NORWICH – A group of 120 hopeful landowners turned out Wednesday evening for a Chenango County Farm Bureau forum to learn how to negotiate profitable leases for natural gas that may or may not lie beneath their property.
During the gathering, Gary Kuehl, who owns 91 acres in Smithville, said he had been approached that morning by an oil and gas company. “After what I learned here tonight, I’m glad that I didn’t sign anything,” he said.
The event, held at Norwich High School, was specifically directed at landowners as opposed to oil and gas company representatives. When two of a handful of executives present in the auditorium attempted to interject during the nearly three hour discussion, they were asked to sit down.
“This is not a debate. ... We are here to protect the landowners’ rights. ... This is not your forum and you may not speak,” Southern Tier attorney Chris Denton said.
Denton, one of three speakers at the informational meeting, began studying mineral rights law in 1998 when large quantities of natural gas were discovered in Trenton/Black River reservoirs in Chemung County. It is estimated that the natural gas industry has invested approximately $200 million in New York, primarily to develop faults in the Finger Lakes and south central New York.
Denton asked the audience for a show of hands of those who had entered into leases already. About 12 people put their hands up. When asked, nearly 25 indicated they had turned down a natural gas company’s attempt to lease their land.
Denton said leasing, or entering into a compulsory integration lease with adjacent landowners, can be advantageous to anyone approached depending upon their particular situation. However, in both cases, he suggested hiring an attorney experienced in the industry.
“Whatever you do, you need an attorney to determine what’s in it for you. Otherwise, the companies are going to skate rings around you. ... A lease is as dangerous as a deed. It is not a contract. It is a transfer of possession. You can only own the gas when you possess it,” he said.
Also, refinancing mortgages or making capital investments or improvements to structures during the period of the lease is prohibited. “You can’t get the bank’s help when there are liens on your property,” he said.
Invited speaker and Chemung County Farm Bureau President Ashur Terwilliger suggested negotiating “every word” in a lease.
Denton attributed the legislative rights that landowners currently have - specifically when approached by companies to participate in compulsory integration leases - to the Farm Bureau’s lobbying efforts back in 2005. “This legislation we are talking about wouldn’t be there to help you without the Farm Bureau,” he said. “They have the landowners’ and farmers’ rights at heart and have taken the lead on this issue.”
“You people are lucky,” Terwilliger said. “When this thing started, we knew zero. We knew nothing. There’s no question that New York state’s farmers are hurting. Maybe this could turn it around for you, but don’t just take what they offer. There is no state law limiting the amount.”
Denton, Terwilliger and Matt Brower, from the New York State Agriculture and Markets, offered the following suggestions:
1) Don’t accept a lease with a term limit for more than 3 years.
2) Don’t lose track of the royalties by concentrating on the signing bonus, which could be anywhere from $200 to $700 per acre.
