FAQ

Published on October th, 2010

Someone has approached me about drilling on my land. What should I do?

  • Promptly consult an attorney who knows oil and gas law. If you don’t know one, contact the local bar association for assistance.

What is a lease?

  • A mineral lease is a contractual agreement between the owner of a mineral tract (the lessor) who grants the right to develop deposits of the mineral to a producer (the lessee). Oil and gas can be sold or leased separately to different parties. Different deposits of the same minerals in different formations can also be leased or sold separately. Usually, a lessee will insist on the right to sell or reassign a mineral lease to another party. Because a mineral lease gives the lessee a property interest in the mineral, leases should be recorded at the Recorder of Deeds office of the county where the leased tract is located. A lease is usually secured by annual rental payments, or a royalty on production paid to the lessor.

Who owns the natural gas?

  • Natural gas may be owned by the person owning the surface property, the minerals, the gas and oil, or the coal. Ownership will be described in the terms of any deeds or leases governing the property.

I own the surface, someone else owns the gas or oil, and a driller is looking over my land. What should I do?

  • Promptly consult an attorney who knows oil and gas law. If you don’t know one, contact the local bar association for assistance.
  • Try to work with the driller on the location of the facilities – well site, access road, gathering pipeline, etc.
  • Negotiate a reasonable price for damage to crops, cropland, timber, etc., before clearing work begins at the well site.
  • Request that the well operator hire a certified lab to analyze any source of water used as a water supply for people, animals or crops before drilling begins. This is to document the pre-drill conditions in case the water supply would be adversely affected by drilling the oil or gas well. If the oil and gas operator declines to perform this pre-drilling survey of your water supply, consider hiring a laboratory approved by the Environmental Protection Agency at your expense.

I am considering leasing oil and gas property to a producer. What should I do?

  • Promptly consult an attorney who knows oil and gas law. If you don’t know one, contact the local bar association for assistance.
  • Be mindful of lease terms for expiration should production cease, or if the lessor fails to produce oil or gas within a specified period. Questions about ownership of wells and equipment may remain if a lease expires and wells are not plugged.
  • Write into the lease agreement protections necessary for crops, livestock, buildings and personal property.

Does a well operator have the right to use the surface of the land if the gas is owned by one person and the surface is owned by another?

  • The right to use the surface is often found in the language of any deed or lease that transferred the rights to produce the gas or oil to a person other than the surface owner. If the terms of a deed or lease do not describe how the surface may be used, then the gas or oil owner has reasonable use of the surface to produce the gas or oil. Some deeds or leases set out payments for or limits on use of the surface. Other deeds give the gas or oil operator full rights to reasonable use of the surface.

(Virginia) What are correlative rights and unitization?

  • Each gas owner who has an interest in a single pool of gas has the right to obtain and produce his share of the gas in the pool without being required to drill unnecessary wells or incur other unnecessary expenses to recover or receive the gas. These rights are known as correlative rights. Unitization refers to the designation by the Virginia Gas and Oil Board* of a given unit on which a gas well can be located and drilled. This process provides for maximum recovery of the gas while protecting the correlative rights of all parties who have been voluntarily or force pooled.

(Virginia) How are ownership interests affected if a company wants to develop gas or oil on or near my property?

  • A gas or oil well drains an area around a well, not just the property associated with the well. The interests of people owning the gas or oil in this area must be pooled together to ensure that all of the owners are paid for the gas they own. This area is referred to as a drilling unit. Some people voluntarily agree to pool their gas by selling it or by entering into a lease, joint operating agreement or other contract with the operator of the well and other owners.

(Virginia) What if I do not voluntarily agree with the well operator?

  • One owner cannot keep others from producing their gas or oil around a well by refusing to participate in the drilling unit. If the other owners produced the gas or oil, then the gas or oil under the one owner would be drained and the owner would not receive his or her share of the proceeds from the sale of the gas. To overcome this problem, state law gives the Virginia Gas and Oil Board the right to force pool all owners into a drilling unit.

(Virginia) The Virginia Gas and Oil Act provides the surface owner with the right to object to a well if:

  • he or she believes erosion and sediment controls are not adequate,
  • additional measures are needed to protect fresh-water bearing strata,
  • the proposed work would constitute a safety hazard, or
  • the location would unreasonably infringe on the surface owner’s use of the surface.
  • If the right to produce the gas or oil has been given through a forced pooling order from the Virginia Gas and Oil Board, then the operator does not have the right to use the surface. The operator must reach a voluntary agreement with the surface owner regarding use of the surface to produce the gas or to construct roads, pipelines, or other related facilities.

(Virginia) How is a landowner’s property protected under the state law?

  • The Act provides for domestic water well replacement if the well is contaminated or interrupted by a coalbed methane well operation within 750 feet of the water well. Surface owners’ rights are addressed in common law and would be enforced in judicial (court) proceedings rather than through administrative proceedings.

Some information supplied by:

Department of Mines, Minerals and

Energy, Division of Gas and Oil at

135 Highland Drive, Lebanon, VA 24266