Natural Gas Leasing: It Can Be Complicated

Property owners who lease their land for natural gas drilling often have to navigate confusing legal terrain. The Post-Gazette takes a look at some of the more complicated aspects of lease agreements:

To understand lease expiration litigation, it helps to understand the stages a lease can enter. The typical five-year agreement, which includes details on any signing bonus or royalty payments, is called the primary term. If sufficient drilling activities start on the property, the lease enters its secondary term.
Secondary terms can stretch for decades and last as long as there is a producing well on the property.
“I have clients that have leases that are well into their secondary term because the primary term expired in 1905,” said Mr. Burnett, referring to the decades-old shallow wells that have long been in Pennsylvania.
Overall, Pennsylvania law remains murky on what constitutes “sufficient” drilling operations, said Mr. Burnett. States such as Texas and Oklahoma, which have seen more drilling for more years, have more settled law on the matter.

 

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