Has anybody seen an Oil and Gas Lease requiring operators to limit emissions? I have seen many surface use restrictions over the years, but never any language that would require limiting emissions. I am not advocating anything, just examining the legality of including in an OGL requirements to do the most basic things such as capture vented gases, reduce flaring, checks for gas leaks, etc. I have clients who would might like to include such language. And an operator who is willing to accept anything reasonable, but I need a starting point. Thanks!
Those clauses might work if the mineral owner owns 100% of the minerals in the unit. Otherwise it would be impossible to implement or police. I can only imagine, an operator telling you he didn’t vent your gas, but did vent gas of one of the other mineral owners. Good Luck.
Appreciate the “good luck!” Interesting problem, though, right? I am open to any and all comments. We see wells with different lease clauses as to what deductions can be made for treating products or how products are priced. Obviously, that is doable, as long as the revenue distribution software can be tortured into delivering the correct payments. I completely concede your point as to partial interests and how could they literally be treated differently? Anybody else have any thoughts? Do we risk shifting liability to our mineral owners in any way?
You are mixing lease provisions regarding the determination of the royalties to be paid - such as subject to costs or not - with a provision regarding well operations conducted by the operator. The operator may or may not be your lessee. If your lessee is a non-operating WI, then it would have no power to dictate operations and might even decline to participate in the well rather than risk being sued for non-compliance. It would be difficult to write such a provision as detailed terms including engineering and other requirements and there would be nothing to enforce if it is written as a generality. Responsible operators check for gas leaks as that is lost revenues. The simpler solution would be to require royalties to be paid on all flared and vented gas and lease use gas, such as done in leases with State of Texas (General Land Office).
Good idea. I will suggest same. It sounds like the concern is more environmental than economic. Perhaps such a required royalty payment would provide sufficient incentive to an operator, responsible or otherwise, to comply with the general idea of limiting flaring, venting, etc.
Please inform your clients that many states are considering legislation that prohibits known environmentalist’s from owning mineral rights !!!