Hello all, I’m relatively new to all this and could use some advice.
The property we bought a couple years ago has a gas well that is currently leased to an operator.
The original owner of the farm drilled a gas well in 1991 which he also paid the bond on. He used the gas for his farm. In 1995 he carved out a few acres of the farm and gave it to his daughter who built a house on it. He also deeded her “free gas for household use”
He did not transfer the mineral rights at that time.
In 2001 he signed a lease with the current gas operator to produce that well. The lease also includes language for free gas for “household use” after the lease went into effect he transferred the mineral rights to her.
We have since purchased the house and land. Since it was deeded free gas would that mean that our household use takes priority over their production since it was deeded before the lease was signed?
I’m planning for the future and want to be sure we’ll have adequate supply.
If you give the name and location of the well, folks on the forum may be able to help you with the decline curve on the well. That will give you a sense of volume and timing.
You’re free gas don’t take priority they’re going to sell as much as they can sell if it runs out it runs out not that you can do they’ll plug the well and and they usually try to limit you to $200,000 metric cubed feet of gas per year unless it was stated different I get free gas unlimited free gas to my property
The graph only goes through 2022. I suspect that the natural decline has continued and will continue to do so. Your attorney will be able to tell you if you have a priority claim on that gas or not.
I believe it probably has as well. A neighbor has three wells and on the meter charts both sides are running at 5 psi.
Over the summer we hit the collection line while doing some excavator work and when the producer pinched off the line going to their compressor station there wasn’t much of anything coming from the wells up here. I’m getting the feeling the reservoir is about exhausted.
They don’t want to give up any of their leases though they’re fighting the neighbor in court so there must be something worth fighting for.
That well is producing so little gas it is probably not economical to operate, except for household / residential gas use at this point. Do you use it for your primary source of heat? What state are you located in? How deep is the well? Does it have a surface or bottom hole pump or is it naturally flowing?
That would make an excellent bar exam question. When you think about land having a bundle of rights like a bundle of sticks (land, water, mineral, etc). The granting of a deed with free gas would be providing land and a partial mineral interest albeit limited. The party taking the lease would probably have known about the grant. If the lessee had notice, they may be bound by the grant.
This post is not legal, tax or investment advice. Reading or responding to this post does not create an attorney/client relationship.
To expand the legal questions further, does an oil and gas lease that includes free residential gas still apply if the original lessor severs the minerals from the surface and there is existing continuous use of res gas at the time of the severance?
What if the minerals are severed and the original lessor never took their free gas, is a new surface owner entitled to start taking free gas?
