Well Pads and the Foreign Gas Exception

Well Pads and the Foreign Gas Exception

Note to the Reader: Gold, Khourey & Turak is the Ohio Valley’s leading law firm representing landowners in all oil and gas related matters. Our goal is to provide landowners with more compensation, better protection, and an agreement on their terms. We are committed to helping landowners and not big business. A representative of the oil and gas company shows up at your door and hands you some papers and a map of your property. You are told the company wants to install a well pad on your property. When you look at the map, it shows a 20, 30, or even 40 acre well pad site (or even multiple pads) right in the middle of the best hayfield on your property—and less than 800 feet from your home. You see that they want to use your private drive as a permanent access road and you can only imagine the diesel truck traffic it will bring right by your home. And, when you see what the company is offering in exchange, you’re shocked!

When you signed your oil and gas lease several years ago, you never expected to end up in a situation like this. . .

Unfortunately, this is precisely the situation many landowners in Marshall, Wetzel, and Tyler Counties are now facing. Several oil and gas companies have developed comprehensive, large-scale plans to install a system of well pads that interconnect with each other. Recently, representatives have been contacting landowners to sign surface site agreements.

If you have been contacted by a company seeking to install a well pad or other surface site on your property:

Know Your Rights!

Read Your Lease! Unless you specifically negotiated for a “no surface” lease term, the oil and gas company usually has the right to reasonably utilize the surface of your land to produce the oil and gas in the production unit. Therefore, in the usual case, you won’t have the ability to contest the company’s right to use your surface, but you are entitled to be compensated for damages. GKT can review your lease and help determine what you are entitled to receive.

The Exception! Pay close attention to any language in the company’s proposed agreement regarding pipelines. These well pad systems are wholly dependent upon the ability to transport foreign gas. Foreign gas is very simply any gas that is not produced from the unit your well pad is servicing. Gas is produced from one well pad, inserted into a gathering pipeline and transported to another well pad, mixed with that well pad’s gas, and transported to the next well pad and so on and so on.

Usually, oil and gas leases do not grant the right to transport foreign gas. So, while the company may have you with the well pad itself, you have them with foreign gas pipelines.

What does this mean? The leverage you have from foreign gas likely isn’t going to be enough to keep the company off of your property. They can still install the well pad and shut-in production. However, the foreign gas leverage will give you the ability to demand a price that is fair and reasonable for the use of your property. GKT can help obtain more compensation and better protection for you.

I am currently representing several landowners who have been approached in these situations, and every situation is unique. If you have been approached and would like to schedule a no-cost, no-obligation consultation to review your lease and any proposed agreement, please contact GKT at (304) 845-9750 or complete our consultation form by clicking on the link below:

Contact GKT for your Free Consultation

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