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Considerations for Surface Use Agreements

Posted: April 10, 2011

Many landowners are being approached to lease land for surface use for infrastructure. What should a landowner be aware of? Here are some items to consider

Landowners across many areas of Pennsylvania are being approached by natural gas companies for surface use agreements.  These agreements cover various surface activities such as the placement of access roads, compressor stations, water impoundments, pipeline activity, or gas storage infrastructure on the landowner’s property.  The terms and conditions of surface use agreements depend largely on the type of infrastructure proposed.  However below are some important items to consider when approached about any type of surface use agreement. These items are provided to illustrate the range of items to consider and are not meant to be a comprehensive list of surface use addenda:
1. Who has access to the site and where is the access point/route?
2. How much traffic will the site receive on a daily basis? How frequently do workers need to visit the site?
3. It may be wise to limit the agreement to only the stated use and not open to unrelated uses (for instance an agreement for a pipe valve should not let the company install a metering station, compressor or other structure).
4. Consider further limiting the agreement to the current structure and not allow additional structures to be built without negotiating terms with the landowner.
5. Define all products allowed to be transported through the infrastructure. For pipeline infrastructure it could be limited to natural gas (not oil, not waste water, not hazardous waste). For water infrastructure, you may want to limit it to fresh water (not brines or waste water).
6. Map in advance the exact location and area used for the structure. Any changes to the location of the structure or access routes need to be approved by the landowner.
7. The landowner should have a map showing pre-defined areas for the activity, both during construction and after.
8. Consider site security issues. Is the site fenced and locked? Will there be gates on access roads? Will the landowner have a key to gates?
9. Define the length of the agreement and include specific terms for ending the contract and removal of the equipment.
10. Include terms for restoring the site after construction and final restoration after the agreement has ended.
11. Terms for damage payments and site restoration for any repairs or upgrades to the structure.
12. Consider what the site will look like when completed. Can it be landscaped or fenced to screen the structure from view?  Is the structure open or enclosed (in a building)? Can it be disguised through building design or landscaping to blend into the landscape or community?
13. If it’s a pipeline related piece, are nearby homes outside of the ‘impact area’ should there be a leak or explosion? (the operator can provide these distances based on gas pressure, etc).
14. A landowner could request drinking water monitoring if water-related infrastructure is being proposed, or sound and air emissions monitoring for compressors or other pipeline related structures.
15. Does the surface use agreement violate any conditions of an existing gas lease or right-of-way agreement on the property?

In addition to the above list, standard items such as landowner liability, dispute resolution and transferability of the agreement should be considered. All of these items should be in writing and part of the agreement or contract rather than a verbal agreement with the landman. As with any contract or agreement, it’s important to have an experienced attorney, with knowledge of the oil and gas industry, review any contracts before you sign. An attorney can also be helpful in negotiating terms with a landman on your behalf.

~Dave Messersmith, Wayne County Extension Educator