RANCHING Business
The Basics of Surface Use Protection By Gilda V. Bryant
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ROTECTING THE RANCH IS AN IMPORTANT ISSUE FOR IN- dividuals who own both the surface and min- erals, as well as for folks who own only the
surface. A surface use agreement (SUA) is a tool ranchers can use to protect their livestock, property and peace of mind. David Wallace, rancher, mineral owner and oil/
gas attorney, is also an instructor at Texas Christian University (TCU) and the TCU Energy Institute. He says there are several types of surface use agreements. The mineral owner may have one that is associated with an oil and gas lease, or the surface owner may negotiate a separate SUA. Occasionally, the oil and gas company combines multiple leases, with surface provisions included. According to Wallace, a mineral owner should add
minimal surface provisions even if he does not own the surface. It is good PR, and may prevent sabotage by a disgruntled surface owner who had no say in the lease. If there is no SUA, the lessee may use as much of the surface as is reasonably necessary, without com- pensation to the surface owner. The lessee has the right to use caliche, subsurface water, build roads, install storage tanks and perform seismic surveys without paying the owner, unless a SUA is in place.
Prohibited use areas Wallace recommends listing prohibited use areas, where no drilling or other oil and gas-related activi-
tscra.org
ties may occur. For example, a company may not drill within 300 to 1,000 feet of an existing house or barn. Stipulate where prohibited areas are located with a photo, map or a metes and bounds description.
Sensitive use areas Sensitive use areas, such as a river bottom, draw
or mountaintop, may be used in a limited capacity by the oil and gas lessee. The company may shoot seis- mic tests, and run pipelines and electric lines in these spots. The surface owner may list a set of rules and regulations, such as no entry when crops are grow- ing. During hunting season, specify that oil and gas company employees must avoid the premises during prime hunting hours.
Full use areas Extensive or full use areas are locations where drill-
ing pads, pits, roads, tanks and compressors are placed. Most of the use-protection clauses address this area. “Whether the surface use agreement is part of an oil
and gas lease or is a separate agreement, you want to have some decision-making authority over the use of materials,” Wallace explains. “You [also] defi ne use of materials. Normal materials in West Texas are water, caliche and sometimes, crushed rock. In East Texas, you have lumber roads and shell roads. Fresh water is a big issue. In some areas of the state we say you can’t use any water that is found on or under the premises.”
May 2016 The Cattleman 61
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