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  • Just a quick disclaimer

  • Um, I'm not giving any legal advice per se tonight

  • I'm not establishing an

  • Attorney-client relationship with anybody

  • Because I'm a lawyer

  • I think it's important that I say that

  • Anytime you have increased drilling activity

  • in an area,

  • What you see is, you see the permits go up

  • This is a timeline from 2004 to 2012 in Canadian County

  • And you'll see the permits went from nearly nothing in 2004

  • To, you know, almost 230 in 2012

  • And that's what we're looking at in this area

  • Of Carter and Love County with all the activity that's here

  • We can expect this kind of activity in the coming years

  • So the outline of today's presentation

  • I'm going to talk about

  • The basic discussion of the philosophy

  • Of an article I wrote called

  • "Don't Give Away the Farm"

  • And basically it's the idea of

  • If you're going to enter into one of these negotiations

  • Define it well

  • And as they want to move out of the parameters of where you've defined it

  • Make that ... make them pay for that

  • So if you set a specific timeframe

  • Of when they're going to be able to apply the mud

  • Also set a specific amount of loads they can apply

  • And if they want to stay there longer

  • Or they want to apply more loads

  • Make them pay more money

  • It's real important to get strong terms

  • I mean, I always say it's a battle of the terms

  • And that's really what I think all these negotiations are about

  • If you decide to do this

  • Is make sure

  • That you don't sign something that's real broad

  • And just lets them kind of come in

  • And use your land

  • However they want

  • And they kind of set the rules

  • You need to set the rules yourself

  • I'm going to talk a little bit about the statutory framework

  • Allowing the application

  • We've heard a little bit about that tonight

  • I'm going to get into a little bit more specifics about it

  • But I'm going to go through it pretty quick

  • Because part of that the first presenter covered

  • And then I'm going to go over a brief overview

  • Of potential benefits and risks

  • Which we've heard a lot about that, too

  • So, I'm going to go through that pretty quick

  • And then I'm going to go over

  • What needs to be in a good

  • Drilling application and surface use agreement

  • That's kind of the heart and meat of the presentation

  • I'll probably slow down a little bit when I get to that point

  • This is an article I wrote called

  • "Don't Give Away the Farm Negotiating Surface Damage Cases"

  • It was published in the "Bar Journal"

  • It's on my website

  • If you're interested in negotiating with an oil company

  • I encourage you to go out online

  • Read this article

  • It talks a lot about the mentality of negotiating with an oil company

  • And the way that you think

  • I mean, to me it's all about how you think

  • When you're negotiating with one of these operators

  • They always want to frame the rules

  • And they always want to say

  • Well this is how the oil company does things

  • Well it never made sense to me why landowner can't say

  • Well, this is how things ought to be done

  • I mean, it is our land, right?

  • So the possible benefits

  • I mean

  • I've been told that soil farming can improve the water retention in the soil

  • And that it can in certain situations improve soil fertility

  • Our our first speaker tonight

  • Could tell much more about this than I know

  • The main one I think is that it can provide supplemental income

  • I mean

  • Folks that are in agriculture are always looking for creative ways

  • Now more than ever

  • To create supplemental income with recreational use of their property

  • This is just another way to generate some supplemental income

  • And if done properly it can work really good

  • It can also be good for the relationship

  • Between the land owner and operator

  • Many times when, you know

  • An operator comes and they're drilling on a ranch

  • It's tense because the surface owner may not own the minerals

  • They don't want them there

  • But a lot of times it can be a real win-win relationship

  • Between the operator and the surface owner, because

  • The surface owner can sell water

  • They can allow soil farming

  • So, soil farming is just another way to

  • Kind of improve the relationship with the oil company

  • And if done properly

  • It can be a real good thing

  • The risks

  • Salinity

  • Sodicity

  • Pretty much all the things that we heard

  • The first presenter talk about tonight

  • I mean, these are the things

  • that that we have to think about

  • So any contract that we enter into

  • Needs to somehow

  • Talk about these risks

  • How we're going to deal with them

  • And how we're going to define them

  • What's going to be allowed

  • This is just another picture of

  • You know, a piece of ground that's

  • Got a lot of salt in it

  • And when it gets a lot of salt

  • It doesn't want to grow grass

  • And most of us are in the business of growing grass

  • So we're going to be trying to grow grass

  • For the next thirty years

  • And that's one of the things you need to evaluate

  • Is what's it going to do to my grazing capacity

  • On my land if I allow them to come in and pay me

  • So much an acre

  • You know, it may not be worth it

  • Especially if it's not done properly

  • He talked a little bit about toxins and metals, uhm...

  • This is a risk but

  • I guess it's a minor risk compared to the others

  • Uh... the statutory framework allowing the application is 165:10-7-26

  • And it defines a one-time land application of drilling fluids

  • It talks about what that is

  • The key thing is

  • Under this rule

  • It falls under the federal regulations under RCRA

  • The Resource Conservation and Recovery Act

  • Now the reason that's so important to you as a surface owner

  • Is because under RCRA and under federal law

  • If you're the landowner

  • And your property becomes polluted

  • You can be responsible for the cleanup costs

  • So, if you get a big plume there

  • As a result of them coming in and

  • Dumping a lot of stuff that they shouldn't be dumping

  • And they're not solvent

  • And they can't pay for it

  • The feds may be coming in looking to you for the bill

  • Especially if it's migrating off your property

  • And getting on somebody else

  • Any land application made

  • Under this has to be done on what they call a one-time basis and

  • You know, we could talk about "one time"

  • It's defined a lot of different ways and

  • You could talk a lot more that, Mike, probably than me

  • But, compliance with the rule

  • There's a two thousand dollar fine

  • For non-compliance with the rule

  • Typically, it's a twelve-month, what is a twelve-month permit

  • That's what the rule says

  • Talked earlier about the maximum slope

  • The application can't be within fifty feet of the property line

  • um... the water table can't be within six feet

  • There are somewhat detailed sampling requirements

  • There's been a lot of discussion tonight about sampling

  • My recommendation would be

  • If you're going to do this on a large scale

  • That you get a geo scientist involved

  • And you come up with some parameters of your own

  • And you put those in your own contract

  • Instead of relying on somebody else to enforce them

  • He talked earlier about the depth to bedrock and the soil texture

  • And the soil salinity, so I'm not going to go into that too much

  • So, negotiations and the surface use agreement

  • The key thing about this is

  • An oil company doesn't have the right to do this