Freshwater frac pond on my property
By the end of 2018 I will have a well on my farm. The other day the company who is going to be doing the work asked me if I would consider putting in a fresh water frac pond that would also include pipeline to it. My location is driving their decision for this, it is close to a lot of things but still rural. My question since this was not part of the original lease, how should I be compensated for such an effort? This is taking place in SE Allegheny county where I have been told is a very good area for gas. Thanks, Scott
Allegheny County Pennsylvania
Thank you for your question. Placing a compensation value can often be very difficult as many factors influence the negotiations. Below are a list of considerations you may want to review with a qualified oil & gas attorney once you receive a formal offer. After reviewing the consideration, if you have additional questions, please feel free to contact Dan Brockett at (814) 437-7607.
- Get everything in writing – a verbal promise of location consultation, timing, and payment does not mean much without having it in writing
- An attorney should review this agreement.
- How will the impoundment affect his property?
- Size in acres (pond size and total disturbed area)? Also, 4 million or 20 million gallons? Payment should reflect total acres disturbed, not pond acreage. If you are interested, Dan can help with the “Typical” land disturbance fees for well pads, access roads, and storage we have seen; however, there is no typical negotiation.
- How much say will he have over location. Location agreements typically read “not to be unreasonably withheld” which gives the company a great deal of latitude and landowners very little say. There are a couple potential clauses you may want to consider as additions to the site location agreement if you receive a offer and Dan could easily help you discuss potential verbiage for you attorney to consider or improve.
- Centralized impoundment for multiple well pads or a well pad impoundment for one well pad?
- Is this going to be an earthen pond, or an above-ground impoundment?
- How close to the nearest occupied structure?
- Freshwater only stipulation (No produced or flowback water of any kind)?
- Longevity of the impoundment, when will the impoundment go away?
5. Traffic to and from the pond (even with a pipeline)?
- Access roads will be needed and heavily traveled to haul water in. A lot of compaction – make sure these roads are not through prime ag land. Along with this disturbance, there will be a lot of noise and traffic to deal with.
- How close is the access road to an occupied structure?
- Hours of operation? Limits?
- Location of the pipeline? Surface or subsurface?
- Ask for lay-flat line or create convenient (to him) crossing points for water pipeline (assuming they keep it on the surface.)
- This will likely be written up as “temporary” and temporary should have a timeline with clawbacks in the contract (“X” per day/week/month after this date)
- Reclamation and Remediation plan?
Special Thanks for Dan Brockett for collaborating on this response.
You did a great job for consideration! The company in question is very good HH they have helped me and I have helped them a great deal. All has been good to date. Will share your thoughts and name for others.
Thanks for the feedback and if we can hep out in the future, please let us know.