Mineral Rights

[Ucsdryder]

Looking at houses with property along the Front Range of Colorado, I keep coming across mineral rights and leases. They all seem to be similar, leased to an oil and gas company, that doesn’t have surface access, but has a setup 1-3 miles away where they dig down 9000-10000 feet and then come in horizontally to the property.

I have 2 questions. First is safety. I have talked to a couple of people that I trust and both felt that safety was a non issue living on the property.

Second, do I want to retain the rights? Assuming the owner wants to keep them or possibly doesn’t have the rights himself, is there any disadvantage other than potentially losing out on income that the lease might produce.

Hoping to find someone with actual experience vs the I heard fracking was terrible or drill baby drill people.

Ok one more question…. Assuming this forever home becomes a not forever home, what does it look like selling the property without having the mineral rights myself?

 

[Mighty Mouse]

I can't give you an informed opinion on the mineral rights question, but having worked in the industry for 14 years and having owned a home near oil and gas wells for 5 years, I can say that I would have no safety concerns living 1-3 miles from an oil and gas site. Noise, lights, and truck traffic might be a concern, but I wouldn't be worried about safety. The horizontal portion of a well (aka, the "lateral") running under your property is of no concern. The lateral is thousands of feet underground, and you will never know it's there.

Depending on how close you are to the "surface hole" (the aboveground point from which the well is drilled) and what the terrain is like, you may be able to hear noise and see light from drilling rigs, frac equipment, workover rigs, and production equipment. Drilling and fracking are temporary, one-time activities (usually a couple weeks per well). Workovers (performing downhole maintenance or modification using a rig smaller than a drilling rig) are infrequent and short-lived. Production equipment will be on the well site indefinitely, and some of it can be obnoxious (e.g., noise from gas compressors, light and noise from flares). Traffic from 18-wheelers hauling oil and water (if the well isn't connected to pipelines) can also be a potential concern.

I had 3 well pads within 3/4 mile of my former house in Oklahoma. This was on the eastern edge of the plains with no topography and few trees to serve as a screen. The occasional noise and light from drilling, frac, and workovers were short-lived enough that it didn't bother me much. Flaring was uncommon, and those particular well sites fortunately didn't have large compressors. The neighborhood liked to blame all the potholes on tanker trucks, but I don't think the roads around our neighborhood were actually much worse than others in the area without nearby well sites (virtually every road in Canadian County Oklahoma that isn’t a state or US highway is riddled with potholes).

All in all, proximity to oil and gas wells isn't desirable, but it also wouldn't be a deal breaker for me if the wells were 1/2 mile or more from my house. If you have 1-3 miles of buffer, I wouldn't worry about it at all.

 

[wyosteve]

Typically mineral rights are reserved by prior owners, so not too likely you would receive them or any monetary benefit. However, the bigger issue potentially is that the mineral right owner/lessee has the right to access your property to develop the rights (i.e. drilling) if they deem necessary. You are at their mercy, but they would have to pay you for surface access/damage.

 

[Ucsdryder]

Typically mineral rights are reserved by prior owners, so not too likely you would receive them or any monetary benefit. However, the bigger issue potentially is that the mineral right owner/lessee has the right to access your property to develop the rights (i.e. drilling) if they deem necessary. You are at their mercy, but they would have to pay you for surface access/damage.

No surface access is how it’s written.

 

[Throwin Darts]

My hometown is in the middle of the Eagle Ford Shale. There isn't anyone in the county that doesn't live close to a producing well. No concerns there.

On the mineral rights, you should absolutely get them if you can. Here in Texas it is very rare for the purchase of a property to come with the mineral rights if the property is anywhere near an oil and gas play. When I bought my ranch here 10 years ago the seller had 36% of the mineral rights. I purchased them separately from the contract on the land and I was shocked that the seller was willing to sell them.

 

[TCUHunter34]

The majority of landowners don’t own the sub surface (mineral rights) under their land and most people don’t know there’s a distinction between the two . Mineral rights are and can be separated from the surface rights and sold or leased without the landowner knowing at all as it’s a different form of real estate.

You can buy surface real estate and not know the minerals are included and you now own them. The minerals are only reserved if expressly written into the contract that the seller is keeping them. If it’s not in the contract, the seller either doesn’t own them or they convey with the sell of the land even if the seller doesn’t know they own them.

Here in OK, some deals offer the minerals for sale with the land, or they expressly state up front that the seller is retaining the minerals.
If it’s not stated, they likely don’t own them. I have bought houses that I would eventually get a letter from an O&G company for, because I now owned the minerals. When I sell that house, I will always retain the minerals as there’s no reason not to.

Safety isn’t a concern but noise and lights couple be if a rig is ever put up near your house.

 

[ODB]

I can’t think of any reason not to obtain rights if all else is solid. We are still getting checks from the leases we retained on the Osage reservation. Then again, if you make too much they will deem you incompetent, assign you a “guardian”, and eventually start knocking you off - Ala Killers of the Flower Moon.

 

[aq3]

Great forum for general education on items like this. Being in PA, similar situation related to fraking and natural gas.

 

[Seth]

As others have indicated, if it is split estate (very likely in CO), mineral rights won’t convey with surface and would need to be purchased/negotiated separately. Value will be determined by potential for development of those minerals, ie a remote chance of development (not near an active play) would be valued significantly lower than rights already under contract with a defined royalty.

 

[Ucsdryder]

The Home we’re looking at, the current owner owns mineral rights and wants to retain them. It has already been drilled, and they are receiving monthly payments out of a pool payment for the entire area.

I need to figure out if the other homes in the area, all sharing similar lot sizes, are being sold with or without the mineral rights being included in the sale. If mineral rights are being included the asking price should reflect him retaining mineral rights. If mineral rights are not being included in the sale price then it’s probably a non-issue other than the fact that it’s weird to think I own the land but not what’s underneath it.