Landowner Information About Oil And Gas Wells
Awareness of Oil and Gas Activity when Purchasing Property
If you are purchasing property in an area with known oil and gas activity (central and western New York), it is important to research and obtain as much information as possible prior to entering into a contractual agreement:
- Ask the seller about any unplugged oil or gas well(s) on the property. New York State Real Property Law (RPP 8- 242.3) states that a seller with knowledge of the existence of an unplugged gas well must disclose this information to the purchaser prior to the sale.
- Consult with your attorney to review the property deed for potential oil and gas clauses.
- Check DECinfo Locator, the New York State Mines and Wells mapping tool, or the Oil & Gas Searchable Database for nearby wells.
- Review oil and gas well maps from the appropriate Division of Mineral Resources regional office.
Undocumented orphan and abandoned wells may be encountered in areas of historical oil and gas activity. Please review Finding and Identifying Oil and Gas Wells for further information.
Private Oil and Gas Leases
Oil and gas companies may approach landowners and offer leases (private contracts), which give the oil and gas companies the rights to explore and develop the oil and gas resources beneath the landowner's property. While a successful exploration and development program could yield substantial monetary compensation to a landowner, there are still many risks to consider. Carefully review any lease and consult with an oil and gas attorney for legal assistance. Before signing, negotiate changes to meet your needs and protect your interests. For more information, read the Landowner's Guide to Oil and Gas Leasing.
Private oil and gas leases between a landowner and an operator are not subject to DEC's jurisdiction.
Purchasing Property Tied to an Oil and Gas Lease
You may purchase a property with an existing oil and gas lease. Generally, oil and gas leases provide operators with access to properties giving the operator (lessor) the mineral rights to the property for the time period specified by the lease, regardless of who owns the property. If the property is sold to a new landowner, he/she is bound to the lease agreement made by the previous property owner. The landowner will acquire the mineral rights back at the end of their lease if the lessor does not explore further or does not drill a successful well. A lease's terms may be extended if a successful well is drilled and the lessor makes consistent royalty payments to the landowner from the well's production.
Compulsory Integration Process
The compulsory integration process addresses landowners of an assigned spacing unit (an area allocated to a well) who have not entered voluntary lease agreements with the well operator. In addition, it protects landowners' correlative rights (fair access to a shared reservoir) by offering them three choices, at three different risk levels, for potential compensation for oil or gas production if the well is successful. This process only begins once DEC issues a well permit to the operator. Read the Landowner's Guide to Compulsory Integration Options for more information.
Landowners and Well Operatorship
While DEC strongly discourages the operation of wells by persons who are not oil and gas professionals, landowners may encounter opportunities to operate oil or gas well(s). This may occur when oil and gas companies offer to sell or give a well to a landowner when the well is no longer commercially viable or when a landowner purchases a property on which non-commercially producing well(s) are located. The prospect of "free gas" may be enticing; however, landowners must understand that operation of any oil or gas well is a regulated activity that involves substantial financial and potential environmental and safety risk. DEC advises against connecting any residence or other occupied building to a well for home-use. While the main component of gas is methane, gas coming directly from a well may also contain propane and butane, in addition to water, since the gas has not been treated. Given this, the gas may not burn correctly in furnaces and other appliances compared to utility natural gas that has been treated. Landowners are encouraged to conduct research, contact trained professionals, and contact DEC to learn more about the operation of oil and gas wells in the state.
Landowners who intend to operate oil or gas wells must first register with DEC by submitting an Organizational Report. To legally transfer well responsibilities from an oil and gas company or previous landowner, a Request for Transfer of Well Responsibilities must be approved by DEC. Upon DEC approval of the transfer, the landowner becomes the well operator and is subject to the same laws and regulatory requirements as an oil and gas company. These requirements include, but are not limited to, well maintenance, reporting, and - at the end of the well's life - plugging. Well plugging costs vary but can easily total tens of thousands of dollars. Downhole (borehole) complications encountered during well plugging can drastically increase plugging costs. An operator's failure to comply with state statutory and regulatory requirements can result in significant fines and penalties imposed by DEC. See Well Operator Responsibilities for additional information.
Safety Tips for Landowners
- Remember that natural gas coming directly from a well has no odor. Pipeline gas coming from a utility has a distinct odor because of an added ingredient. This odor makes it more likely that any leak will be detected before gas can accumulate to explosive levels.
- Be aware that oil wells commonly generate some natural gas. Never have an open flame, lit cigarette, or burning item near an oil or gas well.
- Never hook up a natural gas or oil well to your house. The risk of explosion due to natural gas build up in a home is much greater if that gas is coming directly from a well rather than a utility.
- If you have a "home-use" well connected to your house or other structure, install methane detection alarms in any closed space where methane may accumulate. Preferably, contact a plumber licensed to work on gas lines and have your fuel source switched to utility natural gas.
- Never put any material into an oil or gas well.
- Do not attempt to plug an oil or gas well yourself. All well plugging and reclamation of the land surface must be performed by a registered well plugger in accordance with DEC's well plugging regulations at 6 NYCRR Part 555.5.
- Contact the appropriate Division of Mineral Resources regional office to report any oil, brine, or gas leak from an oil or gas well.