From the Youngstown Vindicator:
By Burton Speakman
A group of Lordstown landowners is attempting to gain more control and protection regarding oil- and gas-drilling activity that soon will be coming to the area.
Although Halcon Resources Ltd. already owns the mineral rights to the property, the company is trying to amend the leases to allow larger drilling units, said Michael Hodak, president of Lordstown Regional Landowners Group. The larger drilling units are considered necessary for fracking, a process in which sand, water and chemicals are pumped into shale at a high pressure to release the gas trapped within the rock thousands of feet underground.
“The request for larger drilling units got us a seat at the table,” he said.
The issue is Halcon does not want to change much within the contract because the company already owns the deep mineral rights, Hodak said.
Houston-based Halcon paid $194 million, or more than $6,000 an acre, to NCL Appalachian Partners of The Woodlands, Texas, to purchase the deep mineral rights for 31,000 acres mostly near Lordstown — primarily in Trumbull County but with a small portion in Mahoning County. Most of the leases were signed in the 1960s, ’70s and ’80s.
Older leases do not provide any protection for landowners. Fracking creates a much-larger drilling pad compared to conventional drilling and compressor stations, adding to the possible land use, Hodak said. Therefore one landowner could have significantly more surface disruption.
Farmers under the current agreement would receive much less for land used by the company than what they could earn farming, he said.
“Landowners need to have more say in land usage,” Hodak said.
Lease terms such as royalty percentages, currently in the agreement as 12.5 percent, also will be discussed, he said.
“We’re not anti-fracking; we want Halcon to be successful,” Hodak said. “The question is at what cost.”
The issues facing the Lordstown group are not uncommon with older leases, said Alan Wenger, an attorney with Harrington, Hoppe & Mitchell Ltd. who represents the Lordstown group and has worked with several other landowner groups on leases.
“The companies will come to landowners and say it’s in their interest to sign, all their neighbors have signed and if they don’t sign, the company will skip over them and drill somewhere else,” he said.
The issue is these older leases do not provide protection to the landowner; the chance to renegotiate is when the company seeks to expand the drilling-unit size, Wenger said. The older leases also do not have provisions on how far drilling units should be removed from buildings or where driveways for access should be built, which are part of modern leases.
The key is for the lessee in agreeing to larger drilling units is to ensure the company uses a significant portion of the property for production and doesn’t simply hold it for production by using a small portion and reducing any potential royalties, he said.
The group in Lordstown represents more than 30 landowners who own more than 5,000 acres of property. The group has been adding landowners recently as well, Hodak said.