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Planning for Gas Leases

Planning for Gas Leases. Planning For Gas Leases. Daniel S. Dineen, Director of Planning Cortland County Planning Department 37 Church St. Cortland, NY 13045 ddineen@cortland-co.org (607) 753-5043 FAX (607) 753-5150. Exploratory drilling.

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Planning for Gas Leases

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  1. Planning for Gas Leases

  2. Planning For Gas Leases • Daniel S. Dineen, Director of Planning • Cortland County Planning Department • 37 Church St. • Cortland, NY 13045 • ddineen@cortland-co.org • (607) 753-5043 • FAX (607) 753-5150

  3. Exploratory drilling • Has been occurring for several decades in other parts of the country • has recently become an issue in the northeast • has not been incorporated into zoning laws in NYS but other areas of the country have developed land use regulations

  4. Gas leases • Contractual agreement • binding document establishing time, price, and any other conditions of the lease • gives the energy company access to the site, the right to prepare the site as needed, and to drill on the site • landowner receives compensation on a per acre leased basis

  5. Gas lease • Term of lease • shorter lease equals smaller payments • if exploratory program is not over, the lease can be renewed or the gas rights revert to the property owner • EXCEPTION - if gas is found during the lease period, the operator retains their rights to the gas for as long as the well is productive

  6. Gas lease • Advantages • lease fee • if successful • owner receives compensation as a % of gas produced • may be allowed to tap into the gas reserve for life of well

  7. Gas lease • Disadvantages • disruption of land : building of roads, removal of trees, topsoil, vegetation, etc. • erosion due to clearing of land • possibility of leaking of drilling fluids into the ground • noise • equipment storage

  8. Gas lease • Lessee is required to reclaim the site to the extent possible (topography, vegetation, etc.) • Purchase of Development Rights program • if property has a conservation easement, can not enter into a gas lease • gas lease can only exist if entered into prior to placing property into conservation easement

  9. Gas Lease • Factors to consider before signing lease • check references • check with neighbors • negotiate lease payment • negotiate term of lease • damage settlement • negotiate location of well, storage tanks, access roads, pipelines,etc. (Pipelines should be buried below plow depth)

  10. Gas Lease • Negotiate a ‘free gas’ clause • limit total combined acreage of gas lease • limit the storage of hazardous materials on site • disposition of well once it is no longer in use

  11. Gas leases • Other considerations • drilling rig will run 24hrs. a day 7 days a week • can affect wells in rare instances

  12. Gas leases • Land use regulations pertaining to exploratory drilling • regulations exist throughout the country but very little in NYS • Clermont,NY requires zoning permit from zoning enforcement officer for drilling activities in the floodplain

  13. Gas leases • Other examples of land use regulations pertaining to exploratory drilling • Napa,CA • requires temporary exploratory probe permit • similar to special use permit with site plan review • requires holes to be sealed within 365 days from commencement of operations • requires indemnity bond to insure site is returned to original state, to the extent possible • requires liability insurance • work must commence within 60 days of issuance of permit

  14. Gas leases • Other land use regulations pertaining to exploratory drilling • Garden City,KS • exploratory drilling prohibited within 25ft. of a building • prohibited within 25ft. Of a property line unless the adjoining property is also under a lease agreement • drilling locations and equipment shall be enclosed in temporary fencing of at least 4ft. in height

  15. Gas leases • Garden City,KS (continued) • gas wells and equipment require chain link fencing a minimum of 6ft. in height • drilling, completion, equipping, repairing, and maintenance of wells can only occur Monday through Friday between the hours of 8am and 5pm

  16. Exploratory drilling • Does not appear to require a building permit for exploratory drilling • appears that the Town can require site plan review

  17. Gas leases • References • “Mother Earth News” issue #85 • www.motherearthnews.com • Ohio Department of Natural Resources “Mineral Resource Management” • www.ohiodnr.com • Town of Clermont,NY zoning • www.nypf.org/clermont.htm

  18. Gas leases • References (continued) • Napa,CA zoning • www.co.napa.ca.us • Garden City,KS zoning • www.garden-city.org

  19. Gas leases • ???Questions???

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