FREQUENTLY ASKED QUESTIONS
About Natural Gas and Crude Oil Leasing, Drilling, Exploration and Production in Ohio
Q. What is natural gas and crude oil (collectively known as “Petroleum”)?
A. The petroleum we use today was formed from the remains of tiny marine organisms over a vast period of time. These dead marine and plant organisms piled up forming layers on the sea floor. They were gradually buried deeper and deeper as sediments accumulated on top of them. Then bacteria, heat and pressure acted on these remains over millions of years to form a liquid (crude oil) or a vapor (natural gas).
Once formed, natural gas and crude oil migrated into permeable rocks with lots of pore spaces where it can accumulate. These rocks are known as reservoir rocks. Natural gas and crude oil stops migrating when it reaches a layer of impermeable rock, through which it cannot pass. This is known as a trap or cap rock.
Q. Could a natural gas and crude oil well devalue my property?
A. There is no evidence that a natural gas and crude oil well will negatively impact the value of your property. On the contrary, the royalty revenues and potential free natural gas, if applicable, may enhance a property’s worth. Many landowners will promote these economic and energy benefits when selling their property. It is also reasonable to request screening and fencing of the well and tanks for aesthetic and safety purposes.
Q. Does my property have the geological potential for natural gas or crude oil?
A. If there are wells in the vicinity of where you live, there’s a good chance that the geological potential could exist on your property. You can check with a local natural gas and crude oil producer to discuss the possibility of leasing your property for potential development of these natural resources.
Q. Who are the reputable companies drilling for natural gas and crude oil in Ohio?
A. Talk with your neighbors to see if they have had wells drilled on their property. Are they receiving their royalties in a timely manner? Have the well sites been reclaimed and being maintained? Tank batteries areas should be trimmed, painted and properly identified with signage identifying the well by lease name/well number, permit number, well owner and an emergency contact number.
Q. What are the different types of leases?
A. Leases can be either development or non-development. A development lease will include access to the surface of the land for drilling and operating the well. A non-development lease is for use of the subsurface minerals only. Both leases share in the landowner royalty of the well, but a non-development lessors typically does not receive free natural gas.
Q. Will there be any changes to my lease if the operator sells the well to another producer?
A. The terms of the original lease agreement applies. However, most leases have a clause that makes them binding on any successor company. The same applies should the lessor sell his property.
Q. How long does it take to drill a well?
A. Most Ohio wells can be drilled with rotary rig in 10 days or less. Cable tool wells may take up to a month or more. After drilling, it may take several weeks to complete the well for production. Reclamation work should take place shortly thereafter, and may depend on applicable seasonal weather conditions.
Q. Is drilling a well noisy and disruptive?
A. While the well is being drilled, the rig must run 24 hours a day, seven days a week. There could be noise from the equipment, light from the rig at night, and some temporary dust or mud from the well site. Once the drilling is completed, there will be some daylight-only operations to put the well into production, Once the site has been restored, the area is essentially returned back to normal.
Q. Could my water well be harmed?
A. Each drilling application is examined on an individual basis by trained technical staff at Ohio Department of Natural Resources, Division of Mineral Resources Management (DMRM) to identify the deepest source of underground drinking water. A casing plan is then designed to protect the aquifers. Steel casing is installed in the well and cemented under the supervision of highly trained industry experts as well as inspectors from DMRM. In the rare instance that a water supply should become contaminated or diminished as a result of drilling, Ohio law requires that the Operator of the well replace the water supply.
Q. What if my neighbors lease their property and I don’t want to?
A. Ohio has spacing requirements, unlike many other states, that protects the correlative mineral rights of property owners. In the case that your property is needed to complete a drilling unit (typically 20, 40 or 80 acres), and you elect not to lease, there is a provision in Ohio law that allows the producing company to apply for a mandatory pooling order to meet state spacing regulations, and to provide the majority of the landowners in the proposed unit the right to development their minerals. If approved, the mandatory pooling includes your property in the unit and you receive your proportionate share of the landowner royalty as though you had leased, but there is no lease agreement between you and the company. Simply put, it is mandatory compensation. Historically, less than 2% of drilling applications request mandatory pooling consideration. The picture shown with this section illustrates well activity in Ohio prior to spacing requirements in the early 1900’s. Without mandatory pooling, there would be no spacing requirements
Q. What rights do I have as surface owner if someone else owns the minerals?
A. The lease agreement defines the conditions that apply between the company and the mineral interest owner. Any other conditions relative to surface activity (i.e., location approval of wells, roads, tanks, damages, etc.) also have to be declared in the lease. Unless specifically declared otherwise, the interest of the mineral owner takes precedence over the surface occupant in cases of mineral severance.
Q. What rights do I have if the company does not fulfill its terms of the lease agreement?
A. Any dispute concerning the lease is a private matter between the lessor and lessee. Communication between the parties is always strongly encouraged. Most leases have a notification provision that must be followed to try and settle any conflict that cannot be otherwise resolved. If all else fails, legal assistance should be sought.
Q. Who is primarily responsible for regulating Ohio’s natural gas and crude oil wells?
A. The Ohio Department of Natural Resources, Division of Mineral Resources Management (DMRM) primarily regulates the industry. DMRM does not get involved in contractual differences between the landowner and the producer. The primary function of DMRM is to ensure the responsible development of Ohio’s energy and mineral resources in a safe and environmentally sound manner. It is mandated by Chapter 1509 of the Ohio Revised Code and Chapter 1501 of the Ohio Administrative Code to protect correlative rights, the environment and public safety. Trained and experienced professional staff review permit applications, enforce the state regulations for drilling and plugging wells and gather and provide oil and gas well information to the industry and public.
Q. Additional Questions
For additional questions, please contact OOGEEP at (740) 587-0410, or email email@example.com.