the marcellus shale lease guide -...

MARCELLUSSHALELEASEGUIDE

PRINCIPLESFORTHECONSERVATION‐MINDEDLANDOWNER

June2011

www . p a g r e en l e a s e . o r g

http://www.pecpa.org

http://www.pecpa.org

Marcellus Shale Lease GuideVersion1.0(June2011)

Pennsylvania Environmental Council, Inc.

ACKNOWLEDGEMENTS:

ThePennsylvaniaEnvironmentalCouncilwishestoacknowledgetheworkofMarilyNixon,Esq.asaprincipalauthoroftheGuide.WealsowishtoacknowledgethesupportoftheColcomFoundaUoninthedevelopmentofthisGuideanditsaccompanyingwebsite.

LEGAL DISCLAIMER:

ThePennsylvaniaEnvironmentalCouncil(PEC)isnotalawfirmanddoesnotprovidelegaladviceorlegalservices.DistribuUonofthisGuidedoesnotcreateanaXorney‐clientrelaUonship.PECprovidesthisGuideonan“as‐is”basis,andmakesnorepresentaUonsorwarranUesregardingtheinformaUoninthisGuide,anddisclaimsanyliabilityfordamageresulUngfromitsuse.

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TABLE OF CONTENTS

SECTION PAGE Introduction 1 Section One: Operational Standards for Oil & Gas Activities 41.1AdaptiveManagement 41.2Crops 51.3EmergencyResponsePlan 51.4ErosionandSedimentControl 61.5ExistingStructuresandFeatures 71.6Fencing 71.7Fire 81.8NoiseControl 81.9NoxiousWeedsandInvasiveSpeciesControl 91.10PollutionPrevention 91.11Reclamation 101.12RecreationalandOtherUsesbyPersonnel 121.13SeismicTesting 121.14Timber 131.15Visual 141.16Wildlife 15Section Two: Air Quality and Dust 16 Section Three: Water Management Issues 173.1UseofExistingOn‐SiteWaterSources 183.2DrillingofWaterWellsforSiteUse 203.3TestingofWaterSupplies 223.4RestorationofWaterSupplies 24Section Four: Storage and Disposal Issues 264.1On‐SiteStorageofTreatedandIndustrialFluids 274.2DisposalofTreatedandIndustrialFluids 284.3On‐SiteStorageofOtherMaterials 294.4SafeguardsforTransportandStorageofMaterials 30Section Five: Well Sites 315.1AssociatedFacilities 325.2SiteSelectionStandards 325.3SiteDesignandConstructionsStandards 33


TABLE OF CONTENTS

SECTION PAGE Section Six: Comprehensive Planning 34Section Seven: Road Construction and Use 37 Section Eight: Pipelines 39 Section Nine: General Provisions 419.1Oil&GasCompany’sUseoftheProperty 429.2CompliancewithPermits,RegulationsandLaws 439.3LiabilityandIndemnification 449.4FinancialSecurity 449.5Insurance 45


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INTRODUCTION ThecurrentboominnaturalgasleasingandproductionfromtheMarcellusShaleformationaffectsallresidentsofPennsylvaniainonewayoranother.Residentsareconcernedaboutpotentialimpactsfromdrillingoperationstowatersupplies,soil,airquality,wildlifepopulations,forests,andothernaturalresources,aswellastothecommunitieshostingMarcellusShalegasdevelopment.ManyresidentsareconsideringleasingtheirpropertyforMarcellusShaledevelopment,orhavealreadydecidedtodoso,butwanttoprotectenvironmentalvaluesassociatedwiththeirpropertyandcommunity.Propertyowners(landownersormineralowners)whochoosetoleasetheirlandforMarcellusShalegasproductioncanminimizeadverseimpactsfromgasoperationsbynegotiatingenvironmentallyprotectiveprovisionsintheleasetheysign.PennsylvaniahaslawsandregulationsthatapplytoMarcellusShalegasdevelopment;buttheselawsandregulationsarebestviewedasafloor,notaceiling,forprotectingenvironmentvalues.Thepropertyownerwhowishestorequireahigherlevelofenvironmentalprotectionforgasoperationsontheirpropertyshouldseektonegotiateheightenedprotectionintothetermsoftheleaseitself.ThisLeaseGuideisintendedasaresourceforPennsylvaniaresidentswhoareconsideringleasingtheirpropertyforMarcellusShalegasproduction,orwhohavedecidedtoleaseandarebeginningthenegotiatingprocess.Itidentifiessomeofthekeyenvironmentalissuesthatcanbeaddressedinalease;summarizesthetypesofapproachesthathavebeenusedtoaddresstheseissuesinMarcellusShalegasleasesinPennsylvania;andoffersoptionsforhandlingtheseissuesinamoreprotectiveMarcellusShalegaslease,usingbestmanagementpracticesemployedinoilandgasleasinginPennsylvaniaandnationwide.The“perfect”MarcellusShalegasleasedoesnotexist;eachleaseshouldbedesignedtomeettheuniquefeaturesofthepropertyproposedforlease.Moreover,thetechnologyandbestmanagementpracticesassociatedwithMarcellusShalegasrecoveryareconstantlyevolving.Asaresult,thisLeaseGuidedoesnotattempttoidentifyeveryenvironmentalissuetobeaddressedinaleaseortoprescribeexactlanguageforleaseprovisions.Instead,itsuggestsamenuofapproachesforthepropertyowner,togetherwithhisorherattorney,toconsiderincraftingleaselanguageforcertainkeyenvironmentalissuesthatbestsuitsindividualcircumstances.Inmanycasestheoptionssuggestedbelowareparaphrasedsubstantially;actualleasetermswillbemoredetailedandprecise.


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ThisLeaseGuideisjustonetoolapropertyownermaywanttousewhenconsideringwhethertoleaseorinnegotiatingthetermsofalease.Severalothervaluabletoolsareavailable,andideallyaconservation‐mindedpropertyownerwilluseallofthem.Thesetoolsinclude:

• Consult a qualified oil and gas attorney and other professionals.ThisLease

GuideisnotintendedtoprovidelegaladviceortosubstitutefortheadviceofaqualifiedPennsylvaniaoilandgasattorney.AnypropertyownercontemplatingleasingtheirpropertyforMarcellusShalegasdevelopmentshouldconsultanattorneytoeducatethemaboutthelawand,iftheydecidetolease,guidethemthroughtheleasingprocess.Thepropertyownermayalsowishtoobtaintechnicaladvicefromoneormoreexpertsinareassuchasengineeringandtechnology,hydrogeology,forestry,wildlife,andbotany.

• Learn from others who have considered leasing.Thepropertyownershoulddohisorherownresearchtolearnwhattermsothersinthecommunityandregionhavebeenabletoworkintotheirleases.Propertyownerscandothisbyjoining,orcommunicatingwith,apropertyownergroupintheirarea,aswellasotherpropertyownergroupsthroughouttheCommonwealthofPennsylvania(andtheStateofNewYork)thathavealreadynegotiatedandsignedMarcellusShalegasleases.Propertyownergroupscanbefoundonlineathttp://gomarcellusshale.com/page/marcellus‐landowner‐groups.

• Review best management practices.Numerousacademic,government,andpublicinterestgroupshavepublishedbestmanagementpractices(“BMPs”)forshalegasoperations.SomeoftheBMPsaddressallenvironmentalaspectsofleasing,whileothersconcentrateonprotectionofaspecificresource.ThepropertyownercanreviewtheBMPsanddecidewhichtopicsorspecificprovisionstoattempttonegotiateintohisorherlease.SomeexamplesofrecentlypublishedBMPsinclude:o PennStateCollegeofAgriculturalSciences,Water Facts #28: Gas Well Drilling

and Your Private Water Supply(Rev.March2,2010).o PinchotInstituteforConservation,The Marcellus Shale: Resources for

Stakeholders in the Upper Delaware Watershed Region (Dec.15,2010).o PennsylvaniaDepartmentofConservationandNaturalResources,Guidelines

for Administering Oil and Gas Activity on State Forest Lands(April26,2011).o PennStateCollegeofAgriculturalSciencesCooperativeExtension,Forest

Landowners and Natural Gas Development: Timber Resources(2009).


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o PennStateCollegeofAgriculturalSciencesCooperativeExtension,Forest Landowners and Natural Gas Development(2009).

o CornellCooperativeExtension,Gas Rights and Right‐of‐Way Leasing Pointers for Forest Owners(Dec.12,2008).

o WesternPennsylvaniaConservancy,Conservation Guidelines for Landowners on Natural Gas Development(June2010).

o U.S.BureauofLandManagementandU.S.ForestService,Oil and Gas Exploration and Development: The Gold Book(Rev.2007).

o EnvironmentalDefenseFund,Emissions from Natural Gas Production in the Barnett Shale Area and Opportunities for Cost‐Effective Improvements(January26,2009).

o PennsylvaniaDepartmentofEnvironmentalProtection,BureauofOilandGasManagement,Oil and Gas Operators Manual(Oct.30,2001).

• Use other available research tools.Anabundanceofinformationisreadily

availablerelatingtothegeologyoftheMarcellusShaleformation,themechanicsoftheoilandgasproductionprocess,potentialenvironmentalimpactsfromshalegasproduction,andothertopicsofinteresttopropertyownersconsideringenteringintoalease.Thefollowingresourcescanbeagoodplacetostart.o PennsylvaniaEnvironmentalCouncil, The Marcellus Shale Amendments: A

Proposal for Reforming the Pennsylvania Oil & Gas Act(May2011). o PennsylvaniaEnvironmentalCouncil, Developing the Marcellus Shale:

Environmental Policy and Planning Recommendations for the Development of the Marcellus Shale Play in Pennsylvania(July2010).

o NationalSeaGrantLawCenterandPennsylvaniaSeaGrant,Citizens’ Guide to Marcellus Shale in Pennsylvania(December2010).

o TheLeagueofWomenVotersofPennsylvania,Marcellus Shale Natural Gas Extraction Study 2009‐2010: Marcellus Shale Natural Gas: From the Ground to the Customer(2009).

o U.S.DepartmentofEnergyOfficeofFossilEnergyandtheNationalEnergyTechnologyLaboratory,Modern Shale Gas Development in the United States: A Primer(April2009).

o PennStatewebsites: CollegeofAgriculturalSciencesCooperativeExtensionNaturalGas

website:http://extension.psu.edu/naturalgas MarcellusCenterforOutreach&Researchwebsite:

http://marcellus.psu.edu/ MarcellusShaleEducation&TrainingCenterwebsite:

http://www.msetc.org/


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o PennsylvaniaDepartmentofEnvironmentalProtectionMarcellusShalewebsite:http://www.dep.state.pa.us/dep/deputate/minres/oilgas/new_forms/marcellus/marcellus.htm

SECTION ONE:OPERATIONAL STANDARDS FOR OIL AND GAS ACTIVITIES Background:WhilePennsylvanialawsandregulationsprovidestandardscoveringoilandgasactivities,theydonotaddressalloperationalaspectsofMarcellusshalegaswellsiting,development,production,andreclamation.WhyTheseIssuesMattertothePropertyOwner:MarcellusShalegasoperationsposetwotypesofimpacts:short‐termimpactsthatmaylastonlyaslongasaparticularphaseofdevelopmentisoccurring,oruptoafewyears;andlong‐termimpactsthatmaylastfordecades.Short‐termimpactsmayincludenoisefromactivitiesassociatedwithwelldevelopment,andsurfacedisturbancesrelatingtowelldrilling.Long‐termimpactsmayincludewaterorsoilcontaminationanddeforestation.PropertyownersconsideringleasingtheirlandforMarcellusShalegasdevelopmentmaybeabletolessenbothtypesofimpactsbyincludingappropriateprotectiveprovisionsintheirlease.HowExistingLeasesApproachtheseIssues:

Manyleasesseektosupplementexistinglawsandregulationsbyincludingadditionalrequirementsaimedatminimizingtheimpactofoilandgasoperationsontheleasedproperty,thepropertyowner,andthesurroundingcommunity.Theleasesvaryastowhatissuestheyaddressthroughadditionalleaseterms;eachleaseistailoredtothespecificleasedproperty,propertyowner,andoilandgascompany.However,agrowingnumberofleasesaddressmostorallofthefollowingissues.PossibleLeaseTermsBasedonBestManagementPractices: 1.1 Adaptive Management

• Requiretheoilandgascompanytocommittoemploycurrentbestmanagementpracticesinallaspectsofoilandgasoperations.Astechnologydevelopsand


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bestmanagementpracticesevolvealongwithtechnologicalandpolicychanges,requiretheoilandgascompanytoimplementupdatedbestmanagementpractices.

• Specifythatwhennewlawsorregulationsareenactedregardingenvironmentalimpactorcontrolsortechnicalaspectsofoilandgasoperations,oilandgasoperationsontheleasedpropertymustimmediatelycomplywiththeirterms.

• Requiretheoilandgascompanytomeetformallywiththepropertyowneratleastonceannuallytoinvestigatecurrentlawsandregulations,currenttechnologyapplicabletoMarcellusShalegasoperations,currentbestmanagementpractices,andenvironmentalperformanceofoilandgasoperationsontheleasedpropertysincethelastmeeting.

• Requirethatcurrentbestmanagementpracticesidentifiedintheannualinvestigationbeimplementedimmediatelyontheleasedproperty.

1.2 Crops

• Requiretheoilandgascompanytousethehighestdegreeofcareandallreasonablesafeguardstopreventinjurytogrowingcrops,timber,nativeorcultivatedgrasses,fruitornuttrees,orpastures.

• Requiretheoilandgascompanytopayforanydamagetogrowingcrops,calculatedasthecurrentmarketvalueoveralloftheaffectedgrowingseasons.Requiretheoilandgascompanytoretainanindependentexpertmutuallyagreedtobytheoilandgascompanyandthepropertyownertovaluethecropspriortoanyearthdisturbanceontheleasedpropertyandultimatelytodeterminetheamountofdamages.

1.3 Emergency Response Plan

• Requiretheoilandgascompanytoprovideacopyoftheemergencyresponse

plantothepropertyowneraswellasthelocalemergency(police,fire,andrescue)services,andtokeepacopyoftheplanontheleasedproperty.


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1.4 Erosion and Sediment Control

• Prohibittheoilandgascompanyfromcausingorcontributingtosoilerosionorsedimentation,ortoinjurytoterraces,grades,orothersoil‐conservingstructuresontheleasedpremises.

• Beforeanyearthmovingordisturbanceactivitiestakeplace,requiretheoilandgascompanytoobtainthepropertyowner’sapprovalofthesoilerosionandsedimentationcontrolplan.Requiretheoilandgascompanytoprovideacopyoftheerosionandsedimentationcontrolplantothepropertyownerandtokeepacopyontheleasedproperty.

• Requiretheoilandgascompanytominimizesoilerosioninconnectionwithconstruction,drilling,andotheractivities.

• Requiretheoilandgascompanytore‐gradeclearedareasimmediately,reseedwithtemporaryorpermanentnative,noninvasivegrasses,andperformanyothernecessaryworktopreventerosionintheseareas.

• Requiretheoilandgascompany,immediatelyaftercompletionofconstruction

ofeachdrillingsite,torestoreallhighwallsandreseedhighwallsandthedownslopeembankmentofeachdrillingsitewithnative,noninvasivespecies.

• Prohibittheoilandgascompanyfromconstructinganearthendamacrossany

streamtoobtainawatersupplyforitsoperations.• Requiretheoilandgascompanytoconstructwaterbarsorsimilardiversion

channelsonpipelinerights‐of‐wayandaccessroadstocarrysurfacerunoffawayfromtheseareasandpreventsiltationofstreams.Requiretheoilandgascompany,duringconstruction,tobuildasettlingbasinatthebaseofeachpipelineright‐of‐wayoraccessroadtoimpoundrunoffandcapturesediment.

• Requiretheoilandgascompanytomaintainandrepair,whennecessary,all

erosionandsedimentationcontrolfacilitiesanddevices.• Requiretheoilandgascompanytoretainanindependentexpertmutually

agreedtobytheoilandgascompanyandthepropertyownertoconductperiodicmonitoringofitscompliancewiththesoilerosionandsedimentationplan.Forexample:afterinitialclearingandgrading;afteranysubsequentsubstantialgradingwork;afterinstallationoralterationofanyroadwaysor


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pipeline;afterinstallationofthewellpadorotherfacilitiesorequipment;afteranyinterimreclamation/revegation;afterremovalofthewellpad,otherfacilitiesorequipment,oranyroadwayorpipeline;andafterfinalreclamationoftheleasedproperty.Requirethatmonitoringresultsbereportedinwritingandacopyofthemonitoringresultsbeprovidedtothepropertyowner.

1.5 Existing Structures and Features

• Requiretheoilandgascompanytousereasonablesafeguardstopreventinjurytobuildings,roads,structures,ensilagepits,improvements,farmimplementsandfencesontheleasedproperty.

• Prohibitremovalfromtheleasedpropertyofanyartifacts,shrubs,rocks(includingBluestone)orothernaturalfeatures.

• Requiretheoilandgascompanytorepairanyimprovementstothelandthataredamagedbyitsoperations.Ifrepairisnotpossible,requiretheoilandgascompanytoreplacetheimprovementsor,atthepropertyowner’selection,compensatethepropertyownerforthedamage.

• Requiretheoilandgascompanytoimmediatelyceaseoperationsandnotifythepropertyownerifitencountersanyhistoricalorarchaeologicalsitesontheleasedproperty.

1.6 Fencing

• Requiretheoilandgascompanytoinstallfenceswithgates,locks,orcattleguards(atthepropertyowner’sdiscretion)aroundwellsitesandotherdangerousstructuresandequipment.

• Requiretheoilandgascompanytofenceandgateallwellaccessroads.

• Specifyaminimumheightforfencesandgates.

• Requiretheoilandgascompanytomaintainallfencesandgatesingoodrepairandkeepgatesclosedwhennotinactiveuse.

• Prohibittheinstallationoffencesinrightsofway.


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1.7 Fire

• Requiretheoilandgascompanytopreventorsuppressfiresontheleasedproperty.

• Prohibittheoilandgascompanyfromburningofrefuse,brushorothermaterialsontheleasedproperty.

• Specifythattheoilandgascompanyisliableforanydamagesresultingfromfirescausedbyoilandgasoperationsontheleasedproperty.

• Requirethesuspensionofdrillingandotheroperationsduringperiodsofunusuallyhighfiredanger.

1.8 Noise Control MostofthefollowingpossibleleasetermsderivefromthePinchotInstituteforConservation’spublicationThe Marcellus Shale: Resources for Stakeholders in the Upper Delaware Watershed Region (Dec.15,2010).

• Requireuseofmufflersondrillrigengines.

• Requireuseofquieterelectricmotorsratherthandieselorgasengines.

• Useengineeredsoundbarriersandsoundinsulatedbuildingswhenwellsitesarewithincloseproximityofresidentialorotherbuildings.

• Requireplantingoftreesorconstructionofbermstomitigatenoise.

• Requireuseofautomatedwellmonitoringsystemsafterwellcompletion.Thishastheadditionalbenefitofreducingvehicletrafficformonitoringpurposes.

• Limitoperationalhourstopreventexcessivenoiseduringnighttimehours.

• Prohibitthesitingofcompressorstationsontheleasedpropertyorrequirethemtobeplacedinsound‐insulatedbuildings.


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1.9 Noxious Weeds and Invasive Species Control

• Requiretheoilandgascompanytoobtainapre‐constructioninventorybyaprofessionalbiologistofplannedareasofdisturbancetodetermineappropriatemethodsforpreventingintroductionofinvasivespecies.

• Minimizeareasofsoildisturbancebycollocatingequipmentandfacilitiestothegreatestextentpossible.

• Requiretheoilandgascompanytoproperlycleanallequipmentpriortobringingitontotheleasedproperty.

• Requiretheoilandgascompanytoarrangeforanannualsurveyofdisturbedareastoidentifyinvasivespecies.

• Requiretheoilandgascompanytocleardisturbedareasofnewinvasivespecies.1.10 Pollution Prevention

• Requiretheoilandgascompanytoperformasiteassessmentofthepropertytodetermineifthereareanyabandonedoilorgaswellslocatedontheproperty.Ifanyabandonedwellsareidentified,requireproperpluggingoftheabandonedwellpriortoanynewdrillingorextractionactivity.

• Requiretheoilandgascompanytousealternative,less‐toxicmaterialstothe

greatestextentpracticable.• Prohibittheoilandgascompanyfromallowingwasteoil,frackingfluids,

flowbackwater,producedwater,oranyotherliquidsorwastesusedinorproducedbyoilandgasoperationstoflowontothesurfaceoftheleasedproperty,orintoanydrains,creeks,orravineslocatedontheleasedproperty.RequiretheoilandgascompanytodisposeofallliquidsandwastesoutsidetheboundariesoftheleasedpropertyatanapprovedfacilityandincompliancewiththerulesandregulationsofthePennsylvaniaDepartmentofEnvironmentalProtectionorothergovernmentalauthority.

• Prohibitstorageofanyliquidsorwastesinpits,pondsorimpoundments(collectively,“pits”)ontheleasedproperty.RequirestorageinclosedtanksthatmeettherequirementsdiscussedinSection5.3ofthisLeaseGuide.


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o Alternatively,requirewrittenpermissionfromthelandownerpriortoconstructionofanypond,impoundmentorpit.Ifwrittenpermissionisgranted,includerequirementsforlocation,construction,andreclamationofthesestructures,asdiscussedinSection4.1ofthisLeaseGuide.

• Requiretheoilandgascompanytofillpits(ifallowed),regradetheareato

approximateoriginalcontours,andrevegetatetothesurfaceowner’sspecificationsoncompletionoftherelatedwell.

• Prohibittheoilandgascompanyfromburyingpitliners(ifpitsareallowed)oranyotherwastematerial,whetherliquidorsolid,ontheleasedproperty.

• Requiretheoilandgascompanytoimmediatelynotifythepropertyownerand

thePennsylvaniaDepartmentofEnvironmentalProtectionofanycontaminationofsoilorwateronorundertheleasedproperty.

• Requiretheoilandgascompanytocleanup,remove,remediate,andrepairany

soilorsurfaceorgroundwatercontaminationordamagecausedbyitspresenceorreleaseofanycontaminantin,on,underorabouttheleasedproperty,whetherornotcausedbythenegligenceoftheoilandgascompany,itsagents,representatives,invitees,contractorsorsubcontractors,ortheiremployees.

• Requiretheoilandgascompanytoreimbursethepropertyownerforanyactions

takenby,orpaidforby,thepropertyownertocleanup,remove,remediate,andrepairanysoilorsurfaceorgroundwatercontaminationordamagecausedbythepresenceoftheoilandgasoperationsorthepresenceorreleasebytheoilandgascompanyoritsagents,representatives,invitees,contractorsorsubcontractors,ortheiremployees,ofanycontaminantin,on,underorabouttheleasedproperty.

1.11 Reclamation

• Requiretheoilandgascompanytoobtainapre‐constructionbaselineinventoryoftheleasedpropertyconditioninordertohaveabenchmarkforrestoringthepropertytoitsoriginalconditions,contour,anddrainage.Requiretheoilandgascompanytoprovideacopyoftheinventorytothepropertyowner.

• Requiretheoilandgascompanytoremovetopsoilseparatelyfromsubsoilwhencreatinganysurfacedisturbanceorconstructinganypad,pipeline,orother


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servicefacility,stockpileatleast12inchesoftopsoilseparately,andatreclamationreplacethesubsoilfirst,withtopsoilreplacedlast.

• Requiretheoilandgascompanytocleanupeachwellsiteassoonaspracticableaftereachwellisdrilled.

• Requiretheoilandgascompany,within30daysaftercompletionofawell(orthefinalwellofacontinuousdrillingoperation)toreclaimthatpartofthewellsitenotusedforproductionrelatedactivitiesasnearlyaspossibletothepre‐drillingconditions,contouranddrainage.RequiretheoilandgascompanytofollowrecommendationsforinterimrestorationlistedinPennsylvaniaDepartmentofConservationandNaturalResources’Guidelines for Administering Oil and Gas Activity on State Forest Lands(April26,2011).

• Requiretheoilandgascompany,within30daysafteradryholeisdrilledorafterpluggingandabandonmentofaproducingwell,torestorethesurfaceoftheleasedpropertytopre‐operationconditions,contouranddrainage.

• Whenreclaimingaportionortheentiretyoftheleasedproperty,requiretheoilandgascompanyto:o Fillinallruts,holes,anddepressionscausedbyitsoperations,removegravel

orsimilarmaterials,restorethecontoursanddrainageofthegroundtoitsoriginalcondition,andspreadstockpiledtopsoiloverdisturbedareas.

o Uselowcompactiongradingtechniquestominimizecompactingsoils.

o Fertilizeandplantgradedareaswithnativenoninvasiveseedingapprovedby

thePennsylvaniaDepartmentofEnvironmentalProtection,andinstallappropriateerosioncontrolstoprotectnewlygradedareas.

o Removealldrillingfluidsandsolidsfromtheproperty,andrestoreanyarea

whereanyfluidsorsolidsweretemporarilyplaced.o Removefromtheleasedpropertygravel,stone,orothermaterialsanddebris

introducedbytheoilandgascompanytotheproperty.Requiretheoilandgascompanytoreplaceanyfences,stonewalls,orbarrierspreviouslyremovedbytheoilandgascompany.


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o Whenreclaimingaportionoftheleasedproperty,requiretheoperatortomaintainthereclaimedportionofthesiteuntiltheleaseisterminated.

• Requiretheoilandgascompanytoplugthewellboreincompliancewithall

applicablelawsandregulations,andinstallcasinginsuchawayastofullyandcompletelyprotectallgroundwater.

• RequiretheoilandgasoperatortocomplywithallrecommendationsforsoilerosionandreclamationcontainedinthePennsylvaniaOilandGasOperatorsManual.

1.12 Recreational and Other Uses by Personnel

• Prohibithunting,fishing,swimming,camping,boating,andotherpersonalorrecreationalusesoftheleasedpropertybytheoilandgascompany,itsagents,representatives,invitees,contractorsandsubcontractors,andtheiremployees.

• Prohibitemployeesoftheoilandgascompany,itsagents,representatives,invitees,contractorsandsubcontractors,andtheiremployeesfrombringinganyanimalontotheleasedproperty.

• Unlessnecessaryforsafetypurposes,prohibitovernighthousingofemployeesontheleasedproperty.Ifhousingisnecessaryforsafetypurposes,includerestrictionsregardingsurfacedisturbanceforemployeehousing,sourceofwater,sanitaryfacilities,etcetera.

1.13 Seismic Testing

• Requirethat,priortoanyseismicworkbeingconductedontheleasedproperty,theoilandgascompanymustsubmittothelandownerforapprovaladocumentdescribinganyseismicworkproposedforthepropertyandamapshowingtheproposedlocationofallseismiclines.

• Specifywhattypesofseismictestingareauthorizedontheleasedproperty.o If3Dseismictestingisauthorizedinthelease:

Requiretheoilandgascompanytoprovidethepropertyownerwitha

mapshowingthelocationofeachshothole;and


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Requirethateachshotholebefilledimmediatelytopreventgroundwatercontamination.

• Require24hournoticetothepropertyownerpriortoconductinganyseismic

testing.

• Requireuseofvibroseistrucksandhelicoptersratherthandrillbuggiestoconductseismicsurveys.

• Prohibitseismictestingduringwetseasonsandperiodsofwetweather.

• Requireseismictestingtocomplywithsetbacksforalloilandgas‐relatedactivitiesontheproperty.

• Requiretheoilandgascompanytocompensatethepropertyownerforanydamagetothepropertythatresultsfromseismicwork.

1.14 Timber

• Prohibittheoilandgascompanyfromcuttingorinjuringforestgrowthexceptthatwhichisnecessarytoenableoilandgascompanytocarryoutoperationsunderthelease.RequiretheoilandgascompanytoindicateontheSitePlananytimberthatistoberemoved.Onleasedpropertiessubjecttoasustainabletimbermanagementplan,requireanytimbercuttingorhandlingtocomplywiththeplan.

• Requiretheoilandgascompanytogivethepropertyownerpriornoticeoftimberremoval,markthetimbertoberemoved,andsecureanappraisalofthetimberbyanindependentcertifiedprofessionalforestermutuallyagreedtobytheoilandgascompanyandthepropertyowner.Specifythatthisappraisalshallbefinalandconclusiveastothevalueofthetimber.

• Allowthepropertyownertochoosewhethertotakethetimberorpaymentforthetimberattheappraisedvalue.

• Ifthepropertyownerchoosesnottoharvestthetimber:o Requiretheoilandgascompanytopaythepropertyownertheappraised

valueofthetimberpriortoharvestingthetimber.


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o Requiretheoilandgascompanytocutandsetasidelogsusingduecare,andremoveuprootedstumpsfromthepropertyorgrindthemon‐siteatthediscretionofthepropertyowner.

o Requiretheoilandgascompanytoplantandmaintaingrassesand/ortrees

orshrubsatthepropertyowner'sdiscretioninclearedareas.

• IftheoilandgascompanydamagesorharveststimberthatwasnotmarkedandindicatedontheSitePlan,requiretheoilandgascompanytosecureanappraisaloftheadditionaldamagedorharvestedtimberbyanindependentcertifiedprofessionalforestermutuallyagreedtobytheoilandgascompanyandthepropertyowner.Requiretheoilandgascompanytopaythepropertyowneranamountequaltotwicethemarketratefortheadditionaldamagedorharvestedtimber.

1.15 Visual

• Selectlocationsforwellsiteandotherfacilities,equipment,andinfrastructurethatminimizevisualimpactandmaximizetopographicscreening.

• Modifytheshapeorsizeofthewellpad,facilities,andequipmenttoallowlessvisibleplacementontheleasedproperty.

• Requiretheoilandgascompanytoinstallvegetative,topographicand/orfenced

screeningtomitigatethevisualimpactoffacilities,equipment,andinfrastructurefromthepropertyowner’sdwellingandotherspecifiedlocationsontheleasedproperty,aswellasfromspecifiedlocationsoutsidetheleasedproperty.

• Requiretheoilandgascompanytolimittheamountofdisturbedareaontheleasedpropertytothebareminimumnecessaryforoilandgasoperationsasauthorizedbythelease.

• Requiretheoilandgascompanytousedrillingrigswithfullyshieldedlighting

consistentwithOccupationalSafetyandHealthAdministration(OSHA)regulations.

• Prohibittheoilandgascompanyfromcreatingavisualnuisancetothepropertyownerorneighboringproperties.


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• Requiretheoilandgascompanytomaintaintheleasedpropertyinaneatandpresentablemanner,removingallrubbishanddebrisasitaccumulatesanddisposingofitoffsite.

• Prohibitparkingorstorageontheleasedpropertyofvehiclesorequipmentnotcurrentlyengagedinoperationsontheleasedproperty.

1.16 Wildlife

• Prohibittheoilandgascompanyfromharmingorinanywayinjuringwildlifeor

anyanimals,poultry,fishorlivestockownedbythepropertyowneroritstenantandkeptorpasturedontheleasedproperty.Requiretheoilandgascompanytousereasonablesafeguardstopreventinjurytoanimals,poultry,fishorlivestock,includingfencing,netting,andothermeasurestokeepwildlifeoutofpits(ifpitsareallowed).

• Requiretheoilandgascompanytoobtainasurveyofwildliferesourcesand

habitatontheleasedpropertypriortoanyearthmovingordisturbancetocharacterizewildlifepopulationsandidentifyanythreatenedorendangeredspeciesorcriticalhabitat.Thesurveyshouldbeconductedbyanindependentexpertwildlifebiologistmutuallyagreedtobytheoilandgascompanyandthepropertyowner.

• RequiretheoilandgascompanytoreporttotheDepartmentofConservationandNaturalResources,Fish&BoatCommission,and/orGameCommissionobservationofanythreatenedorendangeredspeciesorcriticalhabitatontheleasedpropertyandceaseoperationspendingconsultationwithDCNRandimplementationofmeasurestoprotectthespeciesorhabitat.

• Requiretheoilandgascompanytoshareroadsontheleasedpropertytothegreatestextentpossibletominimizesurfacedamageandhabitatfragmentation.

• Ifanyforestclearingisconducted,requiretheoilandgascompanytofeathertheedgesofclearedareastocreatewildlifehabitat.

• Requiretheoilandgascompanytofollowbestmanagementpracticesforrestoration/habitatenhancementlistedinthePennsylvaniaDepartmentofConservationandNaturalResources’Guidelines for Administering Oil and Gas Activity on State Forest Lands(April26,2011).


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SECTION TWO: AIR QUALITY AND DUSTBackground:Thepropertyowner,aswellasothernearbyresidents,canbesubjecttofumes,dust,andotherformsofairpollutionfromallstagesofMarcellusgasrecoveryoperations.Gasrecoveryoperationsgenerateairpollutionfromconstructionactivities,trucktraffic,drilling,equipmentoperations,andoff‐gasflaring.WhyThisIssueMatterstothePropertyOwner:Airpollutioncreatedbyoilandgasactivitiesontheleasedpropertycouldposeaninconveniencetothepropertyownerandthesurroundingcommunity(forexample,byimpairingvisibilityandproducingunpleasantsmellsandfumes),ahealthrisk(duetoemissionsofdangerouspollutants),orboth.Inabroadercontext,thereareconcernsthatstateandfederalregulatorsarenotadequatelyassessingthecumulativeimpactsofthenumerouspollutionsourcesatMarcellusShalegasoperationsstate‐andregion‐wide.HowExistingLeasesApproachtheIssue:Severalleasesincludecontrolsontrucktrafficandrequiredustsuppression.Mostleaseswerevieweddidnototherwiseaddressotherairqualityconcernsinanysignificantway.PossibleLeaseTermsBasedonBestManagementPractices:MostofthefollowingpossibleleasetermsderivefromthePinchotInstituteforConservation’spublicationThe Marcellus Shale: Resources for Stakeholders in the Upper Delaware Watershed Region (Dec.15,2010).

• Requirethecompanytoimplementproceduresandequipmentdesignedtoreducetruckandothervehicletraffic,includinguseofcentralizedproductionandliquidsgatheringsystems,anduseofautomatedwellmonitoringequipment.

• Prohibittheburningofrefuseorbrushontheleasedproperty.

• Requiretheoilandgascompanytoabateanydustfromroadsoranyoilandgas‐relatedequipmentusingenvironmentallysensitivemethods.Thecompany


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shouldselectdustsuppressantsfromthe“ApprovedProductsList”orsimilardocumentpublishedbythePennStateCenterforDirtandGravelRoadStudies.

• Requiretheoilandgascompanytodispersefoamifoperationsareconductedwithair,gas,orairfoam.

• Requiretheuseofbettercontrolvalvesforseparatorunitsandcompressors(forexample,replacewetsealswithdrysealsincentrifugalcompressors).

• Requiretheuseofelectricmotorsorairornitrogendrivenpumps,ratherthandieselorgasolineengines.

• Requiretheuseofpropercatalyticconvertersonexhaustpipesfrompumpsandotherengines.

• Requireuseofemissioncontrolsonglycoldehydratorsandvaporrecoveryontanks.

• Requirethattheoilandgascompanyrecapturemethanegas,ratherthanreleasingorflaringit,andreturnittothecollectionsystem.

• Requiretheuseofotherapplicabletechniquesdesignedtoreducemethane

emissionslistedas“RecommendedTechnologiesandPractices”bytheU.S.EnvironmentalProtectionAgencyNaturalGasSTARProgram(http://www.epa.gov/gasstar/tools/recommended.html).

SECTION THREE: WATER MANAGEMENT ISSUES

Background:EachMarcellusShaleGaswellusesanaverageof2to7milliongallonsofwaterduringthehydraulicfracturing(“fracking”)processtostimulatetheextractionofgasfromtheshaleformation.Thewater,alongwithchemicaladditivesandsand(so‐called“frackingfluid”)isinjectedundergroundathighpressure.Someofthissolutionreturnsfairlyquicklytothesurfaceas“flowbackwater,”whilesomereturnstothesurfaceoveralongerperiodoftimeasacomponentof“producedwater.”NumeroussignificantconcernsexistregardingtheuseofwaterinconnectionwithaMarcellusShalegaswell.Iftheoilandgascompanyuseswaterfromtheleased


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premises–eitherfromsprings,watercourses(includingstreamsandrivers),bodiesofwater(includingnaturalorartificiallakes,ponds,reservoirs,swamps,marshes,orwetlands),orfromexistingornewwaterwells–itmaynegativelyaffectthequantityorflowrateofthepropertyowner’swatersupplyorofbodiesofwaterandwatercoursesinthearea.Anothermajorconcernisthepotentialforcontaminationtowatersupplies,bodiesofwater,andwatercoursesfromliquidsusedorproducedindrillingoperations,hydraulicfracturing,andgasproduction.Frackingfluidscanincludeahostofchemicals,includingacids,dieselfuel,foams,andlubricants.Inadditiontothechemicalsinthefrackingfluids,flowbackandproducedwatercanalsopickuphighlevelsofsaltsandminerals,includingnaturallyoccurringradioactiveelements,astheyflowthroughundergroundstrata.Therehavebeeninstancesoftheseliquidscontaminatingwatersupplies,bodiesofwater,andwatercoursesinPennsylvania.3.1 Use of Existing On‐Site Water Sources Do you, as the property owner, want to allow the oil and gas company to use water from existing wells or other water sources on your property in their operations? WhyThisIssueMatterstothePropertyOwner:Theoilandgascompanyisnotnecessarilyprohibitedbyregulationfromusingsurfaceorsubsurfacewaterfromyourpropertyforhydraulicfracturingorotherusesrelatingtogasdrillingoroperations;althoughwithdrawalsmayrequiretheapprovaloftheDepartmentofEnvironmentalProtectionortheSusquehannaorDelawareRiverBasinCommission.Anoilandgascompany’suseoflargeamountsofsurfaceorsubsurfacewateronyourpropertycouldinterferewithyoursourceofwaterfordrinking,agriculturaloperations,recreation,scenic,andotheruses,andcouldreduceorevenhaltstreamflows.HowExistingLeasesApproachtheIssue:

Someexistingleasesprohibittheoilandgascompanyfromusingsurfacewaterorsubsurfacewateronthepropertyforanypurpose.Otherleasesrequirethepropertyowner’swrittenconsentpriortouseofanyon‐sitewater.Someleasesthatallowtheoilandgascompanytousewaterfromtheleasedpremiseswithpriorwrittenconsentnonethelessprohibittheuseoffreshwaterfromthepropertyforcertainpurposes.


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Someleasesthatotherwiseprohibittheoilandgascompanyfromusingwaterfromthepropertyorthatrequirepriorwrittenconsentincludeanexceptiontoallowtheoilandgascompanytoreuse/recycleflowbackandproducedwater.PossibleLeaseTermsBasedonBestManagementPractices:

• Prohibittheoilandgascompanyfromusingsurfacewaterorsubsurfacewaterontheproperty(includingwaterfromexistingspringsandwatercourses),bodiesofwater(includingnaturalorartificiallakes,ponds,reservoirs,swamps,marshes,orwetlands),orotherwatersourcesorfacilitiesforanypurpose.

• Alternatively,requirethepropertyowner’swrittenconsentpriortouseofanyon‐sitewater.Specifythattheconsentwilltaketheformofaseparatewrittenagreementbetweenthepropertyownerandtheoilandgascompany,maycontainlimitationsonthesource,amount,anduseofthewater,andwillrequireseparatecompensationfortheoilandgascompany’suseofthewater.

• Iftheoilandgascompanyisauthorizedtousewaterfromthepropertyunderaseparatewrittenagreement,includethefollowingtypesofrequirementsintheagreement:o Determinewhatusesthewatercanbeputto.Considerprohibitinguseofthe

waterforhydraulicfracturing,stimulationorcompletionprocesses,orsecondaryrecoveryoperations.

o Requirebestmanagementpracticesforcentralizationofinfrastructure.o Forsurfacewaterwithdrawals,include:

Limitationsonlocationofwithdrawalpoints(forexample,downstreamfromheadwaterareas).

Arequirementtoconsultwithcountyconservationdistricts,localand

countygovernments,riverbasinauthorities,andexistingwateruserstodeterminethebestlocationforwaterwithdrawals.

Alimitationontimingofwithdrawals(forexample,avoidlarge

withdrawalsduringdryperiods,whenstreamflowislow).


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Requirementsforintakestructures(forexample,theuseofdryhydrants,designofstructurestoprotectaquaticlifeandavoidalteringthestream,provisionofadequatesurfacestabilizationtosupporttrucktraffic).

RequireacomprehensivePollutionPreventionandContingencyPlanto

coverthewaterwithdrawallocations.o Forgroundwaterwithdrawals,includearequirementtoconsultwithexisting

groundwaterusersintheareapriortoaccessinggroundwater,inordertoensurethatanadequategroundwatersupplyexiststosupporttheproposedactivitieswithoutnegativelyimpactingexistingusers.

• Clarifythatanyprohibitionorlimitationontheoilandgascompany’sauthorityto

usewaterfromtheleasedpropertydoesnotaffectitsabilitytoreuse/recyclewateranddrillingfluids.

3.2 Drilling of Water Wells for Site Use Do you, as the property owner, want to allow the oil and gas company to drill or operate a water well on your property and use that water for oil and gas operations?

WhyThisIssueMatterstothePropertyOwner:Theoilandgascompanyisnotnecessarilyprohibitedbyregulationfromdrillingoroperatingawaterwellontheleasedpremisesandusingwaterfromthewellforhydraulicfracturingorotherusesrelatingtogasdrillingoroperations.Anoilandgascompany’suseoflargeamountsofwellwaterontheleasedpropertycouldinterferewiththepropertyowner’ssourceofwaterfordrinking,agriculturalorcommercialoperations,recreation,wildlife,scenic,andotheruses.HowExistingLeasesApproachtheIssue:Someleaseseitherprohibittheoilandgascompanyfromdrillinganynewwaterwellonthepropertyorallowthedrillingofoneormorenewwellsundercertainconditions.Theleasesattempttoprovideprotectiontothepropertyowner’sexistingwellsand,incaseswheretheoilandgascompanyisallowedtodrilloneormorenewwaterwells,toclarifywhathappenstothosewellsattheendofthelease.


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PossibleLeaseTermsBasedonBestManagementPractices:

• Prohibittheoilandgascompanyfromdrillingoroperatinganywaterwellontheproperty.

• Alternatively,requirethepropertyowner’swrittenconsentpriortodrillingoroperatinganywaterwellontheproperty.o Providethatanywrittenconsentbythepropertyownerissubjecttospecific

standardsandlimitationsrelatingto,ataminimum,thefollowingareas:

Location:

Thepropertyownerhasauthoritytoapproveordisapprovethelocationofthewell.

Requireanynewwellonthepropertytocomplywiththesetback

requirementscontainedinSectionSixofthisLeaseGuide.

Thewaterwellshallnotinterferewiththepropertyowner’swatersupplyorinjureanywatersupply.

Theoilandgascompanyshallnotifythepropertyownerofanywater‐

bearingformationsencounteredduringdrilling.

WellDrillingStandards:

Thewaterwellshallbefullycased. Useofthewell:

Anywaterwelldrilledoroperatedbytheoilandgascompanyshall

notdoinjurytoanyotherwatersupply. Anywaterwelldrilledoroperatedbytheoilandgascompanyshall

notinterferewithorrestrictthesupplyofwatertothepropertyownerorhis/hertenantsfordomestic,livestock,agricultural,irrigation,commercial,recreational,orotherpurposes.


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Whoownsthewellafteroperationsceaseandwhether/howitistobeplugged:

Anywelldrilledrevertstothepropertyownerafterterminationof

thelease;or Theoilandgascompanymustplugthewaterwellfromthebottom

tothetopwithclay,cementorotherimperviousmaterials,consistentwithcurrentstandards.

3.3 Testing of Water Supplies Do you, as the property owner, want to have your water supply tested to help detect any potential pollution or diminution of your water supply caused by oil and gas operations? WhyThisIssueMatterstothePropertyOwner:Amajorconcernrelatedtoshalegasdevelopmentispotentialcontaminationtobodiesofwaterbodies,watercourses,andwatersuppliesfromthechemicalsinfrackingfluids,flowbackwater,andproducedwater,aswellasthemobilizationofnaturallyoccurringelementssuchassaltsandradioactiveisotopesintheflowbackwaterandproducedwater.Concernsalsoexistaboutthepotentialforshalegasdevelopmenttodiminishwatersupplies,bodiesofwater,orwatercourses(forexample,bydiminishingwellflow),orinextremecasestoresultinatotallossofthewatersupply.Currentlawsandregulationsdonotrequiretheoilandgascompanytotestormonitorwaterqualityorquantityontheleasedproperty.

HowExistingLeasesApproachtheIssue:Manyexistingleasesrequiretheoilandgascompanytotestthequantityandqualityofthepropertyowner’swatersupplybeforeandafterdrilling,andsomeleasesrequiretestingatadditionalpointsinthewelldevelopmentandoperationprocess.Someleasesenlargeontheoilandgascompany’sdutytoconducttestingbyrequiring,forexample,testingofallwatercourses,bodiesofwater,andwatersuppliesontheproperty,andspecifyingwhatwaterqualityparameterstotestfor.


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• Requiretestingofthequalityandquantityofallwells,watercourses,bodiesofwater,andwatersuppliesontheproperty.

• Requirewaterqualityandquantitytestingatkeystagesofthedrillingandrecoveryprocess,including:o Beforeconductinganyseismicwork;

o Beforeandafteranywellisdrilledontheleasedpremisesoranadjacent

parcel;

o Afterhydraulicfracturing;

o Afterre‐stimulation;and

o Whenreasonablyrequestedbythepropertyowner.

• Includespecificrequirementsforwaterqualityandquantitytesting:

o Requiremeasurementofwaterqualitytobeperformedbyastate‐certifiedwatertestinglaboratory,withpaymentprovidedbytheoilandgascompany.Specifythatwaterbetestedforacomprehensivesetofspecifiedwaterqualityconstituents,ataminimumthoseidentifiedbyPennStateUniversityasTier1through3pollutants.1

o Requiretheoilandgascompanytoobtainmeasurementofwatercourseand

bodyofwaterquantityandflowbyanindependentprofessionalhydrogeologistmutuallyagreeabletotheoilandgascompanyandthepropertyowner.

o Requiredocumentationofwatersupplyconditionstobeconductedbya

professionalwaterwellcontractorcertifiedbytheNationalGroundWaterAssociation,withpaymentprovidedbytheoilandgascompany.Require

1 Atpressdate,theseincluded:Tier 1 –totaldissolvedsolids(TDS),pH,barium,chloride,methane;Tier 2–totalsuspendedsolids(turbidity),ironmanganese,hardness(calcium&magnesium),sodium,totalorganiccarbon,strontium,oilandgrease,detergents(MBAS),lead,arsenic,alkalinity,coliformbacteria,sulfate,nitrate;Tier 3–volatileorganiccompounds(VOCs)(TCLorBTEX),radionuclides(grossalpha,radiumandradon).


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documentationofwatersupplyconditionstoincludemeasurementofwaterflowfromwellsandspringsandcharacterizationofundergroundaquifersincludingadeterminationofdirectionofgroundwaterflow.

o Requiretestingtocomplywithallproceduresspecifiedin25Pa.CodeSection

78.52forallwatertesting.

• Requirethatinitialwaterqualityandquantitytestingformthebasisofacomprehensivebaselinesitecharacterization,whichdescribesandquantifiesallwatersupplies,bodiesofwater,andwatercoursesontheproperty,andincludesaplanforongoingmonitoringofwaterqualityandquantity.

• Requiretheoilandgascompanytodrilloneormorewaterqualitymonitoringwellsinthevicinityofgaswells,impoundments/pits(ifallowed),storageareas,etcetera,toincreasethelikelihoodofearlydetectionofwaterqualityorquantityproblems–beforetheyaffectthepropertyowner’swatersupply.Oneormoremonitoringwellsshouldbelocateddowngradientofanyplannedgaswell.

• Requiretheresultsofallwaterqualityandquantitytests,includingongoingmonitoringandacopyofthebaselinesitecharacterization,tobeprovidedtothepropertyowner.

3.4 Restoration of Water Supplies What level of responsibility do you, as the property owner, want to place on the oil and gas company to clean up your water supply if their operations pollute it, or restore the existing quantity of your water supply if their operations reduce it? WhyThisIssueMatterstothePropertyOwner:Existinglawsandregulationscontainalimitedrequirementfortheoilandgascompanytorestoreorreplaceaprivatewatersupplyifdrilling,alteration,oroperationofanoilandgaswelladverselyaffectsthewatersupply.Undercertaincircumstances,theoilandgascompanymustrestoreorreplacethewatersupplywithanalternatesourceofwateradequateinquantityorqualityforthepurposesservedbythesupply.TotriggerthisrequirementthepropertyownermustnotifytheDepartmentofEnvironmentalProtectionofadverseeffectstotheirwatersupply;within45daystheDepartmentmakesadeterminationandmayordertheoilandgascompanytorestore(and,intheshortterm,replace)thewatersupply.


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Currently,contaminationofadomesticwatersupplyispresumedtobearesultofdrillingoralterationofagaswellifthewellislocatedwithin1,000feetofthecontaminatedsupply,andifthecontaminationoccurswithin6monthsafteroperationscease.Thereisgrowingconcernaboutwhetherthis1,000feet/6monthlimitationisstringentenoughtoprotectthepropertyowner’swatersupply.Theexistingpresumptionthatcontaminationofthedomesticwatersupplyisduetooilandgasoperationsisrebuttable–thatis,theoilandgascompanyhastheopportunitytoshowthatfactuallythecontaminationhassomeothersourceorisnotlinkedtooilandgasoperations.Thereisnocorrespondingpresumptionforimpacttothequantityofthepropertyowner’swatersupply,sounderexistinglawthepropertyownermustprovethattheoilandgascompanyisresponsiblefordiminutiontothepropertyowner’swatersupply.HowExistingLeasesApproachtheIssue:Someleasesextendthepresumptionofimpacttoincludethequantityofthepropertyowner’swatersupply,toincludeotherwatersourcesontheproperty,orbyextendingtheregulatory6‐monthtimeperiodwithinwhichtheimpactcanoccur.Someleasesrequiretheoilandgascompanytofurnishareplacementsupplyimmediately(ratherthanthepossibilityofDEPorderingreplacementaftera45‐daydecisionperiod),requirerestorationtopre‐existingconditions(notjusttoalevelsufficientforthetypeofuse),andrequirereplacementandrestorationofthewatersupplyregardlessofcause.PossibleLeaseTermsBasedonBestManagementPractices:

• Extendtheoilandgascompany’sresponsibilityfordamagetoanybodyofwater,watercourseorwatersupplyontheproperty,ratherthanjustthepropertyowner’scurrentdomesticwatersupply.(Thiswouldhelpprotectallwatersonorundertheproperty,includingwatersuppliesusedforagricultural,commercial,industrial,orotherlegitimatebeneficialuses.)

• Clarifythattheoilandgascompanyisresponsiblefordamagetowaterqualityor

quantityresultingfromanyaspectofseismic,oilandgas,construction,landclearing,storage,processing,disposal,orotheractivitiesontheleasedproperty,ratherthanjustdamagefromdrilling,alteration,oroperationofanoilandgaswell.


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• Requiretheoilandgascompanytotakeimmediateactiontoreplace/restorewaterqualityorquantitywhentestingindicatesdeteriorationofwaterqualityordiminutionofwaterquantityorflow.

• Requiretheoilandgascompanytorestorethewaterqualityandquantity

regardlessofitscause.Thatis,replacethepresumptionofadutytoreplace/restorewithanunqualifieddutytoreplace/restore.Expandtheareaoftheoilandgascompany’sdutytoreplace/restoreto2,500feetfromthewellandextendthetimeperiodfordiscoveryto12months.o Alternatively,expandtheareaofpresumptionofinjurytowaterqualityand

quantityto2,500feet/12months.

• Requirerestorationofthewatersupplyquantityandqualitytoitspre‐existingcondition,ratherthansimplytoanadequatequalityforthepurposesservedbythesupply.

• Restorationtopre‐existingconditioncanbespecifiedtomean:matchingthe

baselinewaterqualitylevelsorbetteronaparameter‐by‐parameterbasis.Alternatively,restorationofwaterqualitycanbedefinedasrestorationofthewatersupplytostandardscontainedinthePennsylvaniaandFederalSafeDrinkingWaterActsandimplementingregulations.

o Restorationofwaterquantitytoitspre‐existingconditioncanbedefinedas

achievingthequantity,flowrate,andotherconditionsreflectedinthebaselinesitecharacterization.

o Restorationtopre‐existingconditionalsomeansutilizingthesamemeansof

dispensingwateronthepremises(i.e.replacingin‐housetapsupplywithanexternalwatertankorbottledwatersupplyisnotsufficient.)

SECTION FOUR: STORAGE AND DISPOSAL ISSUES Background:AkeyissuerelatingtoMarcellusShalegasproductionishowtomostsafelystoreanddisposeofmaterialsusedinandproducedfromtheconstruction,drilling,hydraulicfracturing,andoperationofgaswellsandassociatedequipment.


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Shalegasproductioninvolveslargeamountsoffreshwater,frackingfluids,flowbackwater,andproducedwater,aswellasdrillingmudsanddrillcuttings;storageanddisposalofthesematerialspresentspracticalandtechnicalchallenges.Inthepast,largeamountsoffrackingfluids,flowbackwater,producedwater,anddrillingmudswereroutinelystoredinuncovered(andsometimesunlined)pits,andweredisposedon‐oroff‐siteinavarietyofways,anddrillcuttingswerestoredanddisposedinanon‐sitepitorthroughlandapplication.Thecurrentbestmanagementapproachistominimizetheamountofthesematerialsonsite,containthematerialsasfullyaspossible,reuseorrecyclethemtotheextentfeasible,anddisposeoftheremainderoffsite.Questionsalsoariseaboutwhetheranoilandgascompanycanstoregasorothermaterialsundergroundontheleasedproperty,andwhetherandhowtheoilandgascompanymaydisposeofothermaterials,suchaspitlinersandtrash,on‐site.4.1 On‐Site Storage of Treated and Industrial Fluids How do you, as the property owner, want the oil and gas company to store fracking fluids on your property prior to using them for hydraulic fracturing? How do you want the oil and gas company to store the flowback and produced water on your property, prior to disposing of it? WhyThisIssueMatterstothePropertyOwner:Storageoffrackingfluids,flowbackwater,andproducedwaterontheleasedpropertyposesariskofcontaminationtosurfaceandundergroundwater,aswellastosoils.Pits,pondsorimpoundments(againforreference,collectively“pits”)canleakoroverflow,allowingthechemical‐ladenliquidstospillorleakontotheleasedproperty.Migrationoftheliquidsintowatersourcescouldcontaminatethosesourcestotheextentthattheycouldnolongerbeusedfordrinkingwaterorotherpurposes. HowExistingLeasesApproachtheIssue:Manyleasesprohibittheuseofstoragepitsontheleasedproperty.Someleasesthatallowthismethodofstorageplacerestrictionsonthelocationandconstructionofthepit.PossibleLeaseTermsBasedonBestManagementPractices:

• Prohibitstorageofchemicals,frackingfluids,flowbackwater,andproducedwaterinpits.RequirestorageinclosedtanksthatmeetrequirementsdiscussedinSection5.3ofthisLeaseGuide.


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• Requireuseofa“closedloop”system,inwhichliquidsandsolidsareseparated,liquidsarecombinedwithfreshmake‐upwaterandreusedatthewellsiteoratanoff‐sitewell,andsolidsaredisposedofoff‐siteinapprovedfacilities.

o Alternatively,requirewrittenpermissionfromthelandownerpriorto

constructionofanypond,impoundmentorpit.Ifwrittenpermissionisgranted,includerequirementsforlocation,construction,andreclamationofthesestructures,including:

Prohibitionagainstsitingpitsinafloodplainarea. Requirementtoinstalladoublelinerunderanypitwithadequate

“freeboard”betweentheexpectedsurfacelevelofthefluidorothermaterialandthetopofthepit.

Requirementtoinstallfencingandnettingaroundandoverpitsforsafety.

Requirementthattheoilandgascompanyfillthepitsoncompletionof

therelatedwell,regradetheareatoapproximateoriginalcontoursandrevegetatetothesurfaceowner’sspecifications.

Prohibittheoilandgascompanyfromburyingpitlinersoranyother

wastematerial,whetherliquidorsolid,ontheleasedproperty.

4.2 Disposal of Treated and Industrial Fluids Do you, as the property owner, want to allow the oil and gas company to dispose of wastes associated with oil and gas operations, including flowback water, produced water, drill cuttings, and residual waste on or under your property? WhyThisIssueMatterstothePropertyOwner:On‐sitedisposalofliquidsandwastescontainingchemicaladditives,potentiallyhighlevelsofnaturallyoccurringradioactivematerials,andhighlevelsofsaltsthatcouldcontaminatewaterandsoilontheleasedproperty.Thisistruewhetherdisposalisbyinjectionintoanundergroundwelllocatedontheleasedpropertyor,forsomewastes,bylandapplicationordisposalinpits.


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HowExistingLeasesApproachtheIssue:Numerousleasesprohibiton‐sitedisposalofflowbackwater,producedwater,orotherliquidsorwastesonorundertheleasedproperty.Someleasesprohibitdrillingoroperatingwaterorgasdisposalwellsontheleasedproperty,andprohibittheconversionofexistingwellsintoinjectionordisposalwells.Someleasesbroadlyprohibitdisposal,discharge,orburialofanysubstanceontheleasedproperty.PossibleLeaseTermsBasedonBestManagementPractices:

• Requiretheoilandgascompanytoreuse/recycleasmuchflowbackand

producedwateraspossible,eitheron‐siteoratoff‐sitewells.

• Prohibitundergroundinjectionoftheflowbackorproducedwaterontheleasedproperty.

• Prohibittheuseofflowbackorproducedwaterfordustcontrolorstabilizationofunpavedsecondaryroadsontheleasedproperty.

• Prohibitthedisposalofanywaste,includingresidualwaste,inanon‐sitepitorbylandapplication.

• Prohibitthedisposal,discharge,orburialofanysubstanceontheleasedproperty,includingbutnotlimitedtotrash,pits,pitliners,water,frackingfluids,flowbackwater,producedwater,drillcuttings,drillingmuds,andresidualwastes.

• Prohibittheon‐sitestorageoruseofhazardousmaterials,toxicsubstances,orsolidwastes.

4.3 On‐Site Storage of Other Materials Do you, as the property owner, want to allow the oil and gas company to store gas or any other substance under your property? WhyThisIssueMatterstothePropertyOwner:Oilandgasoilcompaniesmaywishtoinjectandstoregasinundergroundformationssuchasdepletedgasreservoirsoraquifers.Undergroundstorageofgasontheleasedpropertycouldresultinwaterandsoilcontamination.Theoilandgascompanymayalsowishtostoreor“sequester”carbondioxideunderthepropertytopreventitescapingintotheatmosphereandcontributingtoglobalwarming.


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HowExistingLeasesApproachtheIssue:Someleasesprohibitundergroundstorageofgasontheleasedproperty.Somealsoprohibitstorageorsequestrationofcarbondioxideundertheproperty.PossibleLeaseTermsBasedonBestManagementPractices:

• Prohibitundergroundstorageofgasoranyothersubstanceontheleasedproperty.

• Prohibitundergroundstorage/sequestrationofcarbondioxideontheleasedproperty.

4.4 Safeguards for Transport and Storage of Materials What safeguards do you, as the property owner, want the oil and gas company to use when transporting or handling materials that could potentially contaminate water sources or soil on your property? WhyThisIssueMatterstothePropertyOwner:Waterandsoilcontaminationcanresultfromspillsoffrackingfluids,flowbackwater,producedwater,orotherliquidsorwastesrelatingtoMarcellusShalegasoperations.HowExistingLeasesApproachtheIssue:LeasesreviewedforthisLeaseGuidedidnotemphasizesafetyintransportingandhandlingpotentialcontaminants.PossibleLeaseTermsBasedonBestManagementPractices:

• Requiresecondarycontainmentwhenchemicalsorliquidsarebeingtransportedto,on,orfromtheleasedproperty.

• Requireperiodicinspectionbyindependent,certifiedinspectorsofpipes,

couplings,valves,tanksandothercontainmentstructurestodetectleaks.


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SECTION FIVE: WELL SITES

InourreviewofexistingleasesforMarcellusShaledevelopment,wefoundnumerousinstanceswhereleaseslimitedthesizeornumberofwellpads,orfacilitiesandinfrastructureassociatedwiththosewellpads,ontheleasedproperty.Thissuiteofprovisionsislikelytobeofgreatsignificancetoindividuallandowners,andwedonotintendtodiminishtheirimportanceinleasenegotiation.However,wehaveoptednottoincludetheminthisLeaseGuideforthefollowingreasons.ThePennsylvaniaEnvironmentalCouncilandmanyotherconservation‐mindedorganizationsconsiderconsolidationofwellfacilitiesandinfrastructureasavitalmeansofreducingadverseandcumulativeimpacts–particularlytonaturalandcommunityresources.Insomeinstancesthiscouldresultingreaterconcentrationofwellactivitiesorstructuresoncertainproperties,rightfullysubjectofcoursetotherestrictionsofindividualleasearrangementsbetweentheoilandgascompaniesandtheparticularlandowner.Whilewerespectandsupportthelandowner’srighttodeterminewhatisintheirownbestintereststhroughleasenegotiation,wedonotwishtocharacterizeleasepracticesthatwouldpotentiallyfurtherdistributewellfacilitiesandinfrastructureacrossabroaderlandscapeasa“conservationprinciple”.Thereforetheyarenotincludedhere.Conversely,theremaybesomeinstanceswhereconservation‐mindedlandownerswouldbereceptivetogreaterdevelopmentontheirownpropertyifitallowedforreductionofecologicalorsurfaceimpactsonaregionalscale.Intheseinstanceslandownersshouldconsiderwhatadditionalconsiderationmaybenecessaryorappropriatetoaccommodateconcentrateddevelopment. Background:AtypicalwellpadforMarcellusShalegasrecoveryis3to7acresinsizeandmaybethelocationfornumerouswells.Thepadiscreatedbyflatteningthearea,removingthetopsoil,installingaliner,andcoveringtheareawithcompactedstone.Thewellpadmustbelargeandstrongenoughtosupportandcontaintankstostoreliquids(and/orpitsifpitsareallowed),welldrillingmachinery,andothermachineryandequipment.Preventingsoilandwatercontaminationislessexpensiveandmoreeffectivethantryingtocleanitupafterthefact.Implementationofbestpracticesinsiting,design,andconstructionofthewellpadcanhelpprotecttheleasedpropertyfromspillsandcontaminatedstormwaterrunoff,minimizeerosion,andprotectforestedareas.Itcanalsolessenvisualimpactoftheoilandgasoperations.


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5.1 Associated Facilities Do you, as the property owner, want to allow placement of any facilities on the surface of your property, or to allow access to your property? WhyThisIssueMatterstothePropertyOwner:Insomeinstancesitispossibleforthepropertyownertonegotiatea“nosurfaceuse”lease,whichgivestheoilandgascompanytherighttoaccessthesubsurfaceofthepropertytorecoverundergroundgas,butprohibitsconstructionofanyfacilitiesorinfrastructureontheproperty.Thistypeofleasecanbedifficulttonegotiatewithanoilandgascompany,butitcanaffordthepropertyownerfargreaterprotectionthanaleasethatallowsplacementofwellsandotherequipment,facilitiesorinfrastructureontheproperty.HowExistingLeasesApproachtheIssue:

Someleasesprohibitsurfaceaccessoroccupancy,whileothersprohibitdrillingawellontheleasedpropertyunlessitcontainsaminimumacreage. PossibleLeaseTermsBasedonBestManagementPractices:

• Prohibittheoilandgascompanyfromaccessingordisturbingthesurfaceoftheleasedproperty.

• Prohibitdrillingofanywellontheleasedpropertyunlessthepropertyisasetminimumacreage(someleasesestablish10acresastheminimum)andsubstantiallyallofthedrillinglocationwillbeontheleasedproperty.

5.2 Site Selection Standards What standards do you, as the property owner, want the oil and gas company to follow when selecting a well site? WhyThisIssueMatterstothePropertyOwner:Carefulselectionofthewellsite(orsites)ontheleasedpropertycanreducethepotentialforcontaminationofsoilandwaterontheproperty,minimizeerosion,andlessenvisualimpactaswellasimpacttothelandscape.


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HowExistingLeasesApproachtheIssue:

Existingleasesrequireminimumsetbacksfromexistingstructuresorfeaturesontheleasedpropertyandtypicallyincludeafewadditionalwelllocationstandards.PossibleLeaseTermsBasedonBestManagementPractices:

• Selectawellsitethat: o Avoidsorminimallyaffectsforestedareas. o Avoidssteepslopesandminimizestheneedtocutandfill.

o Isvisuallyscreenedtotheextentpossiblebyvegetationortopography.

o Avoidsareasofhighlyerodiblesoils,primeagriculturalsoils,andareasprone

tosevereerosion.

o Avoidswaterbodiesandwetlandsareas.

o Avoidsfloodwaysandfloodplainareas.

o Minimizestheneedfortrucktraffictoandfromthesite.

• Requirelocationofthewellpadoranyclearingrelatedtoconstructionofthepadtomeetminimumsetbacksfromkeystructuresorfeaturesontheleasedproperty.SetbacksareaddressedinSectionSixofthisLeaseGuide.

5.3 Site Design and Constructions Standards What design and construction standards do you want the oil and gas company to follow for each well site? WhyThisIssueMatterstothePropertyOwner:AllMarcellusShalegaswellsitesarenotcreatedequal.Managementpracticesexistthatcangreatlyreducethelikelihoodofcontaminationofsoilandwaterbyliquidsandothermaterialsusedorproducedatthewellsite.


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HowExistingLeasesApproachtheIssue:

Mostleasesincludeonlyminimalstandardsforwellsitedesignandconstruction.However,practicalbestmanagementpracticescanandshouldberequired.PossibleLeaseTermsBasedonBestManagementPractices:

• Requiretheoilandgascompanytoinstallanimperviouslinerundertheentirewellpad,underlainwithcompositedeckingtopreventpuncturesoftheliner.

• Prohibittheuseofanypit,impoundmentorpondforstorageordisposalof

frackingfluids,flowbackwater,producedwater,orotherliquidsorwastesusedin,orproducedby,oilandgasactivities.Instead,requireallchemicals,liquids,andwastestobestoredinclosed,double‐walledtanksinstoragetrailersplacedonthewellpad.Forliquidsthatmustbestoredinawellventilatedenvironment,requiresecondarycontainmentaroundtanks,separators,andotherreceptaclesintheformofadike,berm,firewallorotherstructuredesignedtocatchanyleakageoroverflowfromthetanks.

• Requireconstructionofabermaroundthewellpadtopreventrunofffromthe

padsite.

• Requirethewellpadtobeslopedsoastocollectallliquidsfordisposalorreuse/recycling.

SECTION SIX: COMPREHENSIVE PLANNING

Background:PennsylvanialawandregulationscurrentlydonotrequireorprovideincentivesforoilandgascompaniestoconductcomprehensiveplanningforMarcellusShalegasoperations.Insomeotherstates,regulationshavebeenadoptedtopromoteplanningforwellsitesandinfrastructureonalargegeographicscale.WhyThisIssueMatterstothePropertyOwner:Comprehensiveplanningcanresultinreducedsurfaceimpactsandmoreeconomicalgasrecoverybymaximizingtheefficiencyofwellsitespacingandencouraging


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collocationofinfrastructure.Collocationofinfrastructurecanalsominimizetheriskofsoil,water,andairpollutionfromoilandgasactivities.Planningatalandscapescale,however,mayresultinoneormoreindividualpropertyownersbeingrequestedtohostequipment,facilities,orinfrastructureontheirpropertythatarenotdirectlyrelatedtoproductionfromtheirindividualproperty,oreventheunitizedarea.Thisarrangementmay,however,suitpropertyownerswhonegotiateeconomicallyfavorableleasetermsreflectingtheadditionalburdentotheirproperty.Ataleaseholdscale,planningcanhelptoprotectimportantfeaturesoftheleasedpropertyandminimizepollutionrisk.HowExistingLeasesApproachtheIssue:

Mostleasescontainprovisionsrequiringtheoilandgascompanytoengageinsomelevelofplanningattheparcelscale,ratherthanonalarger,comprehensiveplanning,scale.Mostleasesreviewedincludedsetbacksfromkeyfeaturesoftheleasedpropertyandtherequirementtouseexistingroadswherepossible,andseveralincludedarequirementfortheoilandgascompanytocompleteaSitePlanforreviewbythepropertyowner.PossibleLeaseTermsBasedonBestManagementPractices: MostofthefollowingpossibleleasetermsderivefromthePinchotInstituteforConservation’spublicationThe Marcellus Shale: Resources for Stakeholders in the Upper Delaware Watershed Region (Dec.15,2010).

• Requiretheoilandgascompanytoaggregateallleasedpropertiesintheimmediateareawhenengaginginwellsiteselectionandplanningwheretolocateinfrastructuresuchaspipelines,waterwithdrawalpoints,androads.

• Requiretheoilandgascompanytocreateacomprehensiveplanforgasdevelopmentoverallleasedpropertiesintheimmediatearea.Includeinthisplanidentificationofenvironmentalconstraintsondevelopmentsuchaswaterways,floodwaysandfloodplains,wetlandsandvernalpools,forestedareas,steepslopes,occupieddwellings,publicbuildings,drinkingwatersupplies,significantwildlifehabitats,soilconditions,andviewscapes.Requiretheoilandgascompanytoprovideacopyofthecomprehensiveplantothepropertyownerpriortoengaginginanysiteselectionactivitiesontheleasedproperty.


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• Requiretheoilandgascompanytocollocateinfrastructureontheleasedpropertyandwithotherpropertiesintheimmediateareatotheextentpossible,including:o Useexistingroadswherepossible.o Runpipelinesalongroadrightofways.

o Sharepipelineswithothercompanies.

o Useexistingwaterwithdrawalpointsorconstructaccesspointsstrategically

consideringfutureuse.Considertrafficimpactsandsitestabilitywhenselectinganddesigningwaterwithdrawalpoints.

• Requiretheoilandgascompany,priortoengaginginanyearthdisturbanceon

theleasedproperty,tosubmitaSitePlantothepropertyownerforapproval.o RequirethattheSitePlanspecify:

Allexistingimprovementsoruseswithin2,500feetoftheproposedwell

padandanyrelatedfacilitiesorimprovements. Topographicsurfacecontourinformation.

Informationavailablefromexistingdatabases,countyrecords,local

municipalityrecordsand/orsurfacepropertyownersconcerningpriorsurfaceandsubsurfaceusesorotherpotentiallylimitingconditionswithintheproposedwellpadsite.

Identificationofdesignatedpost‐welldevelopmentsurfaceuse(s).

Locationofsurfacewatersandriparianareas,privatewatersources,and

publicwatersupplysources.

PennsylvaniaNaturalDiversityIndex(PNDI)andotherecologicalbaselineinformation.

Locationofpre‐existing,permanentinfrastructure(e.g.,gatheringlines,

compressorstations,meteringandprocessingfacilities)within2,500feetdistanceoftheproposedwellpadsite.


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Thelocationsofallsurfacefacilitiesproposedfortheleasedproperty,

includingwellsites,flowlines,pipelines,tankbatteries,compressorstations,accessroads,andanyothersurfacefacilityorequipment.

o Requireequipmentandfacilitiestobelocatedsoastotakeadvantageof

naturaltopographyandincreasedistancesfromdwellings,habitablestructures,bodiesofwater,watercourse,andwatersupplies.

o Prohibittheoilandgascompanyfromengaginginanyearthdisturbance,

cuttinganyvegetation,orinstallinganyroads,equipmentorstructuresexceptinthelocationandmannerspecifiedintheapprovedSitePlan.

• Requireallsurfacedisturbance,clearing,operations,facilities,equipment,and

infrastructuretomeetminimumhorizontalsetbacksfromkeyfeaturesoftheleasedproperty.Exampleofminimumsetbacks:o 300feetfromanybodyofwater(definedasanaturalorartificiallake,pond,

reservoir,swamp,marshorwetland),watercourse(definedasachannelorconveyanceofsurfacewaterhavingdefinedbedsandbanks,whethernaturalorartificial,withperennialorintermittentflow),orsepticsystem;or500feetfromanyhighqualityorexceptionalvaluewaters.

o 500feetfromanywatersupply(definedasasupplyofwaterforhuman

consumptionoruse,orforagricultural,commercial,industrialorotherlegitimatebeneficialuse;watersupplyincludesawaterwell).

o 500feetfromanyexistingbuilding.

o 300feetfromtheboundarylineoftheleasedproperty.

SECTION SEVEN: ROAD CONSTRUCTION AND USE

Background:MarcellusShalegasoperationsarelargeindustrialusesthatgeneratesubstantialtruckandothertraffictoandontheleasedproperty.Trucksandothervehiclesmaybeusedinconstructionactivitiesontheproperty,transportingequipmenttoandfromtheproperty,haulingwaterandwastes,operatingandmonitoringequipmentand


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operationsontheproperty,andotherpurposes.EachwellsitewillrequirearoadofsufficientwidthandstrengthtowithstandtheintenseroaduseassociatedwithMarcellusShalegasproduction.WhyThisIssueMatterstothePropertyOwner:Newroadscanclaimlargeareasoftheleasedproperty,butthisareacanbeminimizedwithproperplanningandlimitationsonroadconstruction.Roadsimproperlyconstructedcancontributetoerosion,sedimentation,andpollutionofsoilsandwaters.HowExistingLeasesApproachtheIssue:

Manyleasesaddressroadconstructionandusestandards,butmostdonotincludesubstantialdetail.PossibleLeaseTermsBasedonBestManagementPractices:

• Limittheoilandgascompany’saccessto,andtravelon,theleasedpropertytoimprovedroadsonly.RequiretheoilandgascompanytospecifyinaSitePlanwhichroad(s)itwilluseontheleasedproperty.

• Includeleaseprovisionsdesignedtominimizeroadconstructionontheleasedproperty:o Requiretheoilandgascompanytokeeproadconstructiontoaminimumon

theleasedproperty.o Requiretheoilandgascompanytouseexistingroadswherepossibleto

reducesurfaceimpactsandhabitatfragmentation.

o Ifitisnecessaryfortheoilandgascompanytobuildanewroad,limittoonethenumberofroadstoeachwellsiteandrequiretheroadtobeplacedinornearalreadydisturbedareas.

o Establishamaximumwidthforanyroadwaysontheproperty.

o Attheterminationofthelease,providethatallnewroadsbelongtothe

propertyowner.Forallnewroadsthatarenotneededbythepropertyowner,requiretheoilandgascompanytoremovetheroadsurfaceandreclaimtheroadbedandsurroundingarea.Forroadsthepropertyowner


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wishestoremainontheleasedproperty,requiretheoilandgascompanytorepairtheroadpriortoleasetermination.

• Includeprovisionsforroadconstructionandmaintenancethatminimizeerosion

andthepotentialforsoilandwatercontaminationfromroadways:o Requiretheoilandgascompanytomaintainallroadsusedinconnectionwith

oilandgasoperations.o Requireroadconstructionandmaintenancetocomplywith

recommendationsofthePennStateCenterforDirtandGravelRoadStudies.

o Requireroadstobedesignedandmaintainedforgooddrainageandrequireinstallationandmaintenanceoferosioncontrolmeasures.

o Requireroadconstructionmaterialtobecleanandnotcontaminated

material.

o Requireroadsinpoorconditiontobeimprovedbybeingbuiltup,notwidened.

o Requireroadstobeinsloped,outsloped,orcrownedasspecifiedinaSite

Plan.

o Requireditchesandculvertstobeinstalledforallroads.

o Requiredirtandgravelroadstobegradednotlessthanonceperyear.

o Requiretheoilandgascompanytocontroldustfromroadwaysifnecessaryusingenvironmentallysensitivemethods.Thecompanyshouldselectdustsuppressantsfromthe“ApprovedProductsList”orsimilardocumentpublishedbythePennStateCenterforDirtandGravelRoadStudies.

SECTION EIGHT: PIPELINESBackground:PipelinesareusedinMarcellusShalegasoperationstotransportgasthroughandofftheleasedproperty,throughcompressionandprocessingfacilities,andultimatelyto


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market.Eachwellsitewillrequireinstallationofapipelineontheleasedproperty,alongwithrelatedequipmentandfacilities.WhyThisIssueMatterstothePropertyOwner:Pipelinecorridorscanclaimlargeareasoftheleasedproperty,butthisareacanbeminimizedwithproperplanningandlimitationsonthetypesofpipelinesthatcanbeplaceontheproperty.Aswithanysurfacedisturbanceactivity,placementofpipelinescancontributetoerosionandsedimentationifadequateerosioncontrolandreclamationmeasuresarenotimplemented.HowExistingLeasesApproachtheIssue:

Manyleaseslimitthetypesofpipelinesthatcanbeplacedontheproperty,andincludestandardsforpipelineconstructionsuchasminimumdepths.PossibleLeaseTermsBasedonBestManagementPractices:

• Requiretheplacementofpipelinesalongexistingorproposedroadswhere

possible.

• Requirethecollocationofelectric,water,andgastransmissionlineswherepossible.

• Prohibit,absentaseparatewrittenagreement,theplacementofanypipelinesor

relatedequipmentorfacilitiesontheleasedpropertyexceptthoserelatedtodevelopmentandproductionofoilorgasfromtheleasedproperty.o Alternatively,prohibitpipelines,equipment,orfacilitiesotherthanthose

relatedtodevelopmentandproductionofoilorgasfromtheleasedpropertyortheunitizedarea.

o Requiretheoilandgascompanytoattempttoavoidpipelinestream

crossings;wherestreamcrossingsarenecessary,requiretheoilandgascompanytominimizedisturbancetothestreamusingbestmanagementpracticesenumeratedinthePennsylvaniaDepartmentofEnvironmentalProtection,BureauofOilandGasManagement’sOil and Gas Operators Manual(Oct.30,2001).


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• Prohibittheoilandgascompanyfromassigningtoautilityorpipelinecompanyoranyotherthirdpartytherighttoanypipelinesorrelatedequipmentorfacilitiesplacedontheleasedproperty.

• Providethattheoilandgascompany’srighttouseanypipelinesplacedontheleasedpropertyterminateswhenallwellsontheleasedpropertyarepluggedandabandoned.Providethatanypipelinesplacedonthepropertywillbedeemedabandonedafter24monthsofdisuse,andrequiretheoilandgascompanytoremovethepipelineandrelatedfacilitiesandequipmentincompliancewithenvironmentallawsandreclaimalldisturbedareas.

• Includerequirementsforpipelineconstructionandmaintenance:o Requiretheoilandgascompanytoburyallpipelinesandrelatedutilitylines

toaspecificdepth(forexample,belowplowdepth,or36inches).o Requiretheuseofthe“doubleditch”methodforlayingpipeline(thatis,

stockpilingthetopsoilandsubsoilseparatelyandreplacingthesubsoilfirstsotopsoilisreplacedontop).

o Requiretheoilandgascompanyimmediatelyafterlayingpipelineorinstalling

relatedfacilitiesorequipmenttorefillexcavations,fertilize,andseedorreplantalldisturbedareas,andtakeanymeasuresnecessarytocontrolerosionorsedimentationandrestorethenaturalandaestheticvaluesofanydisturbedareas.

o Specifyamaximumwidthforpipelineright‐of‐way.

o Requiretheoilandgascompanytomaintainandrepairallpipelinesand

relatedequipmentandfacilities,andtomaintainandkeepingoodappearanceallpipelinerights‐of‐way.

SECTION NINE:GENERAL PROVISIONSBackground:Leasesincludegeneraltermsrelatingtothelegalrelationshipandobligationsofthepartiesthatarenotlimitedtoenvironmentalaspectsofoilandgasoperations.Certain


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termscomeintoplaywhenanenvironmentalharmhasoccurred,andhelptosortoutwhomusttakewhatstepstoremedytheharm.WhyThisIssueMatterstothePropertyOwner:Thecostofremedyingenvironmentalcontaminationorotherharmscanbeextremelyhigh.Unlesstheleaseclearlyestablisheswhoisresponsibleforsuchharms,thepropertyownerrunstheriskofbeingburdenedwithsomeorallofthecost,andthepropertyrunstheriskoflong‐term,unremediatedcontamination.Propertyownersshouldincludeintheleasestrongprovisionsplacingresponsibilityontheoilandgascompanyforharmsandclaimsresultingfromoilandgasoperationsontheproperty.HowExistingLeasesApproachtheIssue:Mostleasesreviewedincludedetailedprovisionsrelatingtolimitationsontheoilandgascompany’srightstousetheleasedproperty,compliancewithlawsandregulations,liabilityandindemnification,financialsecurity,andinsurance.


9.1 Oil and Gas Company’s Use of Leased Property

• Limittheoilandgascompany’suseoftheleasedpropertytousesauthorizedinthelease.

• Limittheoilandgascompany’suseofthesurfaceoftheleasedpropertytospecifiedoperationsdirectlyrelatedtoagaswellontheleasedpropertyoraunitinwhichtheleasedpropertyisincorporated(forexample,welldrilling,installationofpipelines,installationofequipmentandfacilitiesdirectlyrelatedtothegaswell).Requireaseparatewrittenagreementforanyothersurfaceuses.

• Limittheoilandgascompany’saccesstothepropertytothatnecessarytoenableittocarryoutthepurposesofthelease.

• Specifythedepthofmineralscoveredbythelease.TheMarcellusShaleisjustoneofnumerousstratafromwhichanoilandgascompanymightultimatelywishtorecovergas.Anyattempttodevelopotherstratashouldbethesubjectofasubsequentlease.


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• Prohibittheoilandgascompanyfrominterferingwiththevalidrightsofotherusers/usesoftheleasedproperty,includingthepropertyowner.

• Enumerateotherexistingorlikelyfutureusesoftheproperty.

• Requiretheoilandgascompanytousethehighestdegreeofcareinoperationsontheleasedpropertyandtoemployallreasonablesafeguardstopreventsoilerosion,environmentaldamageorcontamination,oranyotherharmtotheleasedpropertyorsoil,water,andairinandaroundtheleasedproperty.

• Requiretheoilandgascompanytopaydamagestothepropertyownerortheappropriatelesseeforanydamagecausedtothesurfaceorsubsurfaceoftheproperty.

• RequiretheoilandgascompanytoconductalloperationsinaccordancewithgoodindustrypracticeandconsistentwiththePennsylvaniaDepartmentofEnvironmentalProtection,BureauofOilandGasManagement’sOil and Gas Operators Manual,and/orotherspecifiedbestmanagementpractices.

• Specifythatalloftheoilandgascompany’semployees,agents,representatives,invitees,contractors,andsubcontractorsareboundbythetermsofthelease,andthatanyreferenceintheleasetotheoilandgascompanyincludestheseadditionalpersonsandentities.Requiretheoilandgascompanytoprovideacopyoftheleasetoeachofthesegroups.

9.2 Compliance with Permits, Regulations, and Laws

• Requiretheoilandgascompanytoobtainandcomplywithalllocal,state,andfederalpermits.

• Requiretheoilandgascompanytocomplywithalllocal,state,andfederallawsandregulations,policies,andagencyorcourtorders.

• Specifythatanyfailurebytheoilandgascompanytocomplywithlaws,regulations,agencyorcourtorders,orpermittermsisadefaultofthelease.

• Specifythatwhenlaws,regulations,policies,permitterms,oragencyorcourtordersapplicabletooilandgasactivitiesontheleasedpropertydifferregardingenvironmentalcontrols,protection,orcleanup,themoststringentversionapplies.


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• Requiretheoilandgascompanytocomplywithallrecommendationsinthe

PennsylvaniaDepartmentofEnvironmentalProtection,BureauofOilandGasManagement’sOil and Gas Operators Manual.

• RequiretheoilandgascompanytocomplywithallrecommendationsintheU.S.BureauofLandManagementandU.S.ForestService,Oil and Gas Exploration and Development: The Gold Book.

• Requiretheoilandgascompanytoimmediatelynotifythepropertyownerofanyviolationofanyenvironmentallaw,regulation,policyoragencyorcourtorder,oranyenvironmentalimpactatorfromtheleasedpropertyoranybreachofanyofthetermsoftheleaserelatingtoenvironmentalimpactorcontrols.Requiretheoilandgascompanytoprovidethepropertyownerwithalldocumentationrelatingtotheeventrequiringnotification.

9.3Liability and Indemnification

• Specifythattheoilandgascompanyaloneisliableforanycontaminationofair,water,orsoilresultingfromtheoilandgascompany’soperationsontheleasedproperty.

• Requiretheoilandgascompanytoindemnifyandholdharmlessthepropertyowner,andpayanyjudgmentagainstthepropertyowner,resultingfromallclaimsrelatingtooilandgasoperationsontheleasedproperty,includingclaimsofinjuryordeathtoanyperson,damagetorealorpersonalproperty,oranyviolationofenvironmentallawsorregulations.Requiretheoilandgascompanytopayattorneysfeesandcostsrelatingtosuchclaims.

9.4 Financial Security

• Requiretheoilandgascompanytopostafinancialsecurityofaspecifiedamount(inadditiontothefinancialsecurityrequiredbystategovernment)toensureitsperformanceunderthelease.Requireanadditionalfinancialsecurityofaspecifiedamountforeachwelldrilledtocoverplugging,abandonment,andreclamationofthewellsite.

• Specifythatthesecuritycanbeusedbythepropertyownertoremedyanybreachbytheoilandgascompanyofanytermofthelease.


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• Specifythatthepropertyownerandtheoilandgascompanymustreconsiderthesecurityamountevery5years,andifitisnolongeradequatethebondistobeincreased.

9.5 Insurance

• Requiretheoilandgascompanytoprovidespecifiedtypesofinsuranceinspecifiedamountsincluding,forexample,comprehensive(coveringspecifiedhazardsandactivities),excessumbrellaliability(coveringspecifiedhazardsandactivities),workerscompensationanddisability,welldrillinginsurance,wellcontrolinsurance,andpollutionliabilityinsurance.

• Requirethatthepropertyownerisanamedinsuredonallinsurancepolicies.

• Requireinsurertowaiverightofsubrogationagainstpropertyowner.

9.6 Assignment

• Requirethepropertyowner’swrittenapprovalpriortothetransferoftheleasetoanotheroilandgascompany.


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