Gas Rights/Forced Lease FAQ

Fact Sheet Commonwealth of PA • Department of Environmental Protection Landowners and Oil and Gas Leases in PA
Answers to questions frequently asked by landowners about oil and gas leases and drilling

I own the oil and gas on a small tract surrounded by others and I don’t want to lease it, but the neighboring owners are developing or leasing theirs. Can I lose my oil or gas or be forced to lease it?

Your oil or gas could be produced or captured from a well outside your property tract boundaries. In fact, your only protection is if your oil or gas producing formation is subject to the Oil and Gas Conservation Law, 58 P.S. § 401.1 et seq. If so, your property could be included in a voluntary unit or pool, or included in an unitization or pooling order issued by the Commonwealth at the behest of a producer on a neighboring tract. That well operator would then have to pay you a production royalty based on your prorated share of the production from the well, depending on the percentage of your tract of the unit. This law applies to oil or gas wells that penetrate the Onondaga horizon and are more than 3,800 feet deep. Other than spacing for wells in coal areas, Pennsylvania places no restrictions on well location in proximity to tract boundaries for development of oil or gas which is not subject to the Conservation Law; the Rule of Capture applies instead. This means that the operator of such a non-conservation well cannot be compelled by law to pay rents or royalties to owners of neighboring oil or gas tracts. Of course, the Rule of Capture applies on your side of the property line if you drill a well. So to protect their investments in wells to be drilled, most operators are willing to enter into voluntary pooling or unitization agreements for wells to be placed close to neighboring tracts.  

What is DEP’s role in regulating the oil and gas industry?  

DEP enforces Pennsylvania’s oil and gas laws relating to resource management, well construction, drilling safety and waste management practices.  An operator must secure a bond before applying for a well permit. DEP approves bonds and well permits, inspects wells and environmental controls, and permits and inspects waste disposal facilities and waste management activities. Operators must submit reports on well completion, waste management, annual production, and well plugging. DEP has the authority to take action to enforce compliance with applicable laws and to seek penalties for violations of these laws. The Commonwealth of Pennsylvania is not involved in regulating lease agreements between mineral property owners and producers, except that minimum royalty payment is prescribed by law. Lease agreements are contractual matters between private parties. DEP does not audit payments, read or calibrate meters or tanks, or otherwise get involved in lease matters. Well operators are required to report production annually, and state agencies must keep this information confidential for five years, as provided in Section 212 of the Oil and Gas Act, 58 P.S. § 601.212 

What is the role of the Commonwealth in resolving conflicts involving mineral owners or lessees and surface property owners? 

DEP is the agency charged with hearing objections to well permit applications, based on location restrictions or conflicts with other resource interests (for example, coal owners). County courts hear suits for property damage or disputed lease matters, including royalty payments. Remember, a lease is a contract generally subject to contracts law, and not regulated by a government agency. Persons who believe they have been harmed by a decision by DEP – for example, to approve a well permit application, or issue a spacing or pooling order - may appeal that decision to the Environmental Hearing Board. Instructions for filing an appeal can be found on the Web site: http://ehb.cpcourt.com/.

Who can I contact for more information?

For more information, you may contact any of the DEP Oil and Gas offices shown on the following map. For information about production history, geology and for data on potential well locations or producing formations, please contact Pennsylvania’s Topographic and Geologic Survey at:

Dept of Conservation and Natural Resources
Bureau of Topographic and Geologic Survey
Subsurface Geology Section
400 Waterfront Drive
Pittsburgh, PA 15222-4745
Phone: 412-442-4235

http://www.dcnr.state.pa.us/topogeo/loc.