Ok, its finally happened. The country has run out of most of the natural gas that is in easily accesible reservoir rock, and is now turning to the previously un-economicial production rock that creates natural gas for new drilling. This means gas wells going up in suburbia, and a whole lot of homeowners wondering if they own the mineral rights to their property.
Personally, I have been affected by this on two levels: One, my house is located over the Barnett Shale, and two, I have received a written offer for the mineral rights on my house. I did the math and realized it was a lowball offer and have thus far not responded to the offer, but it prompted me to do some research on the issue. Here is what I have found out so far:
1) Mineral rights laws are incredibily complicated.
2) Ask ten experts a question and you will get 12 different answers.
3) If you have the mineral rights, they automatically convey when you sell the property, unless you have a clause in the contracts specifying that the mineral rights do not convey. FIRST QUESTION: Does anyone have a sample of verbiage on this that would stand up in court? Real estate agents are not lawyers and in the Barnett Shale region the practice seems to be for the agents to defer to a lawyer about this question.
4) Finding out if you even own the mineral rights is not easy or cheap, but, as a rule of thumb, *if* you have owned the property for at least a few years prior to the area being considered feasible for oil or gas drilling, and *if* there was no clause when you bought the property, there's about a 90% chance you do own the rights. As a legal matter it will have to be researched all the way back to the soverign of the soil (Private title to all land in Texas emanates from a grant by the sovereign of the soil (successively, Spain, Mexico, the Republic of Texas, and the state of Texas), but as a practical matter going back to when the developer built your subdivision should be good enough. Within the last couple years it has been unheard of for a developer to even get the mineral rights, let alone transfer them to homeowners, but not so long ago it wasn't a consideration. Anyway, SECOND QUESTION: Anyone know any reasonable ways for me to be certain I own the mineral rights?
5) If your house is over production rock, not reservoir rock, you're not going to get rich from the royalties. Production rock yields (at best) $10,000 per acre up front and $400/month royalties for 3 years. (The lowball offer I got was for one-fifth of that.)
6) There are very real concerns with noise, lights, trucks coming and going non-stop (to fracture production rock they inject a slurry of water and sand in the rock, fracturing it. They then have to extract the water back out, which by this point is salty, and haul it away in more trucks.) and not to mention safety. The natural gas that comes out of the well is untreated and does not have that sulfur smell to warn you of a leak. It is corrosive. THIRD QUESTION: Are the people hyping these negatives just trying to hold out for more money, or are they against drilling on principle? Nevermind, you're not in their heads or hearts, I just ask to let people here know I'm a bit suspicious that everyone's angle in this is a bit self-serving. That's why I thought it might be nice to hear what disinterested parties would have to say on the subject. That's your cue. Thank you in advance.