Landowner’s Guide to Oil and Gas Development

Speaking of landowners, I recently came across the Oil & Gas Accountability Project website. They’re an activist organization aligned with the environmentalist camp, looking to recruit and build on a landowner constituency. They offer a publication entitled “Oil and Gas at Your Door? A Landowner’s Guide to Oil and Gas Development”. It’s a biased presentation of the horrible things that accompany oil and gas development. For example, their Coalbed Methane Project is a campaign “for the protection of critical ecosystems, private ranch lands, and people’s health from the devastating impacts of coalbed methane development.” I have some clients doing CBM development, and haven’t seen anything quite approaching “devastating”. Introductory remarks in the guide state “OGAP has prepared this guide to assist those facing oil and gas development on their land and in their communities”. They should have said, “We’ve prepared this guide to scare you out of leasing your land for oil or gas development and to teach you how to make life for developers so difficult they’ll go away.” Nevertheless, they do manage to cover a lot of oil and gas topics, terminology and law. For that reason I’ve reluctantly included it on the list of reading materials to which I can refer virgin landowners who come to me with the standard question, “How does this lease affect my rights?” To which I start by saying, “It’ll take about a day to cover the important subjects and I charge $xxx an hour, were you planning to spend that much?” Usually they weren’t, so I have to do the quick tour, barely scratching the surface, then try to point them somewhere they can try to educate themselves.

The problem is there’s not much out there that’s both informative and written in terms the uninitiated can digest. There’s an outline called “Oil and Gas Law Outline – Fall 2000” that I downloaded once upon a time while surfing the net. I was later told it was from a course at Texas Tech School of Law taught by Prof. Bruce Kramer. However, Prof. Kramer told me he didn’t write it and didn’t know who the author was. There’s also an IRS training document aimed at educating examiners about oil and gas. They can be downloaded from my Yahoo Briefcase. The OGAP Landowners Guide paints a picture of the worst case scenario which, admittedly, could happen. It fails, however, to describe the more likely scenarios, and definitely omits the best case scenario. After reading it, a landowner who might have signed a lease may decide not to and, as a result, miss out on the retirement income his neighbors are getting in the form of monthly royalties. Someday if I can find the time I’ll search for a publication that’s equally extreme on the other side to balance things out. I suspect such a treatment doesn’t exist. One of my oil clients and I were commiserating recently about the prevalent attitudes toward our respective vocations. We didn’t resolve which are perceived as the greater shysters, only that if we wanted to move up in peoples’ eyes, we should start a used car business.

2009/10/18 Update: Yahoo shut down the “briefcase” feature, so the above link no longer works. The items that were there can now be downloaded with these links: Oil and Gas Law Outline, Oil and Gas IRS Manual, Oil and Gas At Your Door.

2010/02/11 Update: Another resource item: NY Coop Extension Landowners Guide.

2020/04/19 UpdateThe Oil & Gas Accountability Project (OGAP), which “champions drilling impacted communities in their fights with too-often unresponsive governments (and corporations)”, is now found on the Earthworks website. They still offer the publication, Oil and Gas at Your Door? A Landowner’s Guide to Oil and Gas Development, though apparently downloadable a chapter at a time.