You have probably heard the words “Marcellus Shale,” “gas lease,” or “natural gas exploration if you are a property owner in northern or southwestern Pennsylvania. Maybe you have heard your neighbors talking about “leasing” their land – or maybe a gas company representative has visited your home asking you to sign a lease. A lease grants permission to explore or drill natural gas on your land. This article was meant to guide landowners and tell them exactly what they need to know about drilling and answers some of the common questions/concerns that exist. When you fully understand this process, you can make better decisions for your land, your family, and the economy.
Natural gas has been extracted from underground sources in PA since the early 1800’s. But with new technologies in place, gas extraction from reserves is becoming more economically feasible.
Landowners are being compensated for the use of their land. Natural gas extraction is a benefit to the area. It can also bring many new jobs to the area. As you can see, it seems that drilling is beneficial to all parties involved.
As a private landowner, the gas development activity may seem confusing because much of the information is carefully guarded to prevent competing businesses from interfering with each other’s gas development plans. The sudden interest and pace of drilling has led to suspicion and uncertainty about the gas exploration process. As a property owner, you should understand the following points about natural gas leasing.
- Property owners generally have the right to explore and extract natural gas underneath their property unless this right has been sold, leased, or transferred to another party. If you own the rights, you may lease the right to explore to your land to a gas company. The property owner will then be given payment for the lease and royalties for the value of the gas. “Mineral rights” and “natural gas rights” are not the same thing. If any questions, you can check the deed to your property information.
- Gas leases are legal and binding documents – ie – contracts. They represent an official agreement between the gas company and landowner. Because the leases are contracts, it is recommended to have them reviewed by a lawyer who is knowledgeable in this area. Once you sign a lease, there is no way to get out until the lease has expired.
- Gas leases are partially negotiable. Gas companies may offer a preprinted lease document. This document can serve as a starting point for a two way negotiation – or it can be accepted or rejected by the landowner.