GAS
DRILLING
UPDATE


Assemblyman
Gary D. Finch
Wants You to Know Your Rights

Pooling & Compulsory Integration
A well may capture oil or gas from more than one property. Therefore, an area called a spacing unit is assigned to each well. If you own the oil and gas rights of your property in a spacing unit, you are entitled to the opportunity, or correlative right, to receive the benefits in the spacing unit. If you lease, the royalty paid under your lease is based on your share of the spacing unit.

If the well operator does not control all the oil and gas rights in the spacing unit, the DEC must address compulsory integration through a separate hearing process after the permit is issued.

Information provided by the New York State Department of Environmental Conservation Division of Mineral Resources.

GLOSSARY
Lessee: The person who leases the mineral rights from the owner in order to drill and operate wells.

Lessor: The person who owns the mineral rights and has executed a lease.

Lease Agreement: An agreement between two or more parties by which a lessee is given the right to enter a property, survey and locate a well site, perform drilling operations, and remove any minerals found.

Lease Bonus: The consideration paid by the lessee to the lessor for executing the lease.

Bonus: The consideration received by the lessor or sublessor on execution of the oil or gas lease.

Exploration Rights: Permission granted by landowners allowing others to enter upon their property for the purposes of conducting geological and geophysical surveys.

Damage Payments: Payments made to the landowner by the oil or gas operator for damages to the surface, to the growing of crops, to streams, or to other assets of the landowner.


Important Contact Information
NYS DEC Region 7 Program
615 Erie Blvd. West
Syracuse, NY 13204-2400
Counties: Broome and Chenango

NYS DEC Region 4 Program
1130 North Westcott Road
Schenectady, NY 12306-2014
Counties: DEC Region 4: Delaware

Leasing state land:
Charles Gilchrist, Chief, Compliance and Enforcement Section
NYS DEC, Division of Mineral Resources
Albany, NY 12233-6500
518-402-8056

For information about what to expect or how to find information on specific existing or proposed spacing units, contact the Bureau of Oil and Gas Regulations at 518-402-8056

For more information about the DEC, visit the Division of Mineral Resources online at: http://www.dec.ny.gov/about/636.html. For more information about the Oil, Gas and Solution Mining Law visit: http://www/dec.ny.gov/energy/205.html

NYS Attorney General’s Office
Regional Office
44 Hawley Street, 17th Floor
Binghamton, NY 13901-4433
(607) 721-8771

Executive Office
The Capitol
Albany, NY 12224-0341
(518) 474-7330


Dear Friend:

Oil and gas are valuable commodities. Their presence beneath your land could mean extra income if you choose to grant a lease to an exploration company. Exploration companies often employ representatives to acquire leases of mineral rights to land with potential reserves of oil and gas.

This outreach guide is to help assist and inform you about your rights if you have been or are thinking about exploring natural gas or oil on your land. It provides basic, general information about the natural gas process; from leasing land to the royalties you receive throughout and until completion of the drilling process.

If you have any questions or concerns, please see the Important Contact Information page on the reverse side of this brochure or contact my office at 315-255-3045 or via e-mail at Finchg@assembly.state.ny.us.

Best wishes,
Signature
Gary D. Finch
Assemblyman
123rd District

Contact Assemblyman Finch

Albany Office:
320 Legislative Office Building
Albany, NY 12248
518-455-5878

District Office:
69 South Street
Auburn, NY 13021
315-255-3045

GENERAL
INFORMATION

What is a lease?
A lease is a legal document or contract between a landowner (lessor) and a company or individual (lessee) granting exploration and development rights to subsurface oil and gas deposits.

Companies will usually present you with a preprinted or standard lease. Review it very carefully and consult an attorney who is experienced with oil and gas leases. Negotiate changes to meet your needs and protect your interests before signing. Get all agreements and conditions in writing.

Entering into a lease agreement does not necessarily mean a well will be drilled on your property. Also, remember that you are granting a right to others which may be viewed as an encumbrance on the property.

Reminder: Please consult an attorney before signing ANY lease.

Before Signing, Think About…
Land disturbance from an access road and drill site. The actual drilling of a well is a temporary activity that may involve a large amount of equipment similar to other construction projects. Be sure that you know how much of your land and which parts of it will be used for access, drilling, production, pipelines, compressors and short or long-term storage of equipment. Have mutually approved reclamation plans incorporated into your lease.

Damage to crops, buildings and other personal property. The lease can also be written to require fences or other safeguards, if needed, to protect people and/or livestock. If not covered in the lease, consider asking for terms that make the company responsible for damage to the latter properties.

Free gas. Leases may provide for natural gas for the landowner’s use if a well is drilled on the premises. If the lease does not specify that the company is responsible for the cost of equipment and installation, then you may have to pay for it. Because of safety concerns, the company may provide a monetary payment in lieu of free gas as an alternative.

Lease Assignment. The lease may contain a clause which allows the company to assign or sell the lease to other firms.

Underground gas storage. Gas production reservoirs are ideally suited for underground gas storage after the gas has been produced. The lease may contain a clause which permits gas storage in return for annual rental payment. As with many other terms of a lease, this clause is negotiable.

NYS DEC’s Role
DEC does not regulate private agreements between landowners and operators. However, DEC’s Division of Mineral Resources regulates oil and gas permits and activity in New York State, whether on public or private land, and is mandated to protect correlative rights, the environment and public safety. Rules and regulations require that well drilling, casing, stimulating, completing, producing and plugging techniques be designed to protect groundwater and to prevent pollution.

Drilling a Well
Once an oil and gas company determines where to locate a proposed well, the company must obtain appropriate permits from the DEC. If the well is capable of production, most of the drilling site will be reclaimed within 45 days. If the well is not completed or is no longer capable of production, state regulations require that a plugging permit be obtained and that the well be plugged and the site reclaimed in accordance with the regulations.

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