The United States is unique among many countries regarding oil, gas or other valuable minerals that lie beneath the surface. In most other countries, the government simply moves in and takes subsurface minerals without regard to the private property owner’s rights.
Mineral rights may be bought, sold or leased. In the U.S. private companies seeking to extract subsurface minerals must negotiate leasing rights with the landowner. Although the landowner may not be entitled to payment for whatever valuable minerals is beneath their land, Pennsylvania law guarantees that they are entitled to royalty payments of a minimum of one-eighth of the gross production involving oil and gas as well as cash payment or some combination.
A mineral lease is a contract between the landowner and oil or gas company granting the company the right to develop deposits of these reserves. As a landowner, you have the right to negotiate whatever terms you want, which may be more than the minimum one-eighth royalty payment requirements that are required by law. If there is to be damage to crops or timber on your land, you should seriously consider a higher royalty percentage before you allow this damaging drilling to occur on your property.
Once the fracking company has reached an Agreement with you and obtains these lease rights, it owns the minerals and you cannot prevent the company from reasonable access to your land for development and production. You should attempt to work with the drillers regarding an access road, gathering pipeline and other issues that may affect your surface use and the appearance and your use of your land.
Remember, the fracking companies are using dangerous chemicals that threaten your land and you water. Since it is your land, you must seriously consider the impact on your lifestyle, your family, your crops, and your animals before you agree to a royalty percentage and to allow potentially dangerous fracking to occur on your property.
Under Pennsylvania law, you can either request the oil company to conduct a pre-drill survey of your water supply or have it done by the DEP (Department of Environmental Protection). If your water supply is polluted by a gas or oil well, the company is required to restore or replace your water supply.
You can also object to the location of the well location to the DEP but you will need a strong basis for them to force it to be moved.
Lease agreements are private contracts and are not subject to federal or state laws except for ensuring that the minimum royalty payments are made. The DEP does not regulate the company drilling on your land, nor does it read the meters or tanks or determine the gross production though operators are required to report their annual production, which is kept confidentially for five years by the state.
Your lease agreement may contain the requisite percentage of royalty payments to which you are entitled, but it may also enable the oil and gas company to deduct costs of marketing, transportation, processing and gathering. How the company determines its expenses that may be deducted may not be disclosed since your lease will inevitably bar you from examining the corporate books. Pipelines in Pennsylvania are largely unregulated so the state has little knowledge of how much gas is being transported at certain places and at certain times. Further, an oil company can use complex or random accounting practices to justify deducting expenses from your royalty check—practices some have called fracking royalty fraud. Consequently, your royalty check could contain numerous deductions, none of which are required to be explained or justified.
Hire an Attorney
Too many landowners in Pennsylvania and elsewhere are discovering the truth about oil and gas companies–that they will use any method available to avoid paying you royalty payments which you are entitled to under your lease.
If you are approached by an oil and gas company to discuss mineral rights or for fracking on your land, hire an attorney. Leasing agreements are complicated documents and are often one-sided in favor of the oil and gas company.
If you are being denied royalty payments, the fracking lawyers at Ostroff Injury Law have the experience, resources and the will to take on energy companies and to get you the compensation you deserve. Unlike other firms who practice in this area, Ostroff Injury Law does not get paid until you do.