# Properties with oil or gas wells



## Bellyman (Jul 6, 2013)

We are looking for a place to call home. We have a pretty good idea of the area we'd like to be in, north central TN, if that gives an idea. There are several places for sale that have gas wells on them, a few that might have some oil, but mostly gas wells. 

It is interesting to think about having free gas, which some of these properties advertise, but what kind of downsides are there to properties like this? I know they can be a bit more tricky to finance in some cases. And I would assume that someone wants access to that well at some point, and if it's on my property, that means an easement of some kind. Would that mean they'd likely have mineral rights to the whole place? 

I don't know what I think. I don't feel like I have enough information to make an informed decision about whether I'd actually like to have a property with a gas well on it or whether I'd like to seriously avoid a property with a gas well on it. (FWIW, I'm thinking of looking at a place that's about 20 acres with a gas well in one corner. It's been for sale for a very long time, which is making me wonder whether the gas well could potentially have something to do with it. Free heat, yes. But what else comes with it?)

Interested in your thoughts.

Thanks!


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## 92utownxj (Sep 13, 2013)

I'll start by saying I don't have a gas well on my property. I do have a gas lease though. It's tied to the deed and dates back to 1950 or so. At that time it was agree upon that $1 per acre per year was a good price for the gas company to pay the property owner for gas storage. The price has stayed the same (I wish it accounted for inflation.) So every February I get a check from Vectren for about $31. 

Natural gas is bought and piped up here from the Gulf and Texas. Then it is pumped under ground under pressure and stored. It is in or under the limestone. The geologist find the best storage fields. We still have a water well and all that. A couple miles away there is a big well head that Vectren owns. It's where they pull the gas out and distribute it. There is a constant flame burning on the well. Not sure the purpose. Sometimes when it's either really cold or really hot I can hear them releasing pressure. Very loud. There are a few 36"+ distribution lines I drive by everyday. Most people have no clue they are there. 

In the lease it states that if they ever need to they can come on the property and set up a well. I don't worry about it too much. The lease is only for gas, nothing else. I know some older folks around me who have or did have wells on their property. They got all the free gas they wanted. Free gas is very rare around here now. One old timer said in the winter time when he got hot he just opened the windows.


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## 1948CaseVAI (May 12, 2014)

If the property has a producing well and is a real bonus. There may well be an easement for maintenance but it shouldn't be a problem. At least in Kansas the mineral rights to a property do not automatically go with the property when it is sold. My Mom has sold quite a few sections (640 acres) of western Kansas land but she has retained the mineral rights for 20 years on all of it. In the case of a gas or oil find she will get the royalties. Many other folks just sell the mineral right along with the property. 

She runs all her business past an attorney because oil and gas has a lot of special rules and laws and gets tricky. I would certainly want a qualified legal opinion before I commit to anything. You also need to know the name of the lease holder (who likely has leased the whole property and has the right to do further exploration at will) as well as the current producer.


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## beowoulf90 (Jan 13, 2004)

This is a generalization and should be treated as such..

1948CaseVAI is correct, they missed one important thing. Real estate east of the Mississippi river as a general rule is sold with the mineral rights going to the new owner. East of the River they tend not to separate the mineral Rights from the property owner. Gas companies tend to have leases, but not necessarily the Right to the gas.

If I remember correctly property east of the Mississippi River is sold by Meets and Bounds with mineral Rights transferring to new owner (yes there can be extenuating circumstances), while west of the River is sold by Range and Sections with the mineral Rights being a separate item to be sold.

Again this is a generalization and as time and situations change this may change also..


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## Darren (May 10, 2002)

If the well is being produced, a well tender will visit the well or a nearby location at least once a month to change the chart on the recorder. Other times a work over rig may come in to "clean" the well when gas flow drops. If there's a tank near the well head a tank truck will be used periodically to pump the fluids out which may be oil and/or salt water. Depending on the access a dozer may be brought in to work the road periodically to allow trucks to traverse the property especially if the road has large pot holes or it's subject to erosion.


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## Michael W. Smith (Jun 2, 2002)

It really isn't that big of deal having a gas well on your property. 

Depending on when the well was drilled, if it was drilled years ago, there probably isn't even a chart on it - the owner of the gas rights gets a royalty check every year for the amount determined when the lease was written. If it's a newer well, the gas company would have a well tender out once a month or so to change the chart / do maintenance.

Most leases give the owner of the property so much free gas / year. But even with the property being sold, and the original owner keeping the gas rights, the gas company still has to give the new property owner whatever free gas is mentioned in the lease. 

Just understand however, that most gas wells do eventually die out - or have such little gas flow it isn't worth it for the gas company to keep it open. If that happens, the gas company will have to have the well plugged and the free gas will be gone.

We have gas wells on our property - and one which we own outright. The one we own was drilled back in the late 1800's - early 1900's. This well supplied enough gas to the neighboring small town, but back in the 1940's or 1950's, production of gas had slowed and the gas company gave the property owner the right to "buy" the well for $1.00 - which they did.

That property owner was my wife's Great Uncle - and he opening a chicken broiler operation where he raised 10,000 broiler chicks every six - eight weeks. That one well kept him in business with free gas for years. Our house is still hooked up to it - and it's still producing. 

I realize in the future if the well would quit producing, we would have to pay to have it plugged - but it's still giving us free gas.

In a cold climate like Pennsylvania - my wife's family has saved $ thousands with free heat & cooking.

You would be a fool to pass up a property with free gas just because it has a gas well on it.


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## Bellyman (Jul 6, 2013)

Thanks, guys! I appreciate the input. The gas well has been a bit of an unknown for me up until recently so I just wasn't sure whether there was a very big and bad dark side that no one talks about much. Of course, I'll be asking some questions about such things on specific properties if they arise as I now realize that there are some variables to be nailed down. 

The whole idea of mineral rights conveying with the sale of the property is kind of hit and miss in the area we've been looking. Some do, some don't. And I definitely want to avoid nasty surprises if at all possible. 

Thanks again for your comments.


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## anniew (Dec 12, 2002)

Perhaps you may also want to look at the gas lease. I have a lease which stipulates "no surface disturbance." Therefore, I might get included in a "unit" where royalties may be possible, but won't have any of the infrastructure, or even truck traffic across my property. Each lease can be different, depending on how it was written. People who have contracted a gas-specializing attorney, have many addenda that are unique to a particular property.


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## Vahomesteaders (Jun 4, 2014)

I would never purchase a property without mineral rights. Many folks have had their land and crops destroyed by new strikes. It's very bad in parts of wv and va. Say a gas company who ownes your rights hits oil on a nearby property. They could come in and dig on every square inch of your land you couldn't stop them. It also dramatically decreases the resale value of your land as people are wise to it and leary of not having total control.


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## anniew (Dec 12, 2002)

Vahomesteaders said:


> I would never purchase a property without mineral rights. Many folks have had their land and crops destroyed by new strikes. It's very bad in parts of wv and va. Say a gas company who ownes your rights hits oil on a nearby property. They could come in and dig on every square inch of your land you couldn't stop them. It also dramatically decreases the resale value of your land as people are wise to it and leary of not having total control.


As I mentioned above, you can get a lease that stipulates, "no surface disturbance"...so even if the property comes without mineral rights, the lease by the former owner may include that stipulation, and your sale could be contingent on the former owner never changing that stipulation.


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## fordy (Sep 13, 2003)

1948CaseVAI said:


> If the property has a producing well and is a real bonus. There may well be an easement for maintenance but it shouldn't be a problem. At least in Kansas the mineral rights to a property do not automatically go with the property when it is sold. My Mom has sold quite a few sections (640 acres) of western Kansas land but she has retained the mineral rights for 20 years on all of it. In the case of a gas or oil find she will get the royalties. Many other folks just sell the mineral right along with the property.
> 
> She runs all her business past an attorney because oil and gas has a lot of special rules and laws and gets tricky. I would certainly want a qualified legal opinion before I commit to anything. You also need to know the name of the lease holder (who likely has leased the whole property and has the right to do further exploration at will) as well as the current producer.


............Mineral rights ownership SHOULD be maintained forever ! WHY , would she put a time limit on such a valuable resource ? Undrilled , mineral rights are not taxed , atleast in Tx unless they are producing . Where in the world did she come up with a rationale that would limit her ownership for 20 short years ? You need to get her to change that so you can inherit the minerals . , fordy


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## 1948CaseVAI (May 12, 2014)

In our state 20 years is the legal max.


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## Evons hubby (Oct 3, 2005)

We have a gas well on our property with out any real downside to it. It was drilled several years prior to me purchasing the property on a two year renewable lease. The gas company would have had to sell gas within the first two years of the lease in order to maintain their lease. That never happened (long story) so the lease expired returning all mineral rights back to the landowner. Mineral rights transferred to me upon my purchase so when I got ready to move into the house I ran line to the house, installed regulator and hooked it up. The free heat is wonderful! The downside is that I'm totally spoiled to it and if it ever runs out I'm going to cry like a baby!


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## dustyshoes (May 22, 2008)

You may want to think about well water contamination. If you've ever watched the documentary "Gas Wars", some who live on or near working gas/oil wells on property have lost their potable water supply to gas/oil intrusion into their water supply and have bad health issues from air quality.


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## Bellyman (Jul 6, 2013)

dustyshoes said:


> You may want to think about well water contamination. If you've ever watched the documentary "Gas Wars", some who live on or near working gas/oil wells on property have lost their potable water supply to gas/oil intrusion into their water supply and have bad health issues from air quality.


Very good point. The property I was speaking of is still for sale. There is not a water well on it but there is a pond. I don't know if it's spring fed or just a retention type pond, or even a pond with a small stream passing through that keeps it full.

I've asked a few locals but haven't gotten much useful info yet. 

The place is priced a bit on the high side for the area but not in the stratosphere. It's been for sale for something close to 3 years, though, so that in itself makes me wonder if there isn't something majorly negative that's not being talked about. 

Thanks for chiming in.


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## fordy (Sep 13, 2003)

..........I was going to mention this before , but I got distracted ! You need to find out WHO , is responsible for Pluging your(the) gas well , one it quits making Gas . Initially , that responsibility would have fallen on all the working interest owner(S) , But , since it seems you own the gas well and are receiving the gas you have stepped into the shoes of the working interest owners , or it appears to be from your description , AND , you may have become responsible for the expense of plugging the well . , fordy


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## Bellyman (Jul 6, 2013)

fordy said:


> ..........I was going to mention this before , but I got distracted ! You need to find out WHO , is responsible for Pluging your(the) gas well , one it quits making Gas . Initially , that responsibility would have fallen on all the working interest owner(S) , But , since it seems you own the gas well and are receiving the gas you have stepped into the shoes of the working interest owners , or it appears to be from your description , AND , you may have become responsible for the expense of plugging the well . , fordy


Interesting. Something I hadn't considered. Thanks for your input.

FWIW, I haven't bought the place. But it's one that's been on the "would like to have a look" list for a while now, kinda surprised it's still available. Basically, it's a case of my wife working with a lady who knows the listing realtor and there have been some very informal brief conversations. No offer, not even a showing yet. Didn't know if I actually wanted the place yet, and that's the reason for the original post.


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