Dr. Shannon L. FerrellAssistant Professor

Oklahoma State UniversityDepartment of Agricultural Economics

Oil, Gas, Wind and Agriculture:Can’t We All Just Get Along?

Our topics today...

• Surface Use and Damage Considerations• Water Use• Fluids Application• Wind Energy Agreements• Oil, Gas, Wind, and Agriculture

BEFORE geophysical testing

• Document water quality and quantity with certified test

• “Before and after” pictures (literally and figuratively)

• Inform company of areas to be avoided• Everything in writing!

300 feet660 feet

Surface use agreements

• Consultation for siting• Setbacks• Attach map• Fencing requirements• Plow-depth restrictions• Specify double-ditching

Considerations for an application agreement

• Full legal names of all parties • Sample analyses• Map of application area

– Setbacks– Restricted areas– Access points

Top 10 Things Your Stakeholders Should Know About:

Surface Damages

1. Know the surface damage laws.

2. Know what factors are considered in damage calculations.

3. Maintain a (good) relationship with mineral owners.

4. Consider drafting a surface use agreement.

5. Consider drafting an exploration agreement.

6. Document the condition of the property before entry.

7. Keep good farm records.

8. Don’t forget restoration issues.

9. Brainstorm non-monetary compensation forms.

10. Brainstorm what you have that may be of value to the company.

Water, water, everywhere…and we’re using it all for hydrofracking.

• Allowed uses?• Restrictions to on-site uses• Timing and source restrictions

Considerations for fluid application agreements

• Who’s the applicator?• “Material breaches”• Notice – where, when, and how• Indemnity• Payment terms• Tenant terms

Crop insurance

• Impacts of fluid application– Read your policy documents carefully– Consult provider BEFORE agreeing to

application– Explicitly address crop insurance and fluid

application in your written lease

The Top 5 Questions to Askabout Wind Leases

1. How will your current uses of the property be

affected by the project?

2. How long will agreement last?

3. What are your obligations under the

agreement?

4. How will you be compensated?

5. What happens when the project ends?

How will your current uses of the property be affected by the project?

• American Wind Energy Association estimates total area of ≈ 60 acres/MW of capacity.

• ≈ 3 acres (5%) to actual physical occupation of land.

• ≈57 acres (97%) to exclusion area for windflow preservation.

¼ section (160 acres)

Image from Google Earth

Field Impacts

How long will the agreement last?

• Agreements typically run from 30 – 99 years (150!) BUT– Leases have to be carefully reviewed for

renewal clauses

• Is renewal automatic?

• Will notice of renewal be provided?

• Is there any opportunity to re-open lease terms at renewals?

What are your obligations under the agreement?

• Indemnity? • Property taxes?• Subordination / property interests• Compliance with government programs (CRP,

EQIP, WHIP)?

How will you be compensated?

• What are your payments for easements?– One-time, up-front, or periodic?– What unit is used?

• What are your lease payments?– Per turbine, per megawatt, or a “royalty?”– Definitions matter!

• What is included?• What is excluded?• What can be deducted?

– How will accuracy be verified?

What happens when the project ends?

• After project term is completed, will the agreement provide for: – disassembly and

removal of equipment– restoration of grades

and soils– replacing vegetation?

• What assurances are in place?

Oil and Wind

• Who has to moderate between the oil company and the wind company?– What does the agreement say?

• Exploration Rights Act of 2011– Confirms right of mineral owner to

reasonable use of surface– Developer must provide notice of

construction to oil and gas operators

– Developer must publish notice of construction in local newspapers

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860 feet

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570 feet

125 feet

THANKS!!!

Shannon L. Ferrell

Assistant Professor, Agricultural Law

Oklahoma State University

532 Agricultural Hall

Stillwater, OK 74078

E-mail: shannon.l.ferrell@okstate.edu