WETLANDS INCLUDED IN LAND LEASED FOR NATURAL GAS WELLS!

The total land leased is 270 acres which includes approx 70 acres of what could be "wetlands".

The land has been subdivided into 10  lots of various sizes from 10-40 acres with 10 owners each owning a pro-rata share of the mineral rights.  We are under the impression that all the owners

would share in any royalties no  matter where a well would be drilled.  Could the "wetlands" included in the leased area be left out of the "production unit" because the gas company wanted no to wait for

approval from the Corp. of Engineers.  There is plenty of dry land to put the wells on to avoid the wet areas but the gas company said if any of the "laterals" went under the wet area that would require corp of engineers permit approval.  The main reason the question is important now is that the 70 acre parcel

that has the majority of the wet lands wants to purchase some additional wet land from my land in return

for me keeping the mineral rights on the land traded to him and he is willing to included additional  mineral rights on his (wet) land.  Can the gas company leave whatever land they want out of  the drilling unit?  If so, the wetland owner without any skin in the game would be a risk for future lawsuits that any

drilling might someday harm his wetland?  Interesting?

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Permalink Reply by george m vietze on May 7, 2014 at 10:13am
Permalink Reply by george m vietze on May 11, 2014 at 10:09am

The company that specializes in Wetland Mitigation Banking informed me that if the project meets their criteria they are not interested in putting up all the money necessary for approval of "credits" and working on a joint venture but are interested in purchasing the "surface rights".  The owners can hunt, recreate on the land but not "put a shovel in the ground".  I would be interested in selling the surface rights and keeping the mineral rights but I have a few questions.

1. option to purchase credits

2. since the property is leased and the lease provides for drilling wells would that prohibit a "wetland reservation or bank".  The gas company would not put the pad on the wetland because there is plenty of "dry land" but the fact that the lease covers all the land would that complicate matters.

3.  A wetland bank could come up with all types of potential problems-rare species,

rare plants, and other sensitive areas would that make it more difficult to get a permit to drill.  Would purchase of "credits" solve that problem?

Those are reasons why your "management company" idea, imo, is a good one,

setting aside other issues like "conflicts of interest", trust etc.,

015334grltd9mPermalink Reply by 015334grltd9m on May 11, 2014 at 11:45am

George I wish I can help you on this, but really I am not the expert on wetland mitigation. 

I strongly suggest that you contact Bill D'Avignon in the City of Youngstown and he can advise you or recommend an expert.  I am very interested in the results of your inquiry because as Land Managers we will be affected.  Good Luck!

Permalink Reply by James Foster on May 6, 2014 at 5:52pm

There are plenty of wetlands, streams, creeks etc included in well units in Ohio.  The Army Corp of Engineer requirement is true here as well.  From what I have seen there is no special wait time just procedures to follow and applications to submit.  The number of pages just for a drilling permit here in Ohio is unbelievable.  Then ad in any special situations such as urban drilling, hydrogen sulfide townships, abandoned coal mine townshipe, forced pooling.  There are pages and pages of regulations that every company has to be familiar with and file the proper paperwork.   There are many people who spend their days filing paperwork with ODNR, PADEP,  WVADEP and other states too for well drilling permits.    I am sure they have a lot of experience doing this by now.  I doubt there is much wait time.  They have procedures when working with wetlands.  They submit for approval what they will do and since they have done many times already they know what ACOE is looking for in the paperwork.

I am not sure how you would exclude the wetlands from a unit.  The unit is laid out in order to meet set back requirements of whichever state you are in then it is usually layed out in a particular direction based on the shale deposit ... in our area of Ohio ... they go SE or NW.  Units here are typically 640 acres or 1280 ... rectangular in shape although there are exceptions.  I am sure it is possible to create a unit that does not include wetlands but not sure why a company would do that.  Pipeline is a bigger problem with wetlands than drilling because you are so much closer to the surface ... drilling mud can leak into the wetlands and did here on one of our pipelines recently.  Fortunately drilling mud is just that mud and not flow back water.  I don't think they would put the pad etc anywhere near the wetlands if they could avoid that.  You are asking now that the unit is set can they exclude the wetlands?  My opinion only but no they can not and no they will not.  There is no reason to do that IMHO.

Permalink Reply by george m vietze on May 6, 2014 at 6:07pm

Thank you James, the property is 270 acres and is leased (HBP shallow Medina well).

My question is, if a drilling unit is put together could they leave out the "wet lands" from the drilling Unit.
You seem to think they would not because there is plenty of land to put the drilling pads on dry land.

My neighbor owns 70 acres of mostly "wet lands" and I am trying to purchase 50% of his mineral rights

by selling him some of my wet land to add to his hunting land and I will keep the mineral rights on the land I trade him and pick up some of the mineral rights on his land.  Are mineral rights on "wet lands" valuable or are they less valuable than dry land mineral rights?

Mitigating of wetland according to Ron Eiselstein may add additional value to wetlands?

I understand real estate but the learning curve of the mineral rights are quite extensive.  I am sure our property is not the only property with this problem and I thank you for your information.

Permalink Reply by gary smith on May 11, 2014 at 6:35pm

this stuff makes my head hurt. how does a lateral thousands of feet down affect a wetlands?

Permalink Reply by Kathleen on May 12, 2014 at 3:50pm
I don't get it either. I get how pipelines or pads would but not a horizontal leg drilled 6-7 thousand feet below.
IMO you have to look at all minerals when deciding if the wetlands have less value for minerals. Can anyone mine for coal there? I would say not, so in that instance the minerals are worth less.
In this market coal is not what they are looking for so maybe the minerals aren't valued less.
Again I can't imagine for a sec anyone is worried about drilling 6-7 thousand feet below acres and acres of wetlands when the pad could be 4-5 thousand feet away from the wetlands on the surface.
Permalink Reply by george m vietze on May 12, 2014 at 4:43pm

I  agree with you, but in the process of trying to decide if I want to trade the surface rights for the mineral rights on the adjacent wetlands I asked the gas company who owns the lease what problems the wetland may encounter.  He said they would have to deal with the Corp of Engineers as well as the DEP even though the pad would be on the dry land if the laterals

impacted the wetlands even if they were deep underground.  This may not be a deal point and just entail a more complete application and a little more time to get the permit approved.

During that due diligence I came across the concept of Wetland Mitigation Banking.  The gas company said they were already working on a wetland project and they would be interested in "credits".   Credits from Mitigation Banks on Wetlands allow the gas company 

to use those credits to obtain faster and less expensive approval of permits.  The company I contacted to see if we could implement a Wetland Mitigation Bank said that if the project qualified they would only be interested in purchasing the surface rights on the wetlands

to form a bank.  I would be interested in selling the surface rights because my main interests are the mineral rights but my concerns:  1. They create or find more sensitive items on the wetland which make the "credits" more valuable but make drilling approvals more difficult. ie.,endangered species, bird migration etc etc.,

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