking that same question when she was contacted by an energy company landman last year. The process, which lasted several months, taught her more than she ever thought she’d know about oil and gas leases, pooling units, and related drilling terminology. Fortunately for her, her brother was experiencing a similar situation in his town, and working together, they found a better solution than either would have achieved alone. The two looked into joining a Landowner Association, but due to minimum acreage requirements, decided to hire an attorney instead. Originally, they got referrals for attorneys in Northeast Ohio, but found that those lawyers had little to no experience with this type of oil and gas lease agreement. An online search of lawyers in Southern Ohio, where they’re already dealing with fracking, yielded their solution. She and her brother hired an attorney from Southern Ohio with experience negotiating safer, more beneficial oil and gas lease agreements.
The plus side for others who are part of their pooling unit is that while signing bonus and royalty percentages are specific to particular agreements, everyone else in the pool must get the same deal regarding other factors — like perimeter around the well site, location of access roads, whether or not storage wells are permitted, maximum depth of drilled wells; all of which must go by most stringent lease in the leasing unit. She feels that if done properly, oil and gas exploration could be a great opportunity for development in our area. And making us less dependent on foreign countries for our oil and gas would be great for the country, too. Her hope is that it’s carried out in the most environmentally responsible manner possible.
“It was a really stressful two months,” stated the Shalersville resident. The phone calls, letters and deadlines escalated. “If you’re critical to the unit, they can simply take it from you. There’s not a lot of choice. Luckily, we found a good lawyer.” After signing the lease, she put all the information away, stating, “You just don’t want to think about it anymore — we did the best we could.”
Chris Gerez, Nelson resident, can appreciate that sentiment. Her experience with land leases started roughly two years ago when she got an introductory letter from Reserve Energy (RE), telling her that they were interested in obtaining an oil & gas lease for her property. She read the letter and she and her family decided against it. In subsequent months, she received several letters, and eventually came to find that RE had signed a significant number of leases in her area. Since the start of the process, the price per acre had doubled. Eventually, a landman came to the house and shared a map of the local parcels where leases had been signed. Gerez was told that the biggest parcels near her family’s property, which are owned by a commercial business and non-resident owners, had signed leases. She was informed that since RE was nearly at the acreage needed to make a “unit” — 640 acres — she had a limited time opportunity to sign a lease and receive a signing bonus. She was told that drilling was inevitable, with or without her consent. She didn’t want drilling in her neighborhood, but she didn’t feel as though she really had an option in the matter. Given what felt like choosing between a rock and a hard place, she signed a lease.
Her mind is somewhat eased by the fact that each property owner’s land that connects to hers have all signed “non-drill” leases, and she has stipulated an amendment to her lease that the drilling company must test water before, during and after drilling. If any issues are found in her well water quality, the company must make amends. Since signing with Reserve Energy, she recently learned that her lease has been sold to Mountaineer Keystone (MK). Representatives from MK have contacted her to say they will provide water testing, as stipulated in her lease, but as of this moment, no water testing has been done. Seismic testing was recently done south of her property, and the out-of-state companies who drafted the local leases, and the out-of-state companies who now own them are quick to assure residents that their processes are safe, and yet, they don’t have to raise their families here. “I don’t trust them,” states Gerez, plainly. “Everyone is out to make a buck.”
As rural residents, Gerez and her family are used to the changes in water characteristics that occur through the normal course of the year to their well water. But now, she’s concerned at every change, wondering, “Is this normal?” She admits that she’s become a little paranoid now, stating, “It’s stressful to have it constantly at the forefront of your mind.” She and her family are plagued by the unsettling feelings of “the industries’ history of problems arising and not being fixed.” To ease her troubled mind, her family takes precautions now, like drinking bottled water. They have also purchased a new water filtration system.
But Gerez acknowledges that financial gain is a huge factor for area residents like her and her neighbors who have signed or are considering oil and gas leases. “With this economy, how can you not say yes?”
When faced with such situations, landowner association may be a valid option for local landowners to consider. These groups, which are formed to educate landowners who are considering oil and gas leasing, help them pool resources to provide each member with a better leasing option than they could typically get as individuals. A local group, the Northcoast Environmental Landowners Association(NELA), will hold a free leasing informational meeting in our area at 6:30 pm on January 17 at the Parkman Community House on Main Market Road in Parkman.[hr] [related_posts]
