Attorney Urges Landowners to Be Savvy When Signing Gas Leases

Linda Williams
Southwestern Pa. Correspondent

BEDFORD, Pa. — Dick Ehmann, a retired attorney specializing in gas and oil leases, spoke to a group of about 40 at a recent meeting here sponsored by the Southern Alleghenies Woodland Owners Association.

Ehmann zeroed in on leases now being offered to local landowners to drill Marcellus Shale wells.

The Marcellus Shale could be a major source of natural gas. Gary Lash, a geology professor at the State University of New York, and Terry Englander, a geoscience professor at Pennsylvania State University, estimates that the Marcellus might contain more than 500 trillion cubic feet of natural gas. An enormous pocket of the Marcellus is spread from New York through Pennsylvania and into West Virginia.

Consequently, gas companies have been knocking on doors of area residents offering contracts, which Ehmann says, “may or may not be good.”

“Because the area is often land rich and cash poor, some tend to take the first offer they get,” Ehmann noted. He said he has seen offers as high as $2,000 per acre and a $3,000 bonus is possible. While the law dictates an 8 percent royalty, some get as high as 20 percent.

“I would suggest that you never trust the company people,” Ehmann said.

While he said he was not there to attract clients, being retired, Ehmann suggested getting a good attorney before signing anything. Two experts in this field, one from Harrisburg and one from Pittsburgh, attended the meeting.

Ehmann said that all landowners wishes are valid, “but you must put (them) in the lease. Some folks want the lease but want their property left alone, others are happy to lease but want tight control. It must be spelled out in the lease if it is okay to store gas on your property. Small plot owners may not want a gas well on their land. Those with many acres would find a well quite acceptable.

“The landowner with the gas well will certainly get the free heat for his home,” Ehmann added.

He cited one client who had a gas lease for a number of years. When the gas was no longer acceptable for commercial use, the landowner asked that they allow the well to remain working. He continued to heat his home for 20 years.

Ehmann believes “unitizing” or combining land is the best way to go when creating a lease. “The bigger the block, the more negotiating power and you only have to hire one lawyer,” he noted.

“Read every word of the lease,” he said, “and if there is something you don’t like, that is why God made black markers.”

“Never rely on DEP to protect your land,” he added. “Anyone who does is a fool.”

For those with forested land, Ehmann suggested getting a forester to check out any trees the leasing company might want to remove. If the gas company has to install a road, ask them to keep it as narrow as possible. Require that the road be gated to keep undesirables off of it, such as four wheelers. Ask them to have it gated with a key. He suggested contacting both an attorney and a petroleum engineer. Neither one knows everything, he said.

Another suggestion was to ask gas companies to bring in a portable toilet before the work begins. “You don’t want human contamination on your land or near your water supply,” Ehmann warned.

In answering questions from the floor, Ehmann noted he is not certain if the recently passed Supreme Court rulings on eminent domain will affect mineral rights. “I would like to think they will not, but on the other hand, I can see that they might.”

He agreed with one comment regarding local lawyers. “The gas companies will use the local lawyers,” he said. “And, no lawyer can be an expert in everything, therefore, find one who has been writing a lot of mineral rights leases.”

Dave Schreffler of the Pennsylvania Game Commission said gas companies have been leasing land from the Game Commission. “We have been able to swing some good deals,” he said. “Don’t be afraid to negotiate!”

The meeting followed closely on a Bedford County Extension sponsored event about two weeks earlier. Melanie Barkley of the Extension office noted nearly 150 people attended that event. Barkley said that, sadly, some folks in Tioga County had signed $5 and $10 per acre leases without seeking help.

“You can ask for too little or too much, jump too soon or too late,” Barkley said. “It is important to seek professional advice.”