Managing Lessors and Leveraging Their Advocacy Power in Shale Drilling

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By Jay Vincent,
Senior Vice President – Energy Sector, Practice Leader, The Saint Consulting Group

Let’s say you have leased 4,000 acres for exploration and production in the Marcellus Shale or even the Barnett.  In some parts of the Marcellus that could mean you have two land owners or lessors to deal with.  The same goes for the Barnett.  When that is the case managing lessors is pretty easy.  Keeping them apprised of what you are doing is simple.  Pick up the phone and call your two friends who have leased their mineral rights to you.

But the likelihood, especially when it comes to urban drilling, is that you have literally thousands of lessors to manage.  That means there are thousands of voices that have a legitimate and recognized role in the process for permitting your wells.  Elected officials call those people their constituents.

Now, if your lessors are complaining about your pad site or the location of a drill rig, then you have real problems.  Because elected officials have no reason to say yes to your variance and certainly no reason to grant you rights to drill near a high impact site if the people  you purport to do business with are in opposition to your plans.  Of course, there will always be the naysayers – those who want the royalties but not the impact.  But if managed properly, perhaps you can leverage the voices of your most likely allies to ensure your firm receives it permit and the lessors receive their royalty checks.

In today’s permitting environment that is becoming a must!  In a nutshell, here is how you do it:

Managing Lessors:

  1. They deserve frequent and clear communication, GIVE IT TO THEM;
  2. Take the time to develop communications channels that make sense for the community;
  3. Meet with your lessors on their doorstep at least two times before you file a permit to produce their minerals;
  4. Make sure you know what the land men or the previous lease owners promised these folks (CRITICAL);
  5. Tell them when you are filing an application and show it to them in their home;
  6. Prepare them for advocating for your project

Leveraging Their Advocacy Power:

  1. Educate them about the forthcoming process for permitting approval
  2. Give them the tools to easily communicate with decision makers
  3. Help them organize themselves to create a supportive community group
  4. Keep them apprised of key hearing and meeting dates
  5. Turn them out to hearings

If you want some help pulling this all together, feel free to give me a call. Developing successful permitting strategies for natural gas developers is a big part of what we do here.

Jay Vincent is senior vice president for development and head of the energy practice for The Saint Consulting Group, email vincent@tscg.biz, phone 312.212.8889

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