Oil and Gas Development Topic of Workshop in Conrad

Story Created: Mar 22, 2012 at 10:42 PM MDT

Story Updated: Mar 22, 2012 at 10:42 PM MDT

Several oil and gas companies are betting natural resources exist along Montana's Rocky Mountain Front. They're leasing land and drilling exploratory wells.

Before places like Choteau turn into towns like Williston, North Dakota, officials want landowners to be prepared.

?We have been approached,? says Mitch Kellogg who farms wheat and barley west of Brady. Soon, his fields may be producing oil as well. ?They say they want to lease land and then they?re going to drill,? he adds.

They need to lease first, and Kellogg hasn't signed the paperwork yet. He still has a few questions and he's not alone. Around 100 people packed a meeting in Conrad Thursday eager to learn more about oil production. ?Some of the water issues concern me as much as anything,? admits Kellogg.

Some mineral and landowners haven't given much thought to what happens when drilling starts: How much water is needed for hydraulic fracturing? Where does it come from? And where does it go? ?Those are real important concerns that everybody should have,? Kellogg says.

Most importantly, how do mineral owners insure they're getting a good lease? ?You want to read that lease over two or three times before you even consider what?s in there,? advises Herb Vasseur, the president of the Montana Land and Mineral Owners Association.

He says there is no rush to sign a lease. ?As time will go on, they?ll prove more production and your minerals will be worth more.?

The old standard for a royalty percentage is 12%, but Vasseur thinks owners should ask for more. Pointing out that, ?The state of Montana school trust lands get 16.66% as a minimum royalty. I think every body should be entitled to that as a minimum.?

Most leases include a sign-up fee where oil companies pay a price per acre to use the land. Vasseur says prices can top $1,000 an acre in eastern Montana and give owners a guaranteed amount of money. ?It?s a contract saying we?re going to pay you X amount of dollars for the privilege of holding this contract with you until we do some production,? he says.

?There?d be a little income off of leasing the land for the minerals, hopefully they drill a well,? Kellogg says.

According to Kellogg, the Texas-based company Lonesome Dove Resources is interested in ?fracking? about 7,000 feet below the surface of his property. In the past, he's had companies drill shallower wells with limited returns.

The Montana Farmers Union sponsored Thursday?s event. This is the eighth oil and gas workshop the organization has hosted, and organizers say the turnout is always high.

Source: http://www.kfbb.com/news/local/Oil-and-Gas-Development-Topic-of-Workshop-in-Conrad-143925526.html

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