M any Colorado citizens are being contacted by "land" people who visit landowners in order to close a contract deal locking in the oil and gas rights for future exploitation. Unfortunately, the high pressure techniques used are not well known to the average citizen nor are the community wide impacts of these "independent" decisions. This article is intended to provide limited insight into the methods often by used by these companies and reveals the sleazier side of the Oil and Gas industry.
These companies will often start with a complete demographic analysis of the persons they are going to be selling to. Income levels, general political viewpoints, and environmental activism concerns are all part of the campaign to acquire lease rights. As citizens become educated from environmental groups and public interest entities, the selling job becomes far more difficult and so these companies stress the need for a quick contract without addressing the environmental and financial impact concerns associated with oil and gas exploitation. They operate much like the maligned car salespersons who know that once a customer exits without purchasing, the sale is highly unlikely to occur.
Appealing to the landowner's sense of patriotic duty by stressing the importance of developing domestic sources of energy rather than depending on "foreign" sources is a key emotional selling point. The salespersons clearly avoid the issues related to the reality of domestically produced oil being sold to foreign markets, for instance. They also do not entertain any discussions of the oil and gas reserves on domestic soil being conserved for precisely what they are - American reserves for future generations to use!
A review of the industry financial experts clearly indicates that the world is awash in crude oil at the present time. More reserves have been discovered and deeper drilling methodologies have enabled the world's oil and gas supplies to be increased without the need for urgent further exploitation. Don't be fooled into believing that these companies are different because they are portrayed as a small business either. These leases are more often sold to the giants of the oil and gas industry, including companies with foreign ownership interests.
Fracking, the process of injecting carcinogenic, polluting fluids into a well under high pressure to release gas by literally cracking the subsurface strata, is of concern to many landowners. It should be of major concern. Not only does fracking involve the use of dangerous chemicals, should a failure of a well casing occur, aquifers upon which counties, individuals, businesses and farmers depend can be threatened and destroyed. Making contaminated water usable for animal and human consumption can add thousands of dollars to individual costs and millions of dollars to clean municipal water supplies. The entities seeking your mineral rights will not discuss the existing water contaminations in other parts of the US, nor will they indemnify the landowner from subsequent liabilities. Despite governmental regulations these industry practices while fully compliant to regulation are inadequate and threaten everyone who depends on these public resources.
Another seldom discussed issue is the impact of both heavy truck traffic and noise which results from any drilling operation. Often these wells are placed in largely undeveloped farm land where roads are often dirt and minimally maintained for the small amount of light duty traffic they incur. Once mineral exploitation begins the roads become the conduit for a steady stream of heavy duty trucks. Governmental maintenance of these roads will fall on the taxpayers back unless the exploitation companies are forced to pay for the road maintenance. While the naive may see the short term impacts of roads and noise as a small price to pay, the damage and ongoing impacts could be decades long and radically impair the future value of real estate thru out an area of exploitation.
Some major banks have started not to provide mortgages for homes with mineral rights because the real estate values can be adversely affected. With well pads requiring tens of acres for initial and ongoing exploitation and with multiple wells per square mile the norm and not the exception, the impact on neighborhoods can be devastating. Seldom, if ever, is a single well adequate and many government entities do not understand the impact of opening a land area to development. In reality, many government entities see the increased revenue from mineral exploitation more important than individual landowner protection.
will often permit the well for greater consumption rates (millions of gallons) than permitted for dwellings or other uses. Once used, this water supply becomes contaminated with chemicals, crude oil and gas constituents, and possibly radioactive radon which is released thru the drilling process.
This water is supposed to be trucked (more trucks!) and disposed of per EPA regulations. Often the EPA permits the water to be injected underground into non producing dormant wells where eventually it may contaminate local underground water supplies. Release of radioactivity has been shown in many fraced wells and is a concern of the EPA. It should be noted the regulations concerning fracking were removed in closed door meetings chaired by the previous Bush Administration. The current Republican House of Representatives is attempting to defund the EPA and remove the critical oversight this agency has over these issues.
Perhaps the last issue that a landowner should be concerned about is the details of the leases themselves. All landowners should seek a legal review of these documents prior to signing them over. While these leases may appear to be short term, they can contain hidden obligations, compliant to state regulation, which enable the leases themselves to be rolled over for the duration of time that the well is in production. This period of time can be decades long in duration.
In summary, the leasing for mineral exploitation is a complex issue that should not be taken lightly. The short term allure of royalties may seem beneficial and welcome in these stressful times, however, the impacts on the longer term quality of life within our communities as well as the financial impact of dramatically decreased property values should be of concern for all citizens. We all need to become actively involved in applying political pressure on our county and state elected officials to put the power to regulate within the citizens hands - not into the hands of the large corporations.
Colorado Taxpayers Need to be Aware
of the Duplicity of Oil & Gas Developers
By Tony Corrado
"Tony is an engineer with extensive technology and management experience. He has served as a member of local government Boards during intensive developmental phases and as a recent a resident of Elbert County he is concerned about the environmental impact of uncontrolled Oil and Gas development. "
Another ploy to be wary of is the point that that they are looking for oil and not gas. The reason may not be obvious.
Associated with the mineral exploitation is the necessity for massive consumption, and subsequent disposal of, water which is used during the entire life cycle of the producing well. The water is often taken from a separate well drilled into the aquifers. This adds significantly to the depletion of the aquifer's water supply as the governmental regulators
An Engineer's Point of View
A Consumer's Guide to Oil & Gas Self-Defense