Leasing water from stream for fracing -What should I be concerned with?

Contacted 2 days ago to sign lease to permit stream water on my property to be used to frac 2-3 wells/4 miles away - Jefferson County/Ross Township, OH, "Long Run" stream.  DRAFT lease rec'd within 15 mins. of phone discussion.

Already leased some of my acres and in unit; they want to use my water to frac wells on unit I'm in.  Spent months drafting mineral rights lease so I'm fairly educated on that issue; no so on water leasing.  Land is vacant.

I'm aware of going rates per 1,000 gallons of water extracted plus land damages.  I can negotiate dollars; more concern for environment/backflow, etc.  DRAFT lease is minimal and seems weak.  What concerns should I have?  What should I research (outside of Ohio laws)?  Anyone else lease water from their land for fracing?  They need between 5 million and 7 million gallons, per well.  Any and all advice welcome.

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Permalink Reply by Jason Grecco on October 15, 2012 at 3:40am

CAM

I would require double backflow valves on every outgoing pipe.  One on each run of line.  Also, have a good indemnification clause construed for the environmental liability.  You could also require the O/G company to list you as insured. 

Out of curiousity what is the rate per 1,000 gallons of frest water.  I have heard many references per 42 gallon barrel.  You are welcome to message that to me if you want it to be kept private.

Jason

Permalink Reply by fotto on October 15, 2012 at 7:33am

What's the reasoning for requesting double backflow valves?

Permalink Reply by Jason Grecco on October 15, 2012 at 8:34am

The worst case, off the top of my head, that is a potential environmental liability with water extraction is a reversal in water flow that potentially contaminates your source of water and continues downstream.  The valves would allow for water to flow one way only.

 

Notwithstanding potential for downstream issues like a decrease in water flow and potentially anerobic conditions due to the dewatering activity itself.

Permalink Reply by fotto on October 15, 2012 at 8:58am

Ok, thanks, although... I was under the impression that the frac fluid was environmentally "safe" and it was the post frac "produced" version of it that was "less safe".

Permalink Reply by Jason Grecco on October 16, 2012 at 3:00pm

fotto

I am certainly not a "anti" fracing guy but frac fluid is not environmentally safe for surface water discharge.....it has a high Total Disolved Solids (TDS), a low PH, and many other curious items that would be a significant issue for fish and amphibian population.  Post frac fluid (flowback water) will have heavy metals and many other petroleum compounds.  

Permalink Reply by john doe on October 15, 2012 at 8:59am

I would like to know price per 1000 gallons also,I am told in PA we dont own the water even in a pond on private property but with a permit it can be sold.Not sure how true this info is.

Permalink Reply by CAM on October 16, 2012 at 12:59pm

Jason:  I have no offer on the table at this point.  I understand the going rate is between $1.00 & $5.00 per 1,000 gallons of water extracted, plus land damages.  Steubenville is selling waste treatment water @5.00/1,000 gallons.  I would negotiate higher - not out of greed - but the cost to transport water from where my land/stream is directly to well pad is under 2 miles.  Improved time, access, energy, and effort is minimal compared to trucking it up from Steubenville or alternatives.  Won't know more until chemical/pressure flow studies completed on stream/flow.  I'm flexible but ask the same...

Permalink Reply by zane zane on October 18, 2012 at 4:02am

i lease water and changed the wording to paying to draw water from my land not buy because i can't sell if i don't own also added 600 dollars monthly minimum check in case they don't use it because they tie up land on my lease for 5 years they have 90 days from signing to give first check or lease is void about 50 so far got nothing.

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