From the Western Environmental Law Center, January 2023

From the Letter of Mike Scott, National Oil and Gas Campaign Manager, Sierra Club, September 16, 2023

From 9 to 5, I’m the Sierra Club’s Oil and Gas Campaign Manager. When I’m not working, you can find me hunting, fishing, rafting, or hiking in Eastern Montana where I live. I love this place, and one of the reasons I live here is so that I can enjoy the outdoors.

Oil and gas production has long been a part of this region, which brings many problems. Radioactive waste from drill rigs, brine water (often saltier than the ocean), and even crude oil ends up in our rivers and on our land. Pumpjacks (those big pieces of equipment that look like a nodding donkey or horse head) sit idle and rusting on the landscape. I live between three large oil refineries, and my farm actually was covered in oil from the 2011 Silvertip pipeline spill in the Yellowstone River. Oil and gas is everywhere in my community and in this part of the country.

That is why we need stronger rules that limit oil and gas exploration!

When oil and gas companies are allowed to operate however they see fit, it leads to pollution and accidents that impact the land, wildlife, and people. For example, unsealed, abandoned wells can leak oil and other pollutants into the air and water. This means drinking water can become contaminated, and the fish we eat are riddled with toxins. It also means a visit to public lands near oil and gas production could expose us to pollutants in the air that can make us sick.

Right now, the Bureau of Land Management (BLM) is updating its oil and gas leasing rules. This is a big deal because the current rules are broken and outdated, leading to the terrible impacts I’ve seen in Montana and across the West. The proposed rules don’t fix everything, but they do start to make reforms that will hold oil and gas companies accountable for their operations. This proposal will also end some of the built-in subsidies that oil and gas companies hoard when they lease public lands. A more transparent process will mean that our perspectives are finally taken into account before dirty fossil fuel projects are dumped into our backyards.

Join me in telling the BLM to strengthen these rules and finalize them as soon as possible!

>> Thanks for all you do, Mike Scott, National Oil and Gas Campaign Manager, Sierra Club

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SUMMARY APPROACH ~ For decades, the Bureau of Land Management (BLM) has sold off public lands to oil and gas companies for pennies on the dollar. This broken system has locked up vast amounts of land from any use other than extraction and left thousands of dangerous and polluting abandoned wells with our communities footing the bill to clean them up.

The BLM just proposed an update to leasing rules that would finally hold fossil fuel companies accountable for the damage they cause, end subsidies for oil and gas producers, and add competition to the leasing process. Tell the BLM to strengthen these rules and finalize them as soon as possible!

Take Action Now!

We can do better, we need to do better, let’s try harder!

Press Release from Karuna Jaguar, Center for Biological Diversity & Peter Hart, Food & Water Watch, July 29, 2022

WASHINGTON— More than 350 conservation and community groups, representing millions of people, called on President Biden and Senate Majority Leader Chuck Schumer today to reject fossil fuel expansion during negotiations over a reconciliation package.

The groups also urged Biden to use the full suite of his executive authority to stop issuing federal fossil fuel leases and deny permits for new fossil fuel infrastructure, and to declare a climate emergency, which would unlock powerful tools to combat the climate crisis.

“Permitting new fossil fuel projects will further entrench us in a fossil fuel economy for decades to come — and constitutes a violent betrayal of your pledge to combat environmental racism and destruction,” the groups’ lettersaid. “New fossil fuel projects will also lock workers into a dying industry and delay the growth in sectors that will support jobs of the future.”

Two provisions buried in the Inflation Reduction Act would require massive oil and gas leasing in the Gulf of Mexico and Alaska, reinstate an illegal 2021 Gulf lease sale and mandate that millions more acres of public lands be offered for leasing before any new solar or wind energy projects could be built on public lands or waters. These leasing provisions lock in decades of additional fossil fuel pollution and continue a racist legacy of sacrificing environmental justice communities.

Greenlighting new fossil fuel extraction is incompatible with climate science and the administration’s climate goals. The science is clear that the president cannot approve any new fossil fuel leases and still stay within the U.S. carbon budget for keeping warming below 1.5 degrees Celsius.

Communities at the front lines of the climate emergency are already dealing with and dying from ever-worsening fires, hurricanes, flooding, heat waves and drought. A recent analysis showed that more than 40% of Americans lived in areas hit by climate disasters last year, a number that would grow if the fossil fuel-friendly provisions in the IRA become law.

Letter signers, including the Center for Biological Diversity, Climate Justice Alliance, Food & Water Watch, Greenpeace USA, Indigenous Environmental Network, Our Revolution and Sunrise Movement, are urging Democratic leaders to reject fossil fuel expansion and stand with the communities that voted them into office.

>>>>> COMMENTS AND QUOTES TELL MORE ABOUT IT!

“We can’t let the renewable energy transition be held hostage by fossil fuel companies,” said Brett Hartl, government affairs director at the Center for Biological Diversity. “The Manchin bill is a devil’s bargain that ignores science and locks us into at least a decade of new oil and gas extraction. There’s a way forward that doesn’t spew more greenhouse gas pollution into the air and harm frontline communities, and it means eliminating these giveaways to the fossil-fuel industry.”

“This bill should not be considered a climate victory,” said Jim Walsh, policy director for Food & Water Watch. “Locking in more drilling and fracking on public lands and waters, billions in subsidies for the myth of carbon capture, and fast-tracking permit approvals for gas pipelines and exports are exactly the policies fueling the climate crisis and harming public health with increasing pollution in our air and water. Lawmakers who support real climate solutions should reject this deal until the fossil fuel handouts are removed.”

“The Inflation Reduction Act may be the most Washington can offer right now, but it’s a far cry from what’s actually needed to address the climate crisis,” said Erich Pica, president of Friends of the Earth. “The investments in renewables, energy efficiency and Superfund clean-ups will make a difference, but communities and the climate continue to be sacrificed to Sen. Manchin’s fossil fuel demands.”

Chamber of WV House of Delegates, 2/9/18

From an Article by Nick Visser, Huffington Post, February 12, 2018

A woman was removed from the West Virginia House of Delegates on Friday after she used her testimony about a fossil fuel-sponsored piece of legislation to list industry donations to state lawmakers.

Lissa Lucas ventured to Charleston to voice her objections to the proposed bill, HB 4268, which would give oil and gas companies the right to drill on private land with the consent of just 75 percent of the landowners. Current law mandates energy companies obtain 100 percent approval before they can develop land, allowing a single person to hold up drilling.

Lucas, also a Democratic candidate for West Virginia’s seventh district, used her testimony to read a list of donations that lawmakers had received from oil and gas companies, information that was publicly available. But shortly into her allotted time, Lucas was ordered to refrain from making “personal comments” about members of the House Judiciary Committee.

“The people who are going to be speaking in favor of this bill are all going to be paid by the industry,” Lucas said, noting that “the people who are going to be voting on this bill are often also paid by the industry.”

“I have to keep this short because the public only gets a minute and 45 seconds while lobbyists can throw a gala at the Marriott with whiskey and wine and talk for hours to the delegates,” she added.

As Lucas read the list of donations, her microphone was cut off. She asked the committee to allow her to finish, and when lawmakers refused, she told them to “drag me off.”

“As I tried to give my remarks at the public hearing this morning on HB4268 in defense of our constitutional property rights, I got dragged out of House chambers,” Lucas wrote on her personal blog. “Allow me to point out that if Delegates genuinely think that my talking about who their campaign donors are ― and how much they’re receiving from corporate lobbyists/corporate PACs ― is an ad hominem attack… then they should be refusing those donations.”

The bill was later passed by the committee and will go to the lower House and state Senate for a full vote, where it is expected to pass, Newsweek reported. West Virginia Gov. Jim Justice (R) has said he will sign the bill into law.

Lucas stood by her actions in her blog post, saying lawmakers should feel guilty about these campaign contributions.

“Refuse any donation that, if someone mentions it, makes you feel personally attacked,” she wrote. “Because that’s not an attack. That’s guilt. And you SHOULD be feeling that. Let that guilt about who you’re really working for inform your votes; don’t let the corporate money do it.”

Committee meeting at WV Legislature

From Julie Archer, WV Surface Owners’ Rights Organization, January 27, 2018

Dear Friends,

The 2018 legislative session is in full swing and you may have heard on the news or via social media that a “co-tenancy” bill (HB 4268) is now being considered by the House Energy Committee. This is one of a series of oil and gas development bills that have been introduced in recent years in various forms and degrees, and which is sometimes referred to as “forced pooling.” A bill passed by the Senate last year (SB 576) contained two forms: “lease integration” or what we call “invisible ink,” and “co-tenancy,” which we called “majority rules.”

HB 4268 deals only with what the industry calls “co-tenancy,” which we are now calling the “cousins” bill. Like last year’s bill HB 4268 is problematic in a number of ways which we’ve outlined in detail below, and we oppose the bill unless these issues are addressed by the committee.

Please contact members of the House Energy Committee and voice your concerns about HB 4268. Urge them to prioritize other legislation before them that will help those most affect by drilling and natural gas infrastructure.

These include HB 2990, which would require continuous monitoring of air, noise, dust, and particulates as recommended by the studies mandated by the 2011 Horizontal Well Act; and HB 3011, which would allow property owners to share financially in the gains from the various interstate pipeline projects, if they are approved and built. (More information about these bills is available here.)

Click here for a list of House Energy Committee members with their phone number and email address, followed by a ‘list’ of emails for all members that can easily be copied and pasted into the ‘To’ field of your email.

On Thursday, the committee heard an explanation of HB 4268 and then delayed further consideration of the bill until Tuesday.

Please act now and make your voice heard. And, thank you for your assistance.

>>> Julie Archer, Executive Director, WVSORO
West Virginia Surface Owners’ Rights Organization
1500 Dixie Street, Charleston, WV 25311

info@wvsoro.org …… 304.346.5891

Monthly Natural Gas Production 2008 - 2016

Mineral owners seek information about gas well laws

From an Article by David Beard, Morgantown Dominion Post, May 26, 2017

Mineral owners gathered Thursday evening to learn about some potential changes in gas well law that could diminish property rights, and to toss around ideas for action. Most of the talk in the meeting room at the Ramada Inn focused on a state Supreme Court Case called the Leggett Case and an industry-backed Senate bill that may rise from the dead, SB 576.

About 20 people turned out to hear from Tom Susman, representing West Virginians for Property Rights; Tom Huber, vice president of the West Virginia Royalty Owners Association; and Steve Butler, administrator of the West Virginia Farm Bureau.

Leggett Case

In the Leggett case, the Doddridge County plaintiffs sued EQT Corp., alleging it has been wrongly deducting post-production expenses from their royalty checks, amounting to 25-30 percent of their rightful income, since 2010.

Last November, the Supreme Court ruled in favor of the plaintiffs. But on Jan. 1, new Justice Beth Walker replaced Brent Benjamin and the court decided to take up the case again. Rethinking a case is rare, Huber and Susman said, and may indicate the court plans to reverse itself.

The case hinges on state code language mandating royalties be paid on gas extracted “at the wellhead.” As Huber explained, changes in the way gas is sold have clouded the issue. Instead of being sold where it exits the well, gas is now shipped to hubs and sold there. So the court seeks to resolve ambiguity in the meaning of “at the wellhead.”

Huber said that the practice of post-production deductions not only deprives the mineral owner of due income, it can and does lead to negative royalty checks where the company indicates expenses exceed the royalty. The Dominion Post previously wrote about this occurring across the country and described some of the lawsuits that ensued.

“We really feel that this is one of the biggest thefts for royalty owners in the state,” Huber said.

Lewis County mineral owner Tom Kopp further explained to The Dominion Post about his situation. His land has three vertical wells owned by three companies, just a few hundred feet apart. The same amount of gas is produced from each, which gets shipped the same distance. Two companies pay full royalties, but one stopped two years ago, claiming transportation expenses were too high.

When Kopp attempted to dispute the charges, the company threatened to start issuing negative royalties — essentially charging them to take the gas they own.

Huber said that if the court does reverse itself, then mineral owners and their supporters in the Legislature will need to make a full-court press to get some protective legislation pass-ed next session.

“We are at a disadvantage,” he said. “We don’t have the deep pockets. We don’t have the fleets of lawyers.”

WV State Senate Bill 576

SB 576 dealt with two topics. One is cotenancy — owners of a single natural gas tract. It allowed the owners of 75 percent of the royalty interest to consent to a lease, in the face of unconsenting or unlocatable cotenants. This part posed few problems for stakeholders.

The other part did. It dealt with joint development, or forced pooling as some call it. It allowed whole tracts to be pooled into a unit unless a lease specifically forbids it. This gained little support outside of the industry.

The bill passed the Senate, but died in the House. Huber said some fear it may be added to the call of the current special session, or another later this summer. Many agree it will return next January.

Opponents regard joint development as a kind of privatized eminent domain — taking land for commercial gain instead of public benefit.

On the other hand, area gas development companies have been posting Facebook advertisements touting a resurrected version of SB 576 as a way to create jobs and boost the economy.

Butler said that the bill contained no real protections for surface owners. It required compensation, but allowed the owner no say in the location of the well — which could disrupt or destroy the production of a farm.

Huber, Susman and Butlers said they aren’t opposing gas well development. They want fair treatment for royalty owners and surface owners. Susman said this was the fourth meeting they’ve held and they plan more around the state.

They plan to work on a package of bills to protect property owner rights and to develop some educational materials to inform property owners and legislators about the issues and needed legislation.

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West Virginia Top Court Reverses Ruling on Gas Royalties

WV State Capitol

WV Surface Owners’ Rights Organization: Final Legislative Update

From an Article by Julie Archer, WV SORO, April 9, 2017

Today is the last day of the 2017 legislative session. You’ve probably heard that the industry’s re-branded forced pooling legislation (SB 576) was officially declared dead earlier in the week by the chair of the House Energy Committee. With the session coming to a close, the other bad bills we alerted you about previously, including the “right to trespass” bills (SB 245 and HB 2688), have also met their demise. This is good news.

Unfortunately, this also means that the various bills on WV-SORO’s legislative priorities list did not make it through the process in time to become law. Although we are disappointed we weren’t able to see these policies passed and implemented this session, we’re pleased to report that our “land reunion” bill (SB 369), which would begin to reverse the trend of separate ownership by giving surface owners a first chance to own any interest in the minerals under their land that are sold for non-payment of property taxes, made it further than it ever had before, having passed the Senate 33 to 1. We are especially grateful to the WV Food and Farm Coalition for their support of this initiative and helping to make the progress we made this year possible.

However, most importantly, we want to thank all of our members and supporters who have took action over the past 60 days. Your calls, emails, and letters to legislators, as well as your letters to the editor made a tremendous difference. Thank you speaking out and making your voices heard. We couldn’t have done it without you.

We also want to thank everyone who renewed their membership in response to our recent newsletter. Your support keeps us going! If you haven’t renewed your membership we hope you’ll continue your financial support of WV-SORO by sending your dues to 1500 Dixie Street, Charleston, WV 25311.

If you didn’t receive a copy of the newsletter in the mail, please email julie@wvsoro.org with your mailing address and other contact information so we can update our records. Thanks again for your continued support.

Fracking Permit Guide and Webinar

Our friends at the WV Rivers Coalition (WVRC) have created a Citizen’s Guide to Fracking Permits in West Virginia to help citizens submit meaningful comments to the WV Department of Environmental Protection on the various permits the agency issues for activities related to natural gas development. This includes well work permits, construction permits related to pipelines and other infrastructure, and permits related to waste disposal (injection wells and landfills).

WVRC and Downstream Strategies will be hosting a free webinar on the guide on Wednesday, April 12 at 1PM.

Citizen involvement helps to hold permitting agencies and companies accountable to the law. It’s also an important way to speak up for the value of our land, our waters, and the well-being of our communities. Click here to register for the webinar.

• >  >  >  >  >  >  >  >  >
• West Virginia Surface Owners’ Rights Organization
  1500 Dixie Street, Charleston, West Virginia 25311
  304-346-5891
  Join WV SORO

Uncompleted Well Pad in State Forest

Gas Company Wants New Ruling on W.Va. Royalties

From an Article of the Associated Press, WV Public Broadcasting, December 22, 2016

A Pittsburgh-based natural gas producer has asked West Virginia’s top court to reconsider its recent ruling that gas companies cannot take deductions for post-production costs from royalty payments to the state’s landowners for mineral rights.

The State Journal reports EQT Production Co. wants the Supreme Court to withdraw its November ruling and rehear the case.

The ruling was requested by the U.S. District Court for the Northern District of West Virginia, where Patrick Leggett and several other mineral rights owners sued EQT, arguing the company was improperly deducting fees from royalty payments.

Leggett owns a farm in Doddridge County where EQT has about 20 wells. He says the company deducted 25 to 30 percent from royalty payments for years.

EQT’s lawyers argue the court misinterpreted state law.

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Pa. still fighting over royalty money from forest drilling

From an Article by Marie Cusick, PA StateImpact NPR, December 19, 2016

Photo: An uncompleted well pad in the Loyalsock State Forest.

The Commonwealth of Pennsylvania continues to haggle with natural gas companies over royalty money it believes it’s owed from drilling on state land.

There are 386,000 acres of publicly-owned forest land leased to gas companies, and like private landowners, the state has had problems getting paid properly.

In September StateImpact Pennsylvania reported the Department of Conservation and Natural Resources (DCNR), which manages state forests, recovered $1.3 million in royalty money over the past year, after ramping up auditing efforts and hiring a new accountant to oversee the issue.

In the past three months, the department has recovered another $150,000.  “As the DCNR identifies discrepancies in the amounts received, it works toward a resolution,” department spokesman Terry Brady writes in an email. “Pending audits and resolutions may result in the collection of additional corrected royalty amounts. ”

The department has repeatedly declined to say how much money it believes it’s still owed.

A 2014 report by StateImpact Pennsylvania shows DCNR has spent years disputing payments made by some drillers. Internal emails show the agency complaining about inaccurate or murky reporting on everything from how much gas is produced at wells, to its selling price.

See also: www.FrackCheckWV.net

Southwestern Energy paid $5 billion for Marcellus & Utica holdings from Chesapeake Energy in December of 2014

Times are tough financially for frackers (and not very good for the rest of us either).

Essay by S. Tom Bond, Retired Chemistry Professor & Resident Farmer, Lewis County, WV

Seeking Alpha, an investment newsletter, carried an article called “Natural Gas: Death By One Thousand Paper Cuts… Then A Huge Axe Wound.” That author was thinking about the problems of investors who speculate on natural gas, trying to buy low and sell high. For them it has been coming out the other way around, buying high and selling low, all last year, but especially in the fall. The article was written at the end of October, when gas was at $2.281 per mmbtu. It had been $3 in May. Marcellus Gas.org gives November cloud sourced prices to royalty owners of $1.73/Mcf. (The Mcf in this case having slightly more energy than the mmbtu unit.)

The real hit though is being felt by the over-extended companies that find and produce natural gas. The case of Chesapeake is familiar, the flamboyant Aubry McClendon, who started the company got it seriously in trouble and they eventually kicked him out. The new CEO has said more than half of the deals Chesapeake had when he arrived were clear losers. They are still in trouble. Chesapeake stock lost 22% in 2014 and the CEO compensation was $14.7 million, earning it the position of 25th in Yahoo finance list of worse-performing CEO’s for that year.

That list is interesting. Looking further at it, Nabors, a company that actually does the drilling, made it at 24th; Weatherford at 19th, Kosmos 17th; Continental Resources, 14th; Southwestern (which bought Chesapeake’s old office in Jane Lew, my Post Office town), 13th at a 30% price decrease; Range Resources, 10th, with a loss of 35% in stock value; WPX, a big fracker at 8th; Whiting Petroleum Corporation, 6th; Cobalt International Energy, 4th, Ensco PLC (an offshore company), 3rd with a 47% loss; and in first place, Linn Energy, with a drop of 67% in 2014. Then an 80 % drop in 2015. Linn CEO compensation was $10 million in 2014!

“Energy companies” were the worst performing sector of the S&P. Real Money, an investment site, recently had an article “Balance Sheet Worries Spell Doom for These 4 Energy Names.”

The first on the Real Money list was – Chesapeake! It was the worst performing stock in the S&P 500 in 2015. (List above was for 2014.) As of the third quarter, Chesapeake Energy has $3.6 billion in current assets but it has $4.6 billion in current liabilities.

Second on the list was Southwestern, also mentioned above. The article says, “This Texas-based company proved that one company’s trash is another company’s, well, trash. Late in 2014, Southwestern Energy acquired Chesapeake Energy’s wells in the Marcellus and Utica shales.” The stock fell 74% in 2015. “As of third-quarter earnings, the company has $570 million in current assets to cover $782 million in near-term liabilities. While the company does not have any debt coming due in 2016, it does have a hefty debt load coming due in 2018, which includes two notes that total $950 million and a term loan the company announced in November for $750 million.

Ultra Petroleum is third, its shares fell 82% in 2015.

Fourth is Consol Energy. It bought the exploration and production business of Dominion Resources in 2010 (including drilling rights under the Lost Creek Storage Field, where my surface lies). The article states, “Fortunately, the company does not have any significant debt obligations coming due until 2022. However, Consol Energy has $970 million in current assets to cover $1.9 billion in short-term liabilities, as of the third quarter. Shares of the company were down 77% in 2015.”

As I mentioned in a previous article, somewhere in the high 30′s of exploration and production companies (out of a total of somewhere in the 50′s ) have taken out Chapter 11 bankruptcy. This allows reorganization. Chapter 7  (liquidation) bankruptcy causes the company to disperse its holdings to creditors and that  is the end of it.

Public opinion is slowly coming around, too. According to Leslie Stahl in 60 minutes, “Taking short cuts and human error are endemic to this industry.” “Natural gas has been the ugly step child of the national energy debate, never getting the political muscle of coal or oil.” Except in West Virginia, of course.

The fracking industry doesn’t want federal regulation. You’d think dealing with one set of rules for all states would make it far easier for them. But the federal government is capable of research and is somewhat less subject to direct political influence. It is easy to get the puff pieces that influence people who never see fracking from legislators and their support for favorable legislation. Some of it is pretty obvious. Recently a legislator published a favorable article, and subsequently a permit was published for a well on his property.

Another problem for frackers is the regular appearance of new research that contradicts their pretense that “fracking never hurt anyone.” Research on health hazards, property value declines, public water contamination, and other nuisances has been coming out for years.

Some recent health research titles are: “Fracking plays active role in generating toxic metal wastewater, study finds,” “Fracking’ Linked to Low Birth Weight Babies,” and “New study connects fracking with lower sperm count.” Some are quite ominous: “Malignant human cell transformation of Marcellus Shale gas drilling flow back water.”

The recent connection between fracking and earthquakes is very bad publicity, since these people have a clear claim to monetary damages. The huge waste of gas by the fracking industry is under attack. The Porter Ranch leak going on for months in California is bad news for the industry. It is comparable to the Deepwater Horizon spill in the Gulf of Mexico. The article “Why are Range Resources executives selling their stock?” created considerable interest. “Texas Fracking Zone Emits 90% More Methane Then EPA Estimated” ties government complicity to corporate interest, as did the Public Herald’s report finding that the Pennsylvania DEP fracking complaint investigations are “Cooked & Shredded.” All the articles about divestment of oil and gas stocks by large owners must have hurt also.

Times are tough, fellows. When your costs for removing fracked oil and gas are $20 to $40 more per barrel or barrel-of-oil-energy-equivalent, you face serious competition from the Saudis, Russians (who have five and a half times as much gas, all conventional gas. compared to all the U. S. reserves, including fracked gas) and others overseas. That $20 to $40 difference doesn’t count the damage you do in the fracking fields, either. When the general public catches on to this, it is going to be worse, too. With the cost of wind energy decreasing by 60% in the last six or seven years and the unlimited sun power being captured with greater and greater efficiency, it’s going to be real tough. Fellows, your political activities are not enough to overcome your cost disadvantages now in the near term.  So what will the future hold?

Neighborly Greetings also from Engage Mountain Maryland

WVU Extension 2015 Oil and Gas Publications

Dear All,

Below are links to three oil and gas peer reviewed publications developed in 2015 by the WVU Extension Service Oil and Natural Gas Team.

I hope they will be of benefit to you or someone you know.

They are available on the WVUES Oil and Gas Website:

>>> Forced Pooling and Dispute Resolution: http://anr.ext.wvu.edu/r/download/222182

>>> Careers in the Oil and Natural Gas Industry: http://anr.ext.wvu.edu/r/download/209241

>>> A Landowner Checklist for Replanting Areas Impacted by Natural Gas Development: http://anr.ext.wvu.edu/r/download/222446

Happy Holidays and Best Wishes in 2016.

Sincerely, Georgette Plaugher

West Virginia University Extension Service

Oil and Natural Gas Education Program

Program Coordinator, Georgy.Plaugher@mail.wvu.edu

Telephone: 304-329-1391

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See also:  www.FrackCheckWV.net and www.engagemmd.org

and www.Marcellus-Shale.us

There is Deceit in Leasing as Practiced Yesterday, Today, and Tomorrow?

Essay by S. Tom Bond, Retired Chemistry Professor and Resident Farmer, Lewis County, WV

We are learning that our society, at the top and now working down, goes on the old principle of “anything I can get away with.” Standards of ethics and behavior, which applied a generation or two previously, are largely forgotten. There has always been a crust of this at the top and a lager at the bottom of the social scale which practiced this ethic, but the middle is more and more crowded by them. One must be more self-protective.

Nowhere is this more conspicuous than in mineral leasing, both in what is written in the contract and how lease taking is done. The first John D. Rockefeller was quite religious, but his brand of Christianity didn’t have much, if any, sense of fairness. It involved a sort of social darwinism. He said, “The growth of a large business is merely a survival of the fittest.” Born the son of a con artist, his Standard Oil gained control over 90% of the U. S. oil business.

Standard Oil was broken up by the federal government as a trust (illegal monopoly). Five year later it was reorganized as a holding company (which owned the fragments of the previous Standard Oil) and had to be broken up again. Some of the worst features go back to that time and his company. One in particular is the habit of leasing not only the drilling target layer but also “all oil and gas” as long as any of either is produced on the leased property.

As a friend once described it to me, from “heaven high to hell deep.” Such leases, taken originally as much as 100 or more years ago still hold today, although the land ownership and the company ownership have changed and the original owners are beyond memory – only names on paper in the courthouse.

Then the idea of separating estates came into existence so the children of the original owners of the lands could receive the “royalty” from oil and gas extracted, but the surface was sold to someone else. The royalty was pure gravy and usually was divided among the original owner’s children, and they divided it when giving to the next generation, which causes several kinds of headaches, both for mineral owners and for producing companies.

If a lease runs out, mineral ownership is still divided. And all mineral owners must be looked up if it is to be leased again. Royalty checks get smaller each generation when divided this way, and have gotten difficult to handle. Record keeping and taxation are a headache for the state.

The situation on my farm is instructive. It was leased in 1934 by my predecessor’s predecessor, a highflying physician in Buckhannon. He was an absentee landlord who had gone broke, but whose father in law, one of the wealthy Bennett family in Lewis county, bought it back at the courthouse steps. I called his daughter, who was the spokesman for the ones who inherited it. She could not even figure out which of the farms her father owned that I was talking about!

This rentier (as the economists call it) mentality cares no more about what happens to the land or community than the blind investor who only cares about increase on his investment. There is a single value in their system of thinking. They will sign about anything the company puts in front of them to keep that easy money coming. Bad for the future, for the environment, for the community and bad for the present surface owner.

Friends and I thought about this situation many years ago and decided it might be a good thing anyway. If it hadn’t, northern West Virginia might have become like much of the southern part of it. There the land has few areas suitable for farming, so coal companies bought it all, and today there are many large company-owned land holdings, and in places the ordinary citizen can’t even find a place to have a residence.

Another long-standing complaint is leases that include other features than oil and gas extraction, particularly for pipeline rights of way. They need to be able to drive along the pipeline, but the description of their need is sufficient so if they need to put in a pump station later, they have a road to it along the right of way. They sometimes call for waterlines, telephone, telegraph and electricity lines!

The lease man is at the bottom rung of the corporate ladder. If you want something outside the company plan, such as to go around a spring, he has to go back to his boss, and he to his boss who knows how far. Time consuming at best, this is more like a screening your request has to go through. Minor changes in a lease can be made, though. Write it on the contract and the lessor and the leaseman must initial it. Beware of the lease man who claims to make a verbal agreement; if it is not written on the contract, they will just laugh at you later when you try to get what you were promised.

One of the big complaints now is what is called “pooling” A company will decide on a drilling plan that includes several tracts. Laws proposed by the industry would allow it to take the rest after getting a minimum of 80%. This is effectively the same as eminent domain used for private gain. If the supply of drillable land was running out, there might be some public good, but leased land is abundant at this time. If it has to be condemned should the driller be allowed to put the well on the condemned land for his convenience, too?

There are endless horror stories about how the leases are executed. Pipelines are laid at a bad time of the year, spoiling hay harvest, or finished up in the fall too late for ground cover to be established before the winter rain. Fences are not replaced, animals are killed. I know of one case where they broke the pelvis of a nursing cow, which, of course could not be sold or utilized and had to be shot and buried. The calf had to be sold immediately, rather than as a weanling. You hear about roads not rocked because the work was done in warm, dry weather is a common complaint. Wells drilled so close to schools the noise and odor is strong. Children are apt to be more vulnerable to toxic substances, too.

Lessors do it once in a lifetime, leasemen do it several times a day. Lawyers are constantly looking to get more for the company. People engaging with a drilling company need to talk to other people who they know are knowledgeable, and if they can find one that is not biased for the companies, consult a lawyer. It’s tricky business, and risky from top to bottom!

See also the recent article on the XTO landman who defrauded West Virginians.