Use of mineral rights for carbon sequestration

[Mutaulaura]

Is anyone aware of new/additional leases happening in Kern County for carbon sequestration? If so, how might that affect the lease rates and terms for amended or new lease agreements?

[Michael_Gabriel]

My wife has mineral rights in Kern Co. Part is used for solar farm. I would be interested in exploring carbon sequestration use.

I haven’t heard of Kern Co land being used that way.

[Jean_M_Pledger]

Kern County oil and gas producers are conducting carbon sequestration projects, but they typically seek out the properties that they are interested in to utilize for such projects. I don’t have any current leads on producers seeking land but will post if I do.

I wish you well in your endeavor.

Jean M. Pledger, Esq. Pledger Law, PC Bakersfield, CA

[Mutaulaura]

We recently negotiated an amended lease for additional net mineral acres in KC. Since there is such limited drilling for gas and oil, we’re operating on the assumption the amended lease has something to do with carbon capture and storage (CCS). We will be in the position of negotiating a new lease in the next few months. I would like to go into those negotiations with the best information I can about rates and terms for a new lease that would be applicable to CCS and may be different from a traditional gas and oil lease.

[M_Barnes]

Have attended several conventions in the last few months which have addressed carbon sequestration. This is going to be a very complex situation. If the CO2 is used for secondary recovery, the mineral owner may benefit and they would sign the lease. If the CO2 is put into storage, then the surface owner may own the pore space so they would have the lease (depending upon your state law). The law has not caught up to the opportunity yet. Oil and gas leases are generally 3-5 years and remain as long as their is economic production. CCUS projects may last 30-50 years, so an entirely different situation. Many of them would require that the mineral owner relinquish their rights. Not sure how they would feel about that and whether the payout is “fair”.