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Oil, gas seminars educate public on lease agreements



Published: Thu, May 17, 2012 @ 12:00 a.m.

By Burton Speakman

bspeakman@vindy.com

CORTLAND

Anyone considering leasing mineral rights for oil and gas exploration or production should take their time and consider any decision they might make, said those knowledgeable about the industry.

First Place Bank and the Trumbull Soil and Water Conservation District had three seminars Wednesday to educate the public on lease agreements.

The seminar at the Trumbull County Agriculture & Family Education Center here was designed to educate the public about the process of oil and gas drilling, legal issues those who sign leases may face, tax questions and investment information.

The conservation district presented a video that showed how the drilling process worked. It also showed a site in West Virginia during the drilling and fracking process and how it looked after that work was completed.

Fracking is the method in which water, chemicals and sand are blasted into rocks thousands of feet below the ground to unlock natural gas and oil.

“I believe it’s important to present a visual of what happens with deep-well drilling,” said Mike Wilson, Trumbull SWCD executive director.

One of the questions the district has been receiving recently from oil and gas companies is where they can receive water.

As part of the SWCD presentation, a map was presented that shows the groundwater resources in Trumbull County. The district also is working with the Ohio Department of Natural Resources to understand the best practices for drilling, Wilson said.

Anyone who is presented any sort of agreement regarding easements, mineral rights or anything else regarding oil and gas production should not feel compelled to sign, said John M. Rossi, a Warren attorney.

“There are benefits to oil and gas drilling, and there are burdens of oil and gas drilling, just like any other industry,” he said.

The key point is to understand that all points can be negotiated, and that if someone is not comfortable, they don’t have to sign a lease, Rossi said.

One of the key points now is water contamination. “Fortunately, we haven’t had a lot of problems with that in Ohio,” he said. “Pennsylvania and New York have had problems.”

Rossi recommended including testing before any drilling activity and then again after it begins. He also stated if a resident doesn’t trust the company hired by the oil-and-gas business to conduct testing they could hire their own to verify the results.

Landowners also should be wary of any company that attempts to place a limit on how long they have to make a decision, Rossi said.

“This is an important position. A time frame is not appropriate in this situation,” he said.

Rossi said he has come across situations where landowners have signed deals with smaller oil-and-gas companies who do not have the finances to develop oil and gas resources.

In that case, the landowner is going to have a difficult time getting out of the lease. Working with well-known companies can help avoid the problem, Rossi said.

Patrick O’Conner, a Cortland certified public accountant, recommended people talk to their family before making decisions and understand the tax liabilities.

“In my experience, most mistakes are made in hasty decisions,” said Mark Wenick, corporate executive vice president for wealth management for First Place Bank. He recommended people take their time before investing any profits from lease payments or royalties.

The experts were able to explain things in a manner that was simple to understand, said Bob Antos of Hartford, one of those who attended the sessions.

His goal was to learn more about the process, he said.


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