We know the extraction of natural gas in the Marcellus and Utica Shale deposits have the potential to bring great economic development and possible negative environmental consequences.
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Q-In your view, from the perspective of a legal expert, what are the top 3-4 things that Municipal Leaders should know, but probably don't?
A-Municipal leaders should know that even though oil and gas permitting and regulation is with the DEP (state) they have certain rights to govern what is and isn't happening with oil and gas drilling within themunicipalities. Zoning ordinances for instance. Noise, truck and weight restrictions on roads. The bonding of roadways from the companies that use them and the right to use or not use certain roadways due to weighrestrictions. The paying for any and all damages that may occur. The notification by the companies operating in their townships of all the operations that are going to happen and an idea when, phone calls or heads up. The notifications of all emergency and fire personnel when certain operations are going to commence, like the flaring of the gas wells. This is a real big thing, there is a 10 to 15 ft. flame coming out of a pipe on the location that will light up the sky at night especially, people need to know that everything is OK and its a safe procedure. They have the right to require the company to provide them a list of all of their service companies that will be operating in their townships and specifically what roads they will be on, etc.
Q-What about local land owners?
A-Landowners need to also have all the notifications by the companies that are doing business up and down their roads and specifically a list of service companies and what they are doing where and why on their properties specifically before anything is done out there on their lands. Just keeping everyone informed will help eliminate alot of problems down the road with Public Relations and public perceptions. Absolute protection of their water resources. They have the right to request that the company test the quality and the quantity both before and after drilling operations even though they may not have a problem after.Right now the state DEP laws says that liability for any contamination is limited to only 6 months after the drilling has ceased, they can request in their leases that this would be liability for the rest of the term of their lease until the production has ended in wells located on theirs or others pooled with them.
Q-What common questions are asked of you and why are they the right or wrong questions?
A-The terms of leases come up often How long will drilling be going on, will the rig be out there all the time until the well dries up? Do you have to come back and frac a well multiple times? -NO not unless something happened with the first job. Where will you get all the water to frac with? Thats determined ultimately by the DEP, they approve all water resources for operations with a special use permit. Who determines where to drill? Ultimately the DEP has the approval for this as well. Do you drill continuously 24/7, yes until the well or wells are drilled, 365 days a year. One Marcellus well from start to finish drilling, if using the same rig would take about a month. Fracing takes about two days for one 3,000 ft. lateral. What aboutthe compressor and pipelines? We need to have these in place because we need to move the gas. The compressor locations are probably the most intrusive of anything as they have several large engines in a building that is operating 24 hrs. 7 days a week, 365 days a year and they will operate as long as the wells and field is in production. They have to be placed on landowners properties where they will not be seen or heard if possible if need be.
Q-What are the advantages and dis-advantages of forming landowner groups?
A-The definite advantages are that no matter how small the parcel of land you have, you will get the same deal, amount per acre, royalty percentage as someone with a larger track and you will be included in the whole deal and not be excluded because your acreage is too small. The larger the landowner's total acreage is within the group the better chances are that they will get the deal that they want to get with the companies. The companies have no choice but to negotiate and pay very close to what the landowner's groups want. The landowner's have more leverage, as there is strength in numbers. The disadvantages are that everyone in the landowner group have to agree with everything together to get the whole deal signeSome people like to do things themselves. Also, the larger the unitization and pooling units the more people will receive royalties from the wells as opposed to just a few.
Q-What can Municipal and School District leaders do to participate in this development?
A-They can have a land rep for leasing come to their school board meetings and listen to the proposition of having their districts property leased for oil and gas exploration. Its to be dully noted that they do not have to have any operations done on their respective properties unless they agree that is what they want to happen. With the advent of drilling horizontally in the shale, the company can literally drill miles below the property and extract the oil and gas from under it without any surface operations whatever. They have the potential to receive thousands of dollars upfront before drilling in the lease rental and have additional money for the life of the well when on production from the royalty percentage. Literally free money to their districts. Make sure like any landowner would, if they are on their own water source (wells) to make sure the company does all the appropriate pre-drilling and post drilling testing. If any drilling is to be done or any pipelines etc. these locations need to be adequately fenced and safety pre-cautions put in place. Definitely have the company notify the district and schools of all operations and when and where. Also, especially when fracing operations are taking place, the company needs to be aware that no trucks will be operating on the roadways when the school buses are running to pick up the children and dropping off later in the day. This can result in possible accidents. Communication like everything, is a huge factor when dealing with these situations between the company drilling and the districts. Safety of the children is of the utmost importance here.
Q-Should land owners or Municipal leaders negotiate directly with competing Energy Companies?
A-In 9 out of 10 cases it would be most advantageous for landowners and municipals to work together with a land group where there is the potential for more support and information that they would in most cases not have access to on their own respectively. Most people just don't have all the facts and key info to help protect themselves and their properties and their futures. Most companies while realizing that they need the landowner as a partner in their business to drill and operate wells sometimes don't always continually treat them as such after they get the leases signed...Unfortunatley. Obviously if these entities deal with a land group, they all have to agree on what the group says and does as one. Sometimes this is easy and sometimes hard and long and tenuous.
By James Cook, Esq. & Team Utica
Call 877-851-0696
or for more information, CLICK HERE
Mr. Cook is the lead council for "Team Utica", a recently formed collaborative. Team Utica was formed to address the growing questions and inquiries not only about the Marcellus shale formations in the Northeast, but the growing interest and opportunities about the Utica formations, which, while somewhat different present similar challenges and opportunities as the Marcellus formations present.
Team Utica is a group of engineers, lawyers and land owner advocates that can advise municipalities, school districts, land owners and others on technical, legal and financial opportunities these formations present. In many cases, these can be done on a contingency basis.
