Mineral rights give gas drillers free rein
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Long-standing state laws that split mineral rights from surface real estate are creating big winners and big losers in the current natural-gas gold rush in Western Pennsylvania.
The winners hold the mineral rights. For them, signing a drilling lease with a gas-producing company can be a lucrative transaction. They are entitled to one-eighth of the royalties and can negotiate free natural gas for their homes.
The losers are landowners who find that their mineral rights were severed from the surface property years ago. They have no control over whether wells are drilled on their property.
Gas-producing companies such as Pittsburgh-based Texas Keystone have been quietly tracking down heirs to those who owned the mineral rights and getting them to sign leases to drill on the property.
Some heirs have moved out of state. Some had no idea they possessed mineral rights until they were approached by gas company representatives. Many have failed to pay any taxes on their assets.
For surface property owners such as Dr. David Lentz and his neighbor William Hofecker, of Fairfield, Westmoreland County, who do not own their mineral rights, the first hint that their land had been leased out from under them came in a letter from Texas Keystone. The company searches for and produces natural gas and oil in Pennsylvania, Ohio, West Virginia and New York.
"I've had this ground for over 20 years," Mr. Hofecker said. "I pay taxes on my ground, and just out of the clear blue sky they came in and they've got every legal right to drill."
Over the past few months, the men say, teams of drillers have scarred hillsides, bulldozed new roads, felled stands of trees and generally devalued their properties. They have no legal recourse and receive no compensation for the losses.
State legislators, including Rep. Jess Stairs, R-Mount Pleasant, are promoting a bill aimed at giving landowners some protection. It encourages "good faith negotiations" between the surface owner and the gas company operators, and stipulates that the landowner be compensated for damage and for lost land value and agricultural production.
"The gas companies can come in and pretty much do what they want to do," Mr. Stairs said. "This [legislation] gives the landowner some maneuverability."
As he flew over the Ligonier Valley while training for his pilot's license recently, Dr. Lentz took in the sight of dozens of new gas wells, drilled into the earth about every 1,000 feet.
"It's like a grid," said Dr. Lentz, a dentist who was born and raised in Fairfield. "They're polka-dotting the land."
He can look out the windows of his home and see more well heads down the hill, on his mother's farm. Two wells were drilled just over her fence rail, a few hundred yards from his father's grave.
And when Dr. Lentz takes a walk around his own 53-acre property, he can see the drilling rigs, the excavators, the swimming-pool-size wastewater pits, all connected by freshly bulldozed access roads.
All of these alterations are allowed in the pursuit of natural gas when the holders of mineral rights sign a lease with a gas-producing company. The companies, in turn, must adhere to environmental restrictions, taking care to reconstruct the land after drilling is finished.
North of Ligonier on Route 711, the landscape is sprinkled with gas wells, their shiny heads popping out of the combed earth on acre-size well pads, their 10,000-gallon brine tanks unsuccessfully hidden behind trees. Multiple wells dot the nearby Champion Lakes golf course, and bulldozers could be seen at work chewing up the land in front of the Pennsylvania Game Commission building, preparing for another well.
Last year, the state Department of Environmental Protection issued three times the number of oil and gas drilling permits as it did in 2001. High energy prices are driving the boom.
The most active counties are Westmoreland, Fayette, Indiana and Armstrong, said Alan Eichler, the DEP's compliance chief for the oil and gas program in Pittsburgh. In Westmoreland County alone, 309 wells were drilled last year.
"Activity is up everywhere," Mr. Eichler said, "We're setting records in the issuance of permits and the numbers of wells we're seeing drilled."
The Westmoreland County recorder of deeds office has received plenty of calls lately, both from those holding mineral rights and hoping to cash in, and from property owners anxious to find out whether their land has been leased and to find the heirs before the gas companies do.
Searches go back years
Many are from the Murrysville area, one staffer said, the site of the Haymaker well, once the world's largest commercial gas well. Digging through the deeds can be a long and laborious process, they say. Sometimes, the search can go back 80 years, through dozens of real estate transactions.
One recent morning, Mr. Hofecker drove his pickup around his five-acre property and pointed out the changes the gas company had wrought. On a hillside with a spectacular valley view, where he once planned to build a house, is a leveled area about the size of a football field where crews dug into the hill.
"It just burned me to no end that these people can do this, and I've got no compensation, no recourse, no nothing," said Mr. Hofecker, who is retired. "We're the ones eating the cost of the taxes and the gas for the well-drillers and the [heirs] to make their money. Legally, they're right. Morally, it's a shame."
He doesn't begrudge those with mineral rights on their own property to sign with the gas companies and make some money. But Mr. Hofecker feels he was taken advantage of by the heirs to his own property's mineral rights, people who didn't pay any taxes on those rights.
"Why doesn't the county, before it goes up for sale, notify property owners so they have a chance to buy it back, so it goes back to the rightful owner?" he said.
According to the Westmoreland County deeds office, if taxes weren't paid on those rights, they would go up for auction and be announced in the newspaper, with the date of sale, property location or map number.
According to Mr. Eichler at the DEP, most property owners in rural areas have held onto their mineral rights. It is more common to find severed mineral rights in developed areas, where the surface property has changed hands many times and been subdivided into smaller tracts.
Natural gas wells are typically 3,000 to 4,000 feet deep, but some can be 10,000 or even 15,000 feet deep, Mr. Eichler said.
Because Fairfield, in particular, has been a center of drilling activity, for a while, calls from concerned people there poured in to the DEP offices.
"Most of the residents were not used to seeing gas wells drilled. ... They were curious and concerned about what was going on," he said. "We had some problems, but not a lot."
Environmental rules say wells cannot be drilled within 200 feet of a building or water supply; in deep-mine coal areas, wells must be spread 1,000 feet apart; and within nine months of the end of drilling, the company must restore the land, regrade it, reseed it. Under the law, gas companies are responsible for the contamination of any water supply within 1,000 feet of a gas well if it occurred within six months of drilling.
Dr. Lentz can still remember signing on the bottom line when he bought his 53 acres in 1997.
"It was right there in red ink: 'no mineral rights,' " he said. "In my mind, there was only coal in this area. I never thought about these gas rights."
His land's mineral rights were severed in 1943, he said, when the owner sold the farm to someone who subdivided it. Dr. Lentz is frustrated that drillers can come onto his property anytime they want to.
"I'm paying taxes on that," he said. "I feel like I'm not even allowed on my own property."
His land now has two wells on it, a number of access roads and piles of felled trees, all marked with orange paint. He once thought about dividing up his land and passing it on to his children. Now, he says, he just thinks about finding another place to live.
Dr. Lentz has contacted lawyers, who have offered him little encouragement, and attended township meetings, where, he said, one of the drilling excavators asked him if he was a terrorist, the way he was standing in the way of America's achieving energy independence.
For several months after he received the letter from the Texas Keystone, he searched for the heirs who leased out his land. He knows a few of them, but has decided for now not to try to contact them.
"My kids will go to school with their kids. It's a touchy situation," he said. "I'm thinking of taking my family in my arms," showing up at their front door, "and asking if they'd like to meet the people that they're screwing."
First Published April 23, 2006 12:00 am