Oil & Gas Drilling Frequently Asked Questions
The City does not lease nor provide advice about leasing private property for gas exploration and drilling. Information provided by the City addresses general issues related to gas drilling and mineral leases and is not intended to provide advice on any specific legal matter or factual situation. This information is not intended to create and its receipt does not constitute a lawyer-client relationship. Readers should not act upon this information without seeking professional legal counsel. Gas companies offering leases for gas exploration and drilling for privately owned minerals, including those with the words "City of Southlake" as part of their name or logo, are not associated with or endorsed by the City of Southlake.
The Barnett Shale is a large natural gas reserve that stretches underground across a 15 county area in North Texas. It contains an estimated 26 trillion cubic feet of natural gas and is located approximately 1.5 miles below the surface. Its 6,000 + square-mile reservoir is already the second largest producing on-shore domestic natural gas field in the United States. In recent years, advances in drilling technology have made it possible for energy companies to extract large amounts of natural gas from the Barnett Shale. Recently, drilling activity has occurred in cities surrounding Southlake. To date, there are no gas drill sites located within the city limits.
What are the City's current regulations on gas drilling?
A Specific Use Permit (SUP) is required to be issued by the City Council following a recommendation by the Planning and Zoning Commission prior to drilling operations occurring within Southlake's city limits. Public hearings for the SUP to permit drilling are required at both the Planning and Zoning Commission and City Council meetings. At these public hearings, citizens may provide comment to the City on the gas drilling proposal.
If the SUP is granted, the gas company then must obtain a gas permit from the City. Obtaining a gas permit requires meeting the regulations of City Code which regulate oil and gas drilling.
Is the city updating current regulations regarding gas drilling?
Yes. The City is considering changes to the land use plan (Southlake 2025 Plan), ordinances and road repair agreement. A City Council task force committee has been formed to review the proposed changes to the ordinances. All task force committee meetings are open to the public and meeting dates and times are posted on the City's website. To find out the dates and times for the next oil and gas taskforce meeting refer to the events calendar on the City's website.
How far must a well be from my property or public structures/areas?
Currently, the distance requirement is regulated by the City's oil & gas ordinance. No well may be drilled closer than 600 feet from any residential structure or commercial building or within 1,000 feet from the boundary line of any abutting property with a public building, hospital, institution or day care center.
What should I do if the gas company wants me to sign a mineral lease?
Mineral leases:
- A mineral lease is a contractual agreement between two entities, the owner of a mineral estate and another party, usually an oil and gas company.
- The lease gives the oil and gas company or individual the right to explore for and develop the minerals that might be found underneath an area described in the lease.
- When you (the lessor) sign a lease you essentially become a partner with the company (the lessee). When a company holds a lease to your mineral property, you cannot lease those mineral rights to another company until the lease term with the first company expires. When the lease terminates, all rights to the minerals revert back to the mineral owner.
- If you intend to only lease your minerals, make sure you are signing a lease, not a document that transfers ownership.
Check out the company presenting you with a lease to sign:
- You may be contacted by a landman. A landman is the gas company's contact person. A landman researches the deed records to determine mineral ownership, locates the owners and negotiates the leases with mineral owners.
- Ask if the company that is leasing the land is the company that will be drilling and operating the drilling site.
- Inquire about the experience of the company in the area. Ask neighbors or other mineral owners and landowners about the company, who is your potential business partner. It is important to know who you are dealing with before entering into a lease.
- Ask for and contact references of other property owners who have dealt or are currently dealing with the particular company.
- To report any complaints related to the actions of a landman, you may contact the American Association of Professional Landmen, 4200 Fossil Creek Blvd., Fort Worth, Texas 76137. The phone number is 817-847-7700.
Before you sign a lease:
- All the lease terms are negotiable, except the owner's name and the legal description of the property.
- Until you understand the terms of the lease agreement or get professional advice, do not sign or agree to anything.
- Review the lease carefully and ask questions about anything in the lease you do not understand.
- A lease may be a long term commitment, so be sure the forms are in language you understand.
- Read pre-printed lease forms very carefully.
Lease provisions to consider:
DISCLAIMER:
The lease provisions listed below are not a complete list or explanation of mineral lease terms and are not intended to replace the advice of an attorney or other professional. Mineral owners who are unsure of their rights or do not fully understand the terms of the lease should seek advice from an attorney or other professional who is experienced in Texas oil and gas law before signing any documents.
The following are some, but not all, of the provisions in a typical oil and gas lease:
- A legal description of the area and number of acres involved.
- An effective date of the lease agreement and the anniversary date for the lease. Lease rental payments must be paid on or before this date in order to keep the lease in force.
- A statement of the primary term of the lease. The term may be any period of time, but it is commonly between 1 and 10 years. Standard lease provisions may allow for the renewal of the lease or hold it in force without your permission.
- Lease rentals. These rentals are paid to maintain the lease during the primary term and vary from lease to lease.
- Signing bonus. This is a guaranteed up front payment of money that is usually paid upon the signing of the lease.
- A royalty clause. The royalty is the share of the gas production that is reserved to the mineral rights owner. It is usually indicated as a fraction or percentage of the proceeds received from the gas that is produced. Royalty may be received in-kind, which means that the lessor may take physical possession of the oil or gas. However, the gas is sold to a refinery and the lessor receives payment for his or her share.
- Payment of royalties. Often, it is stipulated that payment must be received within 30 days of production, and each 30 days thereafter. Payment of royalties directly to the landowner by the gas purchasing company is desirable, so that there is no delay while the oil or gas company does its accounting.
- Landowner approval before a lease can be sold to another company. This prevents the lease from being sold to an undesirable company.
- Payment of damages for property and crops destroyed by the operations. Many leases contain an indemnification provision, which makes the operator liable for any and all damage and liability resulting from gas operations.
I do not want a landman to come to my door and solicit me for the sale of mineral rights. What can I do?
The City has a solicitor's ordinance to protect citizens. A person, other than a minor, shall not engage in solicitation activities in the City without first registering with the City and obtaining a registration and identification badge. If you wish to not be approached by solicitors, you may put post a "no solicitors" sign in a conspicuous place and by ordinance your property cannot be approached. Also, the city prohibits solicitation before 9:00 am or after dark. If you are approached by a solicitor without proper identification or documentation, you may report this individual to the Department of Public Safety. The non-emergency number to request a Southlake police response is 817-743-4524.
Can someone else own the minerals underneath my property? How can I tell if I own my minerals?
Yes. It is possible that the mineral ownership may be different than surface ownership. A deed/title search may be necessary for one to determine who actually owns the minerals under a piece of property.
Who can I call if I have a question?
Questions regarding drilling and operation of gas wells may be directed to the Department of Planning and Development Services at 817-748-8069.
Sources: City of Ft. Worth / TheBarnettShale.com