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Sep
30
Written by:
news editor
9/30/2010 1:00 AM
9/30/10 As many property owners have learned, oil and gas drilling companies are seeking to lease the rights to drill on local private property.
Research Strongly Encouraged Prior to Signing Drilling Lease
by Sean Logan, Director
Ohio Department of Natural Resources
 As many property owners have learned, oil and gas drilling companies are seeking to lease the rights to drill on local private property. This is taking place throughout eastern Ohio. This new pursuit of leased rights reflects the oil and gas potential being found in the Marcellus Shale formation, which is located between 5,000-6,000 feet underground.
The Marcellus Shale formation has provided significant returns for companies drilling in Pennsylvania and West Virginia, and the landowners they lease from. These companies are taking advantage of new technologies that enable them to access reserves that were, until recently, inaccessible. These companies anticipate similarly profitable returns from Ohio wells.
Landowners are concerned about their rights and responsibilities should they choose to lease or not to lease. Neighboring landowners are concerned about the impact on their land, water and quality of life.
In late June of this year, Senate Bill 165 was passed which strengthened oversight by the Ohio Department of Natural Resources (ODNR) for the permitting, drilling and production of natural gas and oil wells in Ohio. The new laws enable ODNR to put more inspectors in the field to ensure Ohio's oil/natural gas laws are followed. Besides additional inspectors and oversight, the legislation also gave ODNR more tools for assuring that rules are followed, and provided new enforcement powers to deal with irresponsible drillers. We are now in a solid position to manage the rush of new activity, and to provide concerned citizens with a regulatory framework that promotes sound business and safe practices.
But landowners have their part to play. Per-acre price offers may seem high. Please do not let these offers cloud the evaluative process you need to take prior to signing any lease.
When in contact with drilling company representatives, landowners need to be diligent in their research prior to leasing their rights. Talk to your neighbors; research those companies requesting your mineral rights. Seek legal counsel knowledgeable in the leasing of oil and natural gas.
Up-front work in negotiating the lease is essential to the success of the agreement. Variables may include duration of the lease, the location of access roads, the placement of the wellhead and storage tanks, and other considerations. Remember you will not be able to change the terms of an oil and gas lease once signed.
The current interest in eastern Ohio is generally associated with drilling in the Marcellus Shale. But below the Marcellus lies the Utica Shale, a formation we are just learning about. The Utica represents a source of natural gas that may one day prove even larger than the Marcellus. And whatever lies below the Utica remains largely unknown. The point for landowners to remember is that a lease on your acreage may involve drilling only at Marcellus depths, it may include all mineral rights at any depth, or it may include some other combination of variables. Again, the advice of an expert is highly recommended.
Want to learn more? Visit the Division of Mineral Resources Management’s Web site at http://www.dnr.state.oh.us/mineral/faqlandowner/tabid/17871/default.aspx. The site provides extensive information on oil and gas leasing, permitting and drilling.
The Ohio Department of Natural Resources ensures a balance between wise use and protection of our natural resources for the benefit of all. Visit the ODNR Web site at www.ohiodnr.com.
For more information, contact:
Mike Shelton, ODNR External Affairs
614. 265. 6891
Heidi Hetzel-Evans, ODNR Media Relations
614. 265. 6860
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