Rock Ridge Resources, Inc. (RRRI)

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Great read from this mornings NYTimes:

When the Backyard Views Are of Wells and Drilling Rigs




By KATE MURPHY
Published: July 31, 2005
WHEN Peggy and Bob Utesch bought a house five years ago on four acres in a town called Silt in rural Garfield County, Colo., they envisioned a quiet, pastoral life. What they got instead was the constant noise and exhaust of heavy trucks and natural gas drilling equipment, not to mention rig workers urinating on their lawn.






"It was quiet and peaceful when we moved in, but by the time we decided to move last March, there were 24 gas wells within a mile radius of our house," Ms. Utesch said.

The couple was helpless to stop the encroachment because they did not own the mineral rights to their land. So-called split estates, where ownership of the land does not include whatever bounty (gas, oil, gold, uranium, etc.) lies beneath it, are common in the United States.

"Often the landowner doesn't know that they don't own the mineral rights until the oil company shows up to start drilling," said John S. Lowe, professor of energy law at Southern Methodist University in Dallas. Real estate agents rarely address the matter, he said, "and most people anxious to close on a home don't read the fine print of the deed."

They should, because the law in most states allows whoever owns or leases mineral rights to do whatever is "reasonably necessary" to extract subterranean riches. As Ms. Utesch can attest, this includes not only digging wells but also running roads and pipelines across a yard as well as setting up housing for employees at the well site. Ms. Utesch said that she barely broke even on her house when she sold it and would probably have made money if the drillers hadn't shown up, because nearby real estate prices were rising rapidly. The man who bought her house, she said, builds custom-made jeeps and trucks with large wheels, and saw the gas well workers as potential customers.

Owners of mineral rights are under no legal obligation to compensate the landowner when, for example, they trample crops or create enormous sinkholes. "The law is tilted heavily toward the energy companies," Mr. Lowe said.

Until recently, split estates were a nonissue because of the slow pace of energy development in the United States. But because fuel prices have risen, energy exploration and drilling are at an all-time high. Several states have reported record numbers of drilling applications this year, particularly for natural gas, according to the Interstate Oil and Gas Compact Commission, an organization that advises the governors of resource-rich states about recovering oil and gas.

The increase in activity has not occurred only in traditional oil and gas producing states like Texas, Oklahoma and Louisiana; there has also been significant activity in regions like western New York and southern Kansas.

And the drilling is not just out on the range. "We're seeing significant new production in populated areas," said Christine Hansen, executive director of the oil and gas commission. An example is the Barnett Shale formation, a geologic jackpot of natural gas underneath the greater Fort Worth, Tex., area, which is home to 1.8 million people. A major player, the Devon Energy Corporation of Oklahoma City, has drilled 1,000 wells there since 2001.

Residents with split estates are not very happy. "I walk out my front door and there's a well right in front of me," said Bob Lane, an independent business consultant who lives in Haslet, a suburb of Fort Worth. "As I sit at my desk, I can feel the earth vibrating and I hear dishes rattling in the kitchen."

Unlike the Utesches, Mr. Lane knew when he bought his home two years ago that he did not own the mineral rights. "It wasn't a concern because subdivisions aren't where the oil companies normally go to drill," he said.

But within months, the heavy machinery appeared. "When they were first digging things up, the diesel engines were running day and night and they had these bright lights - it was hard to sleep," Mr. Lane said. Now that the wells are established and pumping, he said, there is a quieter, though constant, thrum and the air often smells like rotten eggs.

He is considering moving because he fears for his safety. "To me, it's not a matter of if but when there's going to be an explosion," said Mr. Lane, who also worries about property values being hurt.

The energy companies maintain that they are merely pursuing their interests in accordance with the law. And many, like Devon Energy, have tried to be solicitous of landowners in placing wells and roads. "We've worked hard to comply with their requests and let them know exactly what to expect," said Brian Engel, a spokesman for Devon.

Still, the outcry from disgruntled landowners has led Colorado, Wyoming, Montana, New Mexico and Utah to consider landowner protection legislation. Only Wyoming actually passed a statute last March. But though it requires both sides of split estates to attempt to reach an agreement, mineral rights owners need only post a bond to proceed with their plans over property owners' objections.

"If energy prices stay where they are or go higher, people should be concerned about ownership of mineral rights no matter where they live," said Mr. Lowe at Southern Methodist University. "You never know where they're going to find oil and gas deposits, and people have the financial incentive these days to not only find it but also invade your property to drill down and get it."


http://www.nytimes.com/2005/07/31/realestate/31nati.html