The Future of Fracking on Private Land & Ramifications for Mineral Rights Owners

General Mineral Rights Discussion
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I’m seeing more and more articles and opinion pieces written on the Democratic agenda for energy going into the 2020 election, with a particular emphasis on their supposed desire severely hamper the oil and gas industry in the US. I normally would blow this stuff off, but I’m seeing it more and more and it has begun to give me some concern. My previous understanding has been that the most that a Democratic presidency (and Senate, if they sweep in November), would do is ban fracking on Federal land. While this would be unfortunate for the industry as a whole (and the royalties revenues of many state governments), I’ve been under the impression that it would be difficult for the US government to regulate drilling and fracking operations on private lands.

However, could a Democrat-controlled US government implement regulations that make drilling prohibitively expensive or unsustainable on private land also? It seems to me that such regulations would send shockwaves through Texas and adversely effect thousands of mineral rights owners in the state.

Perhaps this is something that should be categorized on the Law & Legal section, as it is chiefly a function of what can or cannot be legislated concerning drilling and fracking on private lands. In any case, I would be grateful to hear the thoughts of those wiser than I concerning the perceived viability of drilling on private land in the Permian Basin and beyond, even under a Democratic US government.

EDIT: I should also note: I do not broach this subject in the interest of instigating a debate about who should/should not be in control of the White House and Senate come November. I am simply interested in the thoughts and insights of folks here related to the potential consequences for drilling on private land should a Democratic sweep take place.

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www.oklahomaminerals.com has a featured article on that very topic in this morning’s posting. It is called "U.S. shale producers race for federal permits ahead of presidential election. " It pertains to federal lands.

I am not making any political statement, just offering the article. It has the same flavor as several webinars that I have listened to recently regarding investment in the oil patch. I am sure there are other opinions as well.

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@M_Barnes Thanks so much for the link to the article. If you know of any recent or upcoming webinars that are open to public signup, I would definitely like to know.

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Some of the sites that I monitor are www.oklahomaminerals.com, NARO (National Association of Royalty Owners), Enverus (a subscription service, but they have free webinars), Hart Energy Newsletters, Oseberg, AAPL (American Association of Petroleum Landmen), Houston Geological Society, AAPG (American Association of Professional Geoscientists) , Oklahoma Geological Society, LinkedIn, the Operator websites, etc. As a mineral owner, I want to know what is going on in the mineral space -geology, land, mineral ownership, mineral buying, bankruptcies, legislation that affects my family minerals, etc. There are many free websites and during the COVID time frame, some good webinars from excellent speakers.

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I’ve been worried about this, too.

I’m still getting some calls from companies wanting to purchase my oil rights.

I’m going to hang tight for now and hope I don’t regret it in a few months.

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Federal permits will be useless, if the Federal Gov. puts a hold or a moratorium on the permits and new drilling and they can also stop production from existing Federal leases using " review" and environmental clauses.

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You can just see what has happened in the State of CO, it affects private lands. In the last election cycle, the various oil and gas regulations were put on the ballot and voters rejected it, soon after taking office, the new Gov. of CO. started using executive orders to issue new laws for oil and gas, they also changed the mission of the oil and gas commission and now the State lawmakers keep passing new laws limiting oil and gas. Pre COVID, many companies were slowing down and also leaving CO, with COVID it has made it worse. Also in CO, townships and cities, have been passing their own moratoriums on oil and gas activities. If JB & KH end up winning , you can expect these policies to spread like wildfire at the federal and state levels and they will find ways to put moratoriums that can go on for years and years. Look at the moratoriums right after the Macondo well blowout in the GoM. It caused so much damaged to the offshore US GoM business.

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@crowne_energy I appreciate your thoughts on what’s going on in CO, thanks for sharing. I’m yet not convinced that what’s happening in CO is an indicator of what will happen in TX, much less the TX Permian Basin.

What’s occurring in CO may spread like wildfire, as you put it, in other parts of the country.

I suppose time will tell.

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NM is on the same path as CO, not as bad yet but they will be getting there soon enough. I dont think TX, WY, ND will have the effects on the scale as CO has been experiencing but if JB & KH get in , they will do everything in their collective power to somehow diminish, control, slow down, stop new drilling in one way or the other. Moratoriums under the guise of, " we need to study" “review” etc , will end up in a lot of law suits , time and money wasted, jobs lost. They will try to use every tool to somehow, in some way , try to slow down/stop drilling. They will try to stop the growth of US oil and gas , and remove sanctions against Russia, Iran and Venezuela.

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Agree 100%. It’s greater than that though. They want to take away personal property rights & give them to the “state”. The oil & gas industry will be the first to go because it gives individuals financial strength through royalties.

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@TODD_M_Baker Wow, that is dire! I didn’t realize that our personal property rights were at stake in all this. Do you have any sources to corroborate that? I’d be very interested to learn more.

I would certainly be bummed if the Federal Government stripped our personal property rights and gave them to the state in the near future.

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I am saying that in the context of banning drilling on private lands. That amounts to the confiscation of your rights to develop your mineral assets.

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Dear Native Dancer,

I am replying to your email because I too am concerned! The problem is public sentiment. Just as you as seeing more and more emphasis by one political party to “ban fracking”, oil and gas is bad, etc. the rest of the public is seeing it too and it IS influencing them. If drilling on federal lands is restricted or banned, your minerals could be in the same sections(s) or pooled unit that would definitely keep your minerals from being developed. Every single one of us mineral owners need to speak up! The anti oil and gas crowd is very vocal and we must speak up also or our rights to have our minerals developed will be crushed. Your concern is very real! Keep speaking up. Write op-ed’s, testify, etc. Every voice is important.

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As big an issue as this, is the attempts by blue states to try to turn oil and gas companies into the “new tobacco” and drive them out of business with climate change lawsuits. Several federal courts have ruled these suits cannot stay in federal court, meaning these companies are stuck defending the suits in state courts.

So how much longer until some overzealous local state attorney gets the bright idea to expand these suits to be against mineral and royalty owners also? We need a federal law preempting these suits and dismissing them, like yesterday.

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NM governor said she will ask for a waiver exempting NM from future ban on fracking public land, according to OklahomaMinerals article M Barnes posted (same available on Reuters). Would Biden have mercy on a Democratic state? Perhaps he would ban public fracking, and seek to compensate NM with some sort of quid pro quo handout.

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Possible Biden scenarios, no wish to quarrel. What are the Biden scenarios, assuming Democrats win White House? Facts. (1) Biden promised to ban fracking on public lands, not private. (2) Millions of Americans desire all-out war on fossil fuels, despite their continued oil & gas consumption. (3) O&G demand will continue rising for many years, despite increases in alternative energy.

Conservative scenario, 15% probability. Brag about new environmental rules, but do not curtail U.S. production. Make a big show of reversing Trump administration deregulation & introduce environmental regulations to clean up O&G, e.g., reduce methane emissions (E&P companies are already reducing methane waste dramatically). Ban fracking on public lands only for certain fragile areas like the artic, New Mexico fracking bans will be watered-down or delayed by studies or proposed regs that E&P companies can overturn or delay in court. Biden and grownups in the party choose this path due to weak post-Pandemic economy, and behind-the-scenes recognition of economic & geopolitical consequences of war on fossil fuels.

Moderate Scenario, 35%. Biden pays lip service to his promise, but in go-slow stages. Biden imposes moratorium on new public land permits, pending a 2-year study. Boast about plethora of new regulations to clean up E&P. E&P companies continue drilling their existing permits in New Mexico, and also their held-by-production acreage. No impact on markets and economy.

Liberal Scenario, 35%. Biden fulfills his promise, permanent cessation of new permits for public lands. Although E&P companies are allowed to drill their existing permits in New Mexico and elsewhere, new regulations raise costs & reduce production on both private and federal lands. O&G futures rise sharply. Putin, Mohammed bin Salman and OPEC celebrate. Private land owners enjoy increased royalties, at least in the near term. Tesla’s market valuation triples in one week.

Draconian, 15%. Feds prevent drilling existing federal permits, and impose regulations to curb fracking on private lands. E&P companies & states file lawsuits, government wins most suits after protracted litigation. Iran finds itself in control of global supply by blockading the Hormuz strait. Negative consequences lead to Republican gains in the mid-term election.

Litigation, 100% probability. Frivolous lawsuits increase against pipelines & energy companies, abetted by newly appointed judges with liberal/environmentalist bias.

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