Leasing the Mineral and Surface Rights
Natural gas producers begin the process of exploring and producing natural gas by obtaining mineral rights from property owners interested in leasing their land for potential drilling activity. Land professionals, or a &quo;landman,&quo; conduct due diligence and research in county courthouses for information on property records and meet with those owners to develop a lease agreement giving the gas producer the right to produce natural gas and other hydrocarbons from their mineral estate.
The lease typically includes a per-acre signing bonus for a specified number of years and an agreed-to royalty payment to the property owner if a well produces natural gas. A number of market-based factors influence the terms included in each agreement.
- Marcellus Lease Guide - Pennsylvania Environmental Council
- Top 10 Biggest Marcellus Shale Landowner Mistakes
West Virginia has legislation being debated to force pooling of properties for horizontal drilling. This bill was a collaborative effort among many of the stakeholders. The pooling bill is designed to benefit not only the gas industry, but also the surface owners, royalty owners and the citizens of the State of West Virginia. A short list of things it addresses are:
- It rewrites the rules on both deep and shallow wells
- It brings some transparency to the leasing process. If you are forced pooled, you will be paid the same as others in your area and the gas companies have to provide written proof of same to the Oil and Gas Commission.
- Surface owners will be given some say in the placement of wells
- Royalty owners will not be charged any post-production costs
- Gas companies must have leases on 80% of the acreage in a pooling unit in order to force pool
- The Oil and Gas Commission will no longer be totally made up of pro gas industry members. Under this bill, one member will be a royalty owner (not related to the gas industry) and one will be a farmer
- The gas industry, under the new rules, may now force pool those minority and/or missing royalty owners they're always talking about
- WV H. B. 2688
- Proposed Legislation for Forced Pooling in WV Gaining Steam - Beware Mineral Owners
- New Forced Pooling Legislation Introduced Today in House Bill 2688