Marcellus Shale: Leases signify business partnership

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HANOVERTON, Ohio — The Ohio Farm Bureau Federation wants to remind the public that signing a lease with a gas company during this Marcellus Shale boom signifies a business partnership.

Dale Arnold, director of energy services for OFBF, said his office is getting bombarded by phone calls from residents who have been approached by landmen about leasing their property to gas companies in the past several months.

He said it is easy to determine why there is such a boom in the industry: It has become cost effective to drill through the Marcellus Shale for natural gas deposits.

Drilling in Ohio

Arnold said Washington and Belmont counties have Marcellus Shale wells in operation. In addition, a well was drilled July 31 in Jefferson County.

He added that when presented with a lease by a gas company, it is a time to begin negotiations, not complete them.

“You need to get an attorney. You need to get one now,” Arnold said.

Ohio’s laws

One thing to keep in mind, Arnold told the crowd, was that Ohio’s oil and gas well laws are tougher than the U.S. environmental protection regulations in regards to water and environmental safety.

Arnold told the crowd to watch out for the wording regarding the specific layer leased. The lease should also define what depth it will reach.

Other concerns raised at the meeting include water supply safety, what is being put into the ground during the fracking process, and during drilling, and how to establish a water source level baseline.

References

Another tip from Arnold is to ask for references. Don’t settle for references from people with leases. Ask for at least five references from people have had gas wells drilled on their property. He stressed to ask for more than three because three can be easily obtained, five might not be.

It is also important to make sure the company clearly understands you want the first year’s lease rental and any bonus to be distributed when the lease is signed. Also, be sure to have an attorney put in the lease, the property owner has a set number of days (an example of 30) to cash the check or back out of the lease without cashing the check.

Also be sure to include in the lease, a minimum depth for any pipes that have to be buried on the property. This is especially important if the property is being farmed. Keep in mind any conservation practices you may implement on the property and farm tiling in fields.

Require maps

Include in the lease that any lines have to be clearly identified and marked and they are included on all sub- and above-surface maps. Be sure the lease states that the property owner gets a copy of the maps and one is filed at the courthouse.

Arnold added another tip is to have an attorney include a provision for an escape clause in the lease in case the property owner wants out at the end of the lease. Watch out for automatic renewal clauses that can occur if you cash checks after the lease is finished.

Arnold emphasized that all landowners must be willing to do their homework and be armed with knowledge and legal advice.

About the Author

Kristy Foster Seachrist lives in Columbiana County raising sheep and horses. She earned her degree from Youngstown State University and has worked in both print and broadcast journalism. You can follow her on Twitter at http://twitter.com/fosterk96. More Stories by Kristy Foster Seachrist

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