Tag Archive for mineral rights

Hick and severance: possibilities abound

Governor John Hickenlooper today recently threatened any municipality in Colorado with legal action, should it have the temerity to try to ban fracking within its corporate limits. His remarks did not resonate from supremacy clauses (state laws are “higher” than local) or any appreciation for local land-use discretion. Rather, the Guv lamented that property owners “paid for” the mineral estates beneath their feet, and so must not lose. He also alluded to severed mineral estates. There lies the meat of the argument.

Only recently employed, directional drilling accompanied by hydraulic fracturing is being used to reach targets that can not be drilled with a vertical well.

Only recently employed, directional drilling accompanied by hydraulic fracturing is being used to reach targets that can not be drilled with a vertical well.

Most severances occur when someone sells a property and retains the mineral rights, or a portion of them. This may be a hedge against benefit from future development. But modern “fracking” was not generally known or acknowledged until 2007 or so, and so I doubt many property sellers anticipated or expected that particular form of beneficiation.

I was a commercial real property appraiser long enough to learn that the “bundle of rights” within a property depends on reasonable expectations, plus knowledge of what is feasible. If someone in Colorado retains rights to mining diamonds, he is pretty likely to be wasting his time. But when a property is purchased without a severance, is the buyer cognizant of what is to be deeded? If so, what is paid for it?

The answer is very little. Only a buyer of a mineral estate in an area where a certain kind of mineral production is not only likely but also being prosecuted, would pay what might be recognized as “market value” for that estate. The increment attributable to all or part of POSSIBLE minerals within a purchase of the fee-simple interest, encompassing minerals, surface, and everything else, is generally minimal. Oil and gas operators almost always lease; they have no interest in ownership. In these days of CERCLA that may not surprise. At least there were such days prior to Dick Cheney’s tenure in Washington’s Executive Office Building.

Monopoly moneySo, guvna, are you going to bat for the owner of the severed mineral estate, or the owner of a complete fee-simple property? Mineral values are speculative until proven by production; drilling may or not prove them. A former oil geologist ought to know that. You also should know that the market value of a speculative probability is lower than the value of what can be seen, touched, and enjoyed (commonly known as the surface of the planet). It is a real shame you have no interest in protecting that.

Fortunately, owners of the latter are usually citizens of the state and can vote. Owners of severed mineral estates may not live here. If you’ve got nothing better to do than sue cities, then I suggest you go back to drilling. In Zimbabwe.

Don’t treat kids like canaries

Longmont’s population aren’t experimental animals.

This November, Longmont residents will have a chance to vote on Ballot Question 300 to ban fracking and the storage of fracking waste within city limits. The No. 1 criticism the opponents of this measure make is that it denies mineral rights owners access to their minerals. Right now, the minerals in question are trapped in shale rock and until the last several years, access to them was denied by technology (conventional drilling couldn’t access shale oil). Then along came unconventional, horizontal fracturing, a largely untested and controversial process exempted from many state and federal regulations. Suddenly, access is possible, but not without huge risks and expenses that are often shouldered by the public.

From increases in air, water and noise pollution, to damage to roads, increased truck traffic, huge consumption of water and costs of emergency response when problems occur, most of the expense is passed on to the public. Banning fracking within Longmont city limits won’t deny mineral rights owners access to their claims. The minerals aren’t going anywhere. They’ll still be there if and when a safer, better understood and more fully studied process for extracting them is developed. But do we really want our children to be the canaries in the coal mine while studies on the risks of fracking are being done? The National Science Foundation just awarded CU a $12 million contract to study the risks of fracking over the next five years. Shouldn’t these studies have been done before we fracked next to homes and schools instead of waiting years or decades to “prove” this method is safe (or more likely, not)?

Vote “yes” on 300 and keep this heavily industrialized process away from our residential areas. The minerals aren’t going anywhere but our community’s safety, health and well-being could be.

NOT in Longmont’s backyard!

Stop killing the Earth for GREED

Methane is released in huge quantities

For all those climate change deniers who have convinced themselves that greenhouse gases are not man-made, here’s a great big wake-up call.

As if CO2 (carbon dioxide) isn’t bad enough, we’re headlong into making the matter 100 times worse.  It’s called methane.  It’s trapped under ice at the poles.  And it’s being released in huge quantities from shale gas drilling.

A January 2009 report by Dr. Al Armendariz, formerly of Southern Methodist University and now the director of EPA’s regional office in Dallas, estimated that the air pollution from shale gas drilling in the Dallas/Fort Worth area likely exceeds the emissions from all the cars and trucks in that area.

From May 31 to June 3, 2011, the Chesapeake Bay Foundation directed David Sawyer of Sawyer Infrared Inspection Services to examine 15 natural gas drilling and compressor sites in Pennsylvania, Maryland and West Virginia that are visible from public roads.  Sawyer’s equipment detected methane and perhaps other hydrocarbon gases escaping from 11 of these 15 sites. The four sites with no emissions were not operating.  CBF used a standard video camera to simultaneously record the same sites that Sawyer was taping with the “GasFindIR” camera.

Dr. Robert  Howarth of Cornell University said CBF’s videotape shows significant emissions of methane and perhaps other hydrocarbon gases, and demonstrates why a comprehensive federal examination of pollution from shale gas drilling is needed.

Visit the link and see for yourself.  The emissions look like colored smoke.  Yet the Colorado Oil and Gas Conservation Commission keeps telling Colorado citizens that WE have no rights, only the mineral owners do.