Learning about Gas Leases

November 24, 2009

By Sarah B.

Mark Duneau, a local organic farmer who has been personally involved with the gas drilling, spoke to the Hancock Rotary Club at its weekly meeting on October 22.

Although advertised as a talk about the Frac Act, Duneau’s remarks focused mostly on gas leases. Duneau has not signed a lease, but has seriously considered it and has studied the leasing process in depth.

When dealing with gas leases, Duneau stressed three points: the Pugh Clause, landowners’ water rights, and the fact that the lease is only as protected as the assets of the company.

The Pugh Clause is something that is often not put into leasing contracts. This is because most people who sign the leases do not know about the clause, and the drilling companies don’t want landowners to find out. “If the gas companies can cheat you, they will,” said Duneau. This largely unknown clause gives landowners more rights over the land they lease by only allowing drilling companies to drill where they find gas, rather than on the entire leased land.

Duneau talked about how people are so concerned with their gas rights, that they don’t think about their water protection. When hydrofracing begins, it requires tens of thousands of gallons of water a day. Duneau said that for all people know, this water could be taken out from under their land.

He also explained that the lease is only as good as the assets of the drilling company. Duneau encouraged people to create as many protections within their lease as possible. “By protecting yourself with a good lease, you are protecting your neighbor,” said Duneau.

Duneau believes that drilling companies should be trying to improve their system of hydrofracing before they drill. “Gas has been there for several thousand years, we can wait a couple of more years to get it right,” he said.

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