Held by Storage?

I am part of a lease signed by my ancestors in 1901. All of the old surface wells have been plugged. The gas company pays me a few dollars per year for storage.  Is this a legal way for the gas company to hold a lease or could it considered expired?

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Permalink Reply by Barry D on February 9, 2016 at 5:33pm

Depends on lease language, but could be legitimate.

Would need to see the entire original lease.

Permalink Reply by rmc on February 10, 2016 at 12:44am
Depends completely on the wording of the lease you are receiving yearly payment from.
I have an active storage lease on my property from the early 1900s but my storage lease has a depth restriction in it.
Permalink Reply by Marcus Huey on February 10, 2016 at 6:16am

Thank you for the response!

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on February 10, 2016 at 7:42am

Marcus,

       You aren't the first landowner to have this problem.

Even the wording of your One Page lease doesn't legalize holding on to your property when there is no production. I have seen where producers falsify production each year from wells that are rusted out at the well head and haven't produced for years.

One person took pictures then got a lawyer. The only way O&G companies can legally hold land is by production. I'm betting your one page Lease doesn't address Storage wells.

Consult a lawyer, but do your homework and find someone who specializes in your issue. Don't try to resolve this issue on your own. You are dealing with people who have been taking gas and oil from citizens for a century or more. They don't have the same US Citizens are use to dealing with, so don't go it alone. I wouldn't.  Good Luck, but I don't believe much luck will be needed if you get the right lawyer.

Permalink Reply by Marcus Huey on February 10, 2016 at 10:45am

Indeed they are too big for mere mortals to take on...a good lawyer is required. What you say is what I was thinking and really appreciate the conformation Ron!

Permalink Reply by Jack Young on February 10, 2016 at 2:15pm

Sorry to say this, but a lease with effective storage language doesn't require production to remain in effect. The old 1900-era leases often didn't have the provisions that would be required for that today, but many were modified along the way such that the acreage they cover can be held now by nothing but storage. A good lawyer will be able to help, but they'll need a title search on the old lease to be sure that nothing has changed over the past 100+ years. You may be fine, or maybe not - good luck with it.

One other thing to remember is that if you're in a regulated storage field, it may be impossible for both practical and regulatory reasons to get your property drilled for deeper horizons even if you can get out of the old lease. This is too complex a subject for this forum, but determining whether you're in a regulated gas storage area is important too. If everyone around you is held by storage, there's not much you can do with a small tract of land unless you can find someone who is into vertical drilling. Some problems just can't be solved even with good legal help. Hopefully that's not the case here.

Permalink Reply by Philip Brutz on February 10, 2016 at 8:03am

Which State, county, Township are you in?  You may be part of a gas storage field.  You may want to do a search on this site for "gas storage",  this topic has come up several times here over the years.

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on February 10, 2016 at 12:37pm

You are welcome Marcus.

I had to address a problem at the house while I was revising the last message, so I apologize for the confusion in the sentence below.

Change This:  They don't have the same US Citizens are use to dealing with, so don't go it alone.

To This:          They don't have the same ethics US Citizens are use to dealing with, so don't go it alone.

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