Oil & Gas Question: (Tyler, Howe: mineral rights, lease, to buy)

[jimboburnsy]

Let's say that you own some land out in the Texas countryside (but only the surface estate). The minerals under your land have been leased by an oil company and they decide to drill a well on it.

1) Does the oil company owe you anything for placing a drillsite on your property?

2) Can they simply decide to build a road on your property without compensating you for damages in any way?

3) If they bring in a gas well, can they simply decide to bury a pipeline on your land without compensating you for damages in any way?

[EasilyAmused]

Here's a good source: Oil/Gas: can owner of mineral rights drill on my land?, dear delores, pa dept of environmental protection Same applies for TX. Yes, they can come in and take over, within reason. They will knock down fences and create road to the site if reasonable roads do not exist. There are guidelines and pre-drill agreements are usually drawn up legally.

I'm currently trying to buy more land. and the owner doesn't want to convey the mineral rights. It might be the deal breaker for me. even though they should compensate and should pay a fee to lease above surface space, frankly I don't ever want to deal with it. I've heard bad stories.


Keep in mind that the Mineral Right owner has dominance in Texas. This source has the best explanation.
http://docs.google.com/viewer?a=v&q=...SN1ENunpZXW5yQ

http://geology.com/articles/mineral-rights.shtml Here's another source/

[derekv]

Originally Posted by jimboburnsy

let's say that you own some land out in the texas countryside (but only the surface estate). The minerals under your land have been leased by an oil company and they decide to drill a well on it.

1) does the oil company owe you anything for placing a drillsite on your property? no, the mineral estate is dominant in texas and compensation for surface damage is not required. Although, most reputable operators will compensate you for surface damage regardless.

2) can they simply decide to build a road on your property without compensating you for damages in any way? yes.

3) if they bring in a gas well, can they simply decide to bury a pipeline on your land without compensating you for damages in any way? they will need a pipeline easement, and you are compensated.

d

[WillysB]

The red responses in derekv's post are about the way it works. Drilling companies today are fairly responsible about maintaining the environment. Some will even work with a property owner to put in a road suitable to the property owner's needs, or upgrade an existing facility.

[Poltracker]

In addition to the above, they are responsible not to break environmental regulations. These regulations differ from mineral rights and drilling regs. They are not allowed to create noxious odors and must clean up all spills among other things. Just an FYI.

[EasilyAmused]

Originally Posted by Poltracker

In addition to the above, they are responsible not to break environmental regulations. These regulations differ from mineral rights and drilling regs. They are not allowed to create noxious odors and must clean up all spills among other things. Just an FYI.

Here's a catch though. While putting a pipeline through a neighboring property, they had a "whoopsies." We all had to change from well water to city water. That was huge for many people's personal and farm use. So yes, while the pipeline company paid for the fix, they don't pay for the long term negative effects of the fix.

[Poltracker]

Originally Posted by EasilyAmused

Here's a catch though. While putting a pipeline through a neighboring property, they had a "whoopsies." We all had to change from well water to city water. That was huge for many people's personal and farm use. So yes, while the pipeline company paid for the fix, they don't pay for the long term negative effects of the fix.

Good point

[doss1]

It's amazing that one can't really own land these days like our forefathers did. If it's not mineral rights issues, it's deed restrictions or some kind of easement. With the rate of wind farms giong up, soon you won't have a nice view out your back porch.

[love roses]

My grandma is going through that right now. There is oil on her land in Tyler and a company is going to go in and drill for it. They were NOT happy about it, but my dad negotiated for compensation for anything they do. I know his answers for the questions you have and they are

1)Yes
2)I don't think they have to, but my dad got it in writing that they will compensate for a road on the property.
3) No...I think they HAVE to compensate you for damages.

[jimboburnsy]

Originally Posted by jimboburnsy

Let's say that you own some land out in the Texas countryside (but only the surface estate). The minerals under your land have been leased by an oil company and they decide to drill a well on it.

1) Does the oil company owe you anything for placing a drillsite on your property?

2) Can they simply decide to build a road on your property without compensating you for damages in any way?

3) If they bring in a gas well, can they simply decide to bury a pipeline on your land without compensating you for damages in any way?

Interesting answers guys. Derek, I think you must be in-house.

I posed the questions because I'm curious about how my fellow Texans understand oil & gas law. I ran into a situation recently in which a surface owner had been very poorly advised and it wound up costing him a lot of money.

A1) No. Unless the lease (or deed) specifically addresses special rights for the surface owner, an oil company has the right to use the surface for purposes of exploration and they are not obligated to pay any sort of damage settlement so long as the surface owner's right to use and enjoy the surface is reasonably accomodated. In practice, good-faith operators will generally seek a damage release and work with the surface owner on location placement since it is always better to have a happy, satisfied landowner with a check in his or her pocket - but that landowner is not necessarily in a strong negotiating position.

A2) Yes. Again, the surface owner must be reasonably accomodated but compensation is not required.

A3) This is conditional. If your land is covered by the same lease that the well produces from the oil company can install a pipeline without your consent so long as you are reasonably accomodated and if any trees are destroyed they must pay actual damages. That said, particularly if the company wants to connect "off-lease gas" to the pipeline, it isn't a good idea to rely on an oil & gas lease to preserve a pipeline easement. HOWEVER, be aware that if your land is covered by a producing lease your bargaining position is precarious and getting into an adversarial negotiation is very risky.