Choosing to lease or sell the mineral rights to your property takes time. As you question the process, you may wonder how having an oil rig on your property will affect your day-to-day life. After all, giving an oil and gas company the green light to mine below your home and land means they’ll have a daily presence for the duration of the contract.
Here are a few questions to ask your landman or oil and gas company representative as you make a decision.
How is the oil rig constructed?
Before the oil rig is assembled, your land will be leveled and partially excavated to construct temporary access roads and drill a well if there’s no natural water source such as a river or lake nearby. A reserve pit will also be created to dispose of mud and other waste created by drilling.
Next, the visible equipment goes up. Land oil rigs feature a derrick, or tall structure to house the drilling equipment. This piece, which looks like an old grid-style telephone tower, is what you envision when someone mentions oil drilling. At the base of the derrick are several more parts, including the engines, electrical generators, a hoisting system, turntable, rotating equipment, drills and the circulation system.
After the oil is located and flowing, the oil rig will be removed, and production equipment is put into place to extract the oil from the well for as long as the supply is plentiful. Mineral reserves may hold enough to allow for drilling for a few years or a lifetime. It simply depends on the location of the well and the amount of resources hidden below the property.
Of course, all of this heavy machinery and construction work causes noise and a visual change of your landscape. How invasive this process will be to your daily life depends on how close the rig is to your home. If you own hundreds or thousands of acres of land, the entire production site may be located far enough away from your main dwelling that you aren’t bothered by the process. During the negotiation process, you will work with the oil and gas company, as well as their geologist to determine the best place to set up the work site on your property.
Do I need to take any safety precautions?
Oil drilling and production sites are hazardous work sites. In addition to heavy machinery and deep reserve pits filled with waste, exposure to gasses seeping from deep below the Earth’s surface is possible. One gas of concern is Hydrogen Sulfide, which is corrosive to metals and requires workers to wear respirators and protective clothing, according to the United States Department of Labor’s Occupational Safety & Health Administration (OSHA).
No person, pet or livestock should enter an active oil production site without official clearance from the site’s project manager.
Does mining affect my water supply?
Water is a necessity for mining operations. In addition to using water on or near your property, the process may affect your ground water supply or quality. It’s common for the groundwater supply to be tested before, during, and after drilling to record any changes.
Most contracts will dictate that if an oil and gas company contaminates the homeowner’s water supply, fresh clean water will be brought to the property. If you tend livestock, crops or a larger personal garden, pay extra attention to this portion of the contract. Find out where the clean water will be sourced from and how it will be brought to your property. Will a new water supply line be installed? Will you have a reservoir tank?
What happens when the drilling is done?
Once the contract has expired or the oil well has run dry, the well is plugged. The oil and gas company removes the underground casings and all the equipment above ground. Cement plugs are placed in the well’s borehole to prevent the flow of underground fluids. Then, the land is reclaimed by the owner.
The process of reclaiming will vary depending on your contract. Some companies will deconstruct the access roads and water wells, while others may leave them in place if you deem them as beneficial and desirable moving forward.
If you usually use the land for crop or livestock production, ask about including a surface damage clause in your contract so you will be compensated for the loss of income you would have otherwise earned by farming that area. Many companies will also offer to restore the land to what it was, so have photographs and pre-production soil sample results available.
Having an oil rig on your property will change your daily life. Only you can decide if the process is worth the extra income. Make a list of all your concerns and questions and present them to your oil and gas company representative and your lawyer before signing any contracts. Don’t hesitate to ask for a tour of a current production facility so you can determine how invasive the oil rig would be to your lifestyle.