Surface Use Agreements | Oil and Gas Lease

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( — September 28, 2022) — An optional agreement that will set the terms of communication between both the field owner as well as the resource owner/lessee (often a gas or oil company), is known as a Surface Use Agreement. Oil and gas corporations must engage in such agreements and contracts before production starts in some states, including Oklahoma and New Mexico, according to the law. Sadly, some states have no laws that provide surface owners with such protection. Mineral lessees are not required to sign this kind of contract, but they frequently do so in order to maintain good working relations with their surface owners. 

In the event of an accident or significant damage caused by the corporation, a surface use agreement in place that has been set up and managed to negotiate properly will shield the property owner from liability concerns, minimize unnecessary landowner shocks, and enhance the amount of accidental damage remuneration that the landowner receives.

Here are a few things to consider while looking for a Surface Use Agreement.

 Check the lease’s terms and conditions:

It is great if there are pre-existing clauses there in oil and gas leases that demand surface owner security or reimbursement. Those clauses are required to be upheld and may give the surface owner a solid foundation for asking the lessee for pertinent reimbursement. 

Be alert to any outdated or discarded infrastructure or possible contaminant problems:

If such problems exist, that could serve as a starting point for a conversation concerning the necessity of surface use protections. A surface owner has the right to get in touch with the Commission and request an investigation or study of the situation if they are worried about pollution or safety issues. A surface owner may be more ready to cooperate with an oil and gas lessee if these problems are present in order to prevent RRC intervention if they are aware of this.

Demand an operational and official meeting:

It is a good idea to meet with the mineral lessee as well as talk about operating difficulties upfront. Included in this are issues like gate accessibility, closing gates, working hours as well as shift patterns, etc. Some oil and gas corporations are willing to discuss with the surface owners so that they can prevent future conflict since they think Surface Use Agreements are advantageous to both sides. The surface owner can arrange a meeting to ascertain whether the lessee is eager to cooperate. A surface owner might, at the absolute minimum, be able to get maps and information on the extent of potential activities on his land. It’s pivotal to know what are surface use agreements to avoid any conflict. 

Be considerate and sensible:

Surface owners do not have a strong negotiating position since oil and gas companies are not obligated to sign a Surface Use Agreement. When speaking with the company and submitting pleas, keep this in mind. The likelihood that a surface owner will obtain a Surface Use Agreement increases if they are courteous to the corporate spokesperson and reasonable about the conditions that ought to be covered.

Keep an eye out for a chance for a trade-off:

The mineral lessee might frequently ask the surface owner for anything that is not permitted by the lease. For instance, the oil and gas corporation can ask for a tunnel or pipeline allowance across the land to access another leased lot. This is the ideal opportunity to discuss a new Surface Use Agreement as well as negotiate advantageous conditions.

Keep in mind the usage restrictions imposed by law:

There are various protections that the landlord ought to be aware of, even if there aren’t many legal restrictions on a mineral lessee’s ability to exploit the surface property. Firstly, only the portion of the surface area that is “reasonable and necessary” to extract gas and oil from that specific lease may be used by the lessee. It is not permitted if the use exceeds what is deemed reasonably necessary (for example, if the landlord utilizes water from the site to extract oil and gas on some other unpooled property). Second, in some circumstances, the accommodation theory offers protection to a surface owner who already has surface use. Lastly, the oil firm is constrained to a suitable operating standard because it does not have the freedom to behave carelessly.

Landowners, at the minimum, should possess a basic understanding of oil and gas leases before entering into them. This will ensure that when they accept an oil and gas lease, they are aware of the rights they are granting the oil and gas company, the rights they are entitled to under the lease, and the obligations placed on them. A well-written surface use agreement may be the greatest approach for a landlord to make sure that the worth of the land is protected in areas where oil and gas production is imminent.