I Am the Surface Owner, but I do not own the Oil and Gas Rights.

What Can I Do?

When the surface rights to a property belong to one party and the subsurface and oil and natural gas rights belong to another party, this is often called a “Severed Estate.”  Severed Estates are very common in West Virginia and other gas producing states such as Oklahoma and Texas.  Due to the Marcellus Shale natural gas boom in Pennsylvania, we can expect severed estates to be common place in the future as landowners across the Marcellus Shall region seek to maintain their oil and natural gas rights when they sell their property.  These landowners are understandably looking for potential benefits of future natural gas royalties even after they no longer own the surface rights.

Surface owners who do not own the oil and gas rights for their property often contact my office to inquire as to what rights they have when they receive notification by an oil and gas company of their intention to enter onto the land and install a well site, access road, or other facilities on the surface of the property.

Pennsylvania law provides the oil and gas rights owner the right to develop the subsurface resources.  Unfortunately for the surface owner, they generally will not be able to prevent the natural gas company from entering onto the property to reasonably extract and develop the natural gas resource.  However, there are steps that the surface owner may take in effort to make this process less intrusive and painful to the surface owner.

There are legal options that the surface owner may seek to employ and the landowner should consult a knowledgeable attorney to ascertain their legal rights.  However, these legal options are somewhat limited.  My standard advice to landowners is to communicate as early as possible with the natural gas company to discuss issues of access road and well site location as well as compensation for surface damages.  An attorney can assist the surface owner through this process and seek to negotiate to maximize benefits for the surface owner while also attempting to reach mutually acceptable locations for access roads, pipelines, and well site pads.  

However, the oil and gas rights owner is said to have “Dominant Estate.”  This generally means that the natural gas company is going to have the legal right to have reasonable access to the property for the development of the oil and gas beneath the land.  A basic rule gives the oil and gas company the right to enter upon the property for the purpose of accessing and extracting the natural gas, but the company must exercise these rights while recognizing the surface owner’s rights and take appropriate action to prevent unnecessary disturbance to the owner of the surface. (See Shartiers Block Coal Co. v. Mellon 25A. 597 PA.1893).  Moreover, Pennsylvania courts have held that mineral estate holder’s right to use the surface is restricted to reasonable methods in the orderly removal of the mineral rights.  Factors of consideration will include the customs of the industry and the reasonableness of the activities of the gas company.  

Unfortunately, for surface owners, recent well site locations that I have worked on have recently ranged from eight to seventeen acres.  Obviously, this is a major impact on the surface of the property and certainly something the unsuspecting surface owner does not welcome.  Due to the significant surface impact, it is important for the surface owner to seek to negotiate the highest possible compensation for damage to timber, crops, or any other surface damage that is involved in the installation of any access road, pipelines, or well site.  The surface owner should also seek to negotiate for water testing by a certified laboratory prior to any installation operations on the premises.

As part of the installation process, the surface owner will typically receive a Well Permit Application.  The surface owner does have the right to file an objection with the Department of Environmental Protection (DEP) but these objections are generally very limited (See Section 205 of the Oil and Gas Act).  Typically these objections involve issues such as the proposed well site does not meet the required setbacks from a residence.  In my opinion, these objections are going to be rare as the companies are very aware of the setback requirements and will most likely have planned accordingly before they begin the permitting process.  The best course of action for the surface owner when faced with notice that the gas company intends to enter the property for the extraction of gas, is to immediately contact legal counsel to discuss their options and rights in greater detail.

Quite frankly, another concern that landowners are faced with is evaluating the cost of legal representation in relation to the ultimate benefit.  By no means am I indicating that a surface owner should not hire an attorney to assist them in this regard, but I think it is a disservice to the surface owner not to consider the potential costs involved in challenging this activity versus the potential positive result.  At minimum, surface owners should consult with an attorney to advise them of their rights and potentially to negotiate on their behalf to maximize any damage payments that may be available.  In certain circumstances, surface owners may wish to file objections with the assistance of counsel and any other legal action that may be available based upon the gas company’s intention or plans on the property.

Surface owners who have been notified of oil and gas company’s intent to enter onto the property for the development and production of the oil and gas beneath the ground, should feel free to contact me at: (570) 307-0702.  My approach is to provide surface owners with a realistic expectation and explanation of their rights and explore whether any viable legal action is available.  I stress again that the most important action a landowner can take is to move swiftly upon receipt of notice of a gas company’s intention to access the property.  By quickly addressing this issue, the surface owner may find that there is more flexibility with the natural gas company regarding the location of access roads and well sites and other facilities.  

Douglas A. Clark, Esq. – Protecting Pennsylvania Landowners