When an Ohio landowner is thinking about potentially leasing his land to natural gas drillers, a frequently asked question is…Does this mean I get free gas for my home?
As with practically everything else, one must look to the language of the gas lease. In older leases, the free gas provision was very common, but the newer natural gas leases are tailored to shale gas wells and the clause has virtually disappeared.
However, you may still be entitled to free gas if the lease affecting your land has a free gas clause, and a well is actually being drilled on your property AND neighboring residences aren’t already using the free gas. Most leases provide the free gas can only be used by “one dwelling house” or “one residence” or limit the gas to “domestic use.”
It’s conceivable this could be stretched to mean a barn or an outbuilding, or even an apartment or an office, but most likely the interpretation is “a house” and one would be prohibited from linking the gas line to a fuel farm or industrial machinery.
How Much Free Gas Can You Get?
It is important to hire a professional to install the gas line to your house because natural gas is extremely flammable and therefore very dangerous. The investment in having the line installed properly will be far less than the amount you will save by having free gas for your home. The landowner usually pays the cost of installing the gas line unless the lease specifies the driller is responsible for equipment and installation, but the latter is rare.
The next thing most lessors want to know is how much free gas can I get?
The average lease historically allowed for about 200,000 cubic feet per year, or the amount needed to heat an average-size home and this is probably about what you will receive. It is possible that if wasteful use of gas can be shown, the right to free gas may be terminated. An example of this would be when the free gas is used to heat or cool a building that is not insulated.
Check your gas lease carefully to see how much free gas you can expect to obtain.
If you use more than the lease permits, you will likely be billed for the additional gas at market price. You are fortunate if your lease says “wholesale price.” Sometimes a lease will not state what happens if a lessor uses more than the allotted amount. Some drillers do not even require that a gas meter be installed—in that case there may be no accurate way of measuring the amount of gas a landowner is using. Eventually, most well drillers will notice this oversight and ask the landowner to install a meter.
Ohio law clearly states that the surface owner of the land is the one entitled to free gas, not the person who owns the mineral rights if they are two different individuals.
Some companies may prefer a monetary payment in lieu of free gas due to safety concerns.
If you have questions about your rights to natural gas when your land is leased to an energy company, don’t be hesitant to seek the advice of an experienced Ohio oil and gas attorney. The law firm of Slater & Zurz LLP has lawyers who can help. Please contact us at 1-888-534-4850. This is a complex area of the law and you should not try to go it alone or depend on the advice of the gas company.