January 2015 Gem County Gazette by Gem County Concerned Citizens)
Store for Seismic Testing Permit Signers?
was the latest Gem County Oil & Gas Ordinance meeting, after which the
topic of seismic testing came up. A local realtor had some
information about the effect of the gas industry on the ability of
people to sell their homes here as the effort to obtain permission for
seismic testing, and to obtain mineral rights leases, is ramped up.
realtors have been finding that banks/mortgage companies have gotten
very leery of lending on any property where there is even a seismic
testing lease (“permit”) in effect – or even of lending on a place
next door to one where there is such a lease! This is to say nothing
of the actual mineral rights lease (permission to drill – oil and gas
are considered minerals), the duration of which can be for decades.
While developers like to think (and tell people) that property values
will go up – if all goes as they hope and mineral rights owners do get
(unguaranteed) royalties from successful gas well development –
property values could sink due to any number of factors: new traffic,
noise, dust, fire hazards, air/water contamination or just the risk of
This means that:
If you sign the seismic lease, or the mineral rights lease, and then
want/need to sell your property, you may need to find a rare cash-only
And if you wish to refinance your mortgage, you may not be able to do
so at all within that up-to-2-year period.
Then, perhaps, there is your insurance company’s constraints to
consider (some say they will not renew policies for those who lease).
There is also a standard clause in mortgage documents that allows the
lender to call in the loan if the property is subject to any type of
And as was reported at the G&O meeting, a great many prospective
buyers looking here are now savvy/leery about the gas development
coming to this area and are themselves demanding disclosure on leases
and mineral rights, etc. – and turning away if these are found.
The purveyors of
these documents naturally do not make sure that the property owners
know what ramifications there may be if they sign. Absentee owners
are simply mailed a letter and don’t even have affected neighbors to
confer with. And some people have heard that they inevitably must
allow seismic testing – and are feeling very worried about all this.
You do not
automatically have to let someone onto your property for seismic
testing. You may hear from a promoter of such a lease that they’re
going to have access to a public road or a right-of-way next to you
anyway (common claim; not necessarily true, since a road easement may
be only for a certain type of access) or that “you won’t be able to
stop us anyhow” (also a recurrent theme). You may sign if you want
to; but know that these are not valid reasons for your signing – they
are ploys to get you to sign. You have every right to take your time
to make a decision, one way or the other.
testing is not “just imaging”, as door-ringers are claiming – it
involves vibration of the ground…which has been known to affect
springs or improperly cased water wells, or knock down shallow-rooted
trees. Unless only sensors are to go on your specific property,
“thumper trucks” (veibroseis vehicles) will be used; and outside of a
200’ setback from structures/wells, dynamite charges may also be set
in drilled holes. Your agreement could limit specific times, numbers
of times, or types of access, or access in specific locations, such as
a garden or feeding area. Make sure that any agreement you sign
doesn’t release the survey company from damages.)
The reason some
people are convinced that they must allow such access may be that,
indeed, our dollar-hungry state legislators have given some
unparalleled rights to the gas and oil industry. But these involve,
specifically, taking the actual mineral resources, under a certain
condition. Developers were not given the right to trespass on the
surface of the land for purposes of seismic testing.
If you have
already signed a seismic testing lease – which will help the gas
exploration company establish where the gas is so they know where to
concentrate their efforts – you are stuck with this decision and its
effects…but only for the lease period. This is entirely separate from
a mineral rights lease that could lead to royalties (if a well is
actually drilled, and if it is as successful as projected). That is a
much more serious matter, as such leases are for a far greater number
of years and involve far greater risks…which concern lenders (and
insurers – and home buyers) even more. (Beware of any seismic testing
lease permit that includes an option to lease mineral rights as well.)
Part 2: Mineral
The decision to
lease mineral rights under your land may be out of your control if
another entity owns those rights. Such rights often do not accompany
a house sale (and the disposition of mineral rights often doesn’t
appear anywhere in your mortgage/deed/title records – you would have
to do a lengthy title search at the Assessor’s office to trace this).
This is called a “split estate”, where one party owns only the surface
land (the “real estate”) and another owns the extractive rights below
the top 3 feet of it.
If you do not
own your mineral rights, it’s possible that the mineral rights holder
may have already signed a document to allow seismic testing. If this
is the case, and you would not have allowed seismic testing access on
your surface land, you may want to contact a lawyer.
If you do indeed
own your mineral rights, the gas exploration company may again be at
your door…in fact, whether or not there is gas under your land! The
legislature is expected to soon vote in new rules that give oil and
gas developers rather shocking powers of “forced integration/pooling”
common to other G&O states. The upshot will be that they can take gas
even from those who are utterly unwilling to lease their mineral
rights...if they are able to talk certain mineral rights holders of
large properties, or enough mineral rights holders of smaller
properties, into leasing.
It is to be set
up like this: If the company can get the owner/s of 55% of the
acreage in any given 640-acre section to lease their mineral rights to
them, then they can force all the other owners in that section to
accept drilling on their land as well…even though they "own" mineral
"rights" under their land and don’t consent to lease them. (Would
this be unconstitutional? a clear violation of private property
rights? No matter – it’s done elsewhere, and it’s likely soon to be
done here in Idaho.)
So even if
everyone's land isn't drill-worthy, the exploration company will still
be trying to get up to 55% to sign mineral rights leases…so that they
can take gas from wherever they want to within that 640-acre section
(and beat out any other extraction company that may be trying to do
the same). It's worth it to them to pinpoint (via seismic testing)
where the best access points to the gas reservoir are…because even if
your property is small and there's a too-close setback to your house
to put a drill rig on it, they could always diagonal-drill under your
property line to get to it (or perhaps build a road across your land
to another location). They'd rather pay you a share of the takings
than not achieve the big Taking of "force-pooling" everyone into the
"integrated" 640-acre “unit”.
If your property
happens to be force-pooled in a successfully integrated unit, you’ll
be compensated with the lowest royalty accepted by willing signers in
the unit. Too bad if you’d rather have waited for gas prices and
therefore the value of your lease to go up – or rather not have had a
gas(/oil) well, storage tanks, or access routes to them on your
property at all.
What to Do?
You might want
to talk to your own mortgage holder and insurer, if not a lawyer,
before you sign any papers from an “Alta Mesa” or “AM Idaho”
representative. You may also wish to make sure your neighbors
understand what they will be getting themselves (and you) into by
signing either type of lease.
You can find a
list of questions/cautions/suggestions for seismic leases at: www.ProtectGemCounty.org.
itself has the potential to shake things you wouldn’t want shaken up
or shaken apart; but more importantly, your decision could let loose
undesired consequences for your future financial welfare as well. We
believe that all residents should be fully informed so as to make the
right decision for them. Take your time to consider your options.
The next Gem
County Oil & Gas Ordinance meeting will be Thursday, Jan. 8th,
6:30pm at the County Courthouse.
back to the natural gas links page