OIL, GAS BOOM: PROPERTY OWNERS BEWARE
Typical leases rarely protect landowner

Penn State Cooperative Extension Educator Tim Pierson cautions property owners being approached about their subsurface rights to be careful.

"The standard lease rarely protects a landowner," Pierson said. "It's full of legal jargon that protects and benefits the company leasing your property."

In general, Pierson said, a landowner should request separate leases or contracts and payments for: shallow oil and gas; deep oil and gas; minerals; and any rights-of-ways for roads, pipelines or utilities.

One forest owner in Potter County who recently leased oil and gas rights on 585 acres echoed that advice. "Landowners should insist on having the final say on the location of wells, roads, tanks, gates, fences, pipelines, and other aspects of drilling and production," he said.

Annual lease payments are usually negotiable and vary widely from five to hundreds of dollars per acre. The lease rate may link to existing leases with others in a block of land with proven or probable gas potential. The royalty rate for gas is set by the state at oneeighth, or 12.5 percent of the yield value.

Water quality protection is important and usually requires addendums to the standard lease, Pierson said.

"Insist that water wells and developed springs be tested prior to any activities and again after all development and production activity is in place," he advised.

Pierson also cautioned that gas and oil producers are likely to cut trees across a wide expanse to access land.

"Negotiate the location of these cuttings," Pierson said. "Establish the value of your trees in the lease agreement; otherwise you will typically receive minimal compensation for them. The rate will not include consideration for future value or lost potential income."

Soil protection is also important, he pointed out. Leases usually only require returning the land to its original contour and seeding. Landowners can specify the disposal of tree tops and stumps, topsoil replacement, and erosion and sedimentation controls.

There are rules as to how many feet from a structure or a water source a well can be, but by law a surface owner ultimately cannot interfere with the drilling of a gas or oil well and is not entitled to royalties, unless he also owns the mineral rights.