Need unbiased info on natural gas and oil drilling solicitation

Asked September 22, 2013, 10:57 PM EDT

My parents have been approached by a natural gas/oil drilling company re: my parents contracting to allow the company to check if their property has drilling/mining potential. My questions are: Are the "oil" producers really striking oil in Michigan,or are they fracture mining?

The majority of residential wells provide sulfur water,does the sulfur presence pose greater contamination and health issues than present in areas with less sulfur water? If surrounding properties are contacting with the petroleum companies, would my parents' 50 acres be affected (water contamination, possible gas-leak emissions, etc) even if they chose not to lease their property? I personally am against mining or drilling the common land, but I am not a decision maker on this issue. I would, however appreciate and unbiased information that I would forward to my parents. I have personally witnessed the horrific effects of well "leaks" "accidental water contamination" and "not-confirmable or deniable" effects in Otsego, Crawford and Montmorency in the past decades and am concerned my family not receiving the "whole" story of the companies intentions. Your time and consideration on this issue is appreciated.

Lenawee County Michigan oil production oil and gas leasing

1 Response

I am going to include your original questions and then my answers.

My parents have been approached by a natural gas/oil drilling company to allow the company to check if their property has drilling/mining potential. My questions are: Are the "oil" producers really striking oil in MI,or are they fracture mining?

When you say they have been contacted to determine if there is oil and gas potential, is the company asking them for permission to do a seismic survey or are they asking them to sign an oil and gas lease? If it is for seismic, they can grant permission for this or not grant permission, it is their choice. If they grant permission they should be paid for allowing the seismic equipment on the land.
Oil producers are striking some oil in MI. They are using conventional vertical wells or horizontal wells. Some of the horizontal wells are being developed using hydraulic fracturing.

The majority of residential wells provide sulfur water,does the sulfur presence pose greater contamination and health issues than present in areas with less sulfur water.

Water containing sulfur does not affect oil and gas drilling. The zones they are attempting to harvest are usually at least 3,000 feet deep. Water bearing aquifers that are used for domestic wells are usually no deeper than 400 feet, with most 100’ or less.
If surrounding properties are contacting with the petroleum companies, would my parents' 50 acres be affected (water contamination, possible gas-leak emissions, etc.) even if they chose not to lease their property? This is a multi-faceted question. Your parents do not have to lease their land, even if they have been offered a lease. The lease the company initially offers is written by them and for them. I recommend your parents fully understand the lease before they sign it. These are long-term contracts that can last for generations. Terms of the lease can be negotiated so the document aligns more with owner goals. For example, the petroleum industry has a set of best practices to protect groundwater quality, including baseline testing of water quality, but they are not offered in the initial lease. They can be added through negotiation. If your parents land was part of a drilling unit, which represents all of the acres that one particular well harvests, they must be under a lease or compulsory pooling order. This insures that they be paid. The state will not allow an oil and gas well to be drilled until it is documented that all landowners affected by the well will be paid. A document I wrote titled “Compulsory Pooling and the Landowner Not under a Lease” explains compulsory pooling. An option for your parents might be a non-development lease. You can learn about this by utilizing some of the educational information I discuss next. I recommend you watch on U tube the video “Oil and Gas Mineral Rights Leases; Tips for Owners before Signing a Lease”. To find this video, go to U tube videos and search for oil and gas leasing. The video of one of my landowner informational meetings is at the top of the list. I recorded a webinar in August that is more up to date than this video. It is located on the MSU Extension Oil and Gas webpage at http://msue.anr.msu.edu/program/info/oil_and_gas and is titled: “Understanding and Negotiating the Oil and Gas Lease”. I think it would be very beneficial for you and your decision makers to watch. It discusses the standard oil and gas lease and the alternatives mineral owners have to negotiate more favorable economic and environmental terms. We also have “Oil and Gas Expert Resources for Landowners”. This is a list of oil and gas attorneys that have stated they assist private landowners in negotiating the oil and gas lease with the oil and gas company.

I personally am against mining or drilling the common land, but I am not a decision maker on this issue. I would, however appreciate and unbiased informaton that I would forward to my parents.

Owning mineral rights is a blessing. If the minerals are present and the lease done correctly, the income from oil and gas can greatly exceed the income from surface activities, while reducing impacts as much as possible. But it must be done correctly through the oil and gas lease. I would be happy to discuss your situation with you or with your parents by phone. If you are ever offered a lease and want me to review it and provide comments and suggestions, I can do that for a fee.