An analysis of the “SURFACE USE LETTER AGREEMENT”

Posted: February 2, 2012 in Uncategorized

The Gardendale Accountability Project

An analysis of the “SURFACE USE LETTER AGREEMENT” provided to a surface owner in Gardendale, TX by Gray Surface Specialties during the month of October, 2011.

Excerpts from the AGREEMENT:

(1) The payment of $10,000 for the Gardendale “X” Well #X, which includes any and all damages due to the location and construction of the well pad, its associated pits, roadways, pipeline/flow lines and electric lines.

For $10,000 this landowner gives up 1 acre, the roads, buried reserve and mud pits, all roads necessary, pipeline and electric lines for the rest of their lives. Location of this well will prevent many other types of uses of the surrounding property around the well…for the rest of their lives! If they sell the property, this agreement goes with it! You tie up your land for the foreseeable future for $10,000. The money offered can’t buy you a new pickup or remodel your kitchen.

(2) Operator and Surface Owner agree any means of ingress/egress to the referenced well(s) shall be at and along a route that is reasonable and mutually agreeable upon by Operator and Surface Owner. In the event that Operator and Surface Owner are unable to reach mutual agreement with respect to the location after good faith negotiations by both parties conducted for a reasonable time under all the facts and circumstances. Operator shall construct such road (a) in a manner and location that takes into consideration the factors specified by Surface Owner and, to the extent reasonably practical, minimizes the negative impact of such facilities on Surface Owner’s pre-existing lands…

Note the words ‘reasonable’, ‘takes into consideration’ ‘extent reasonably practical’. This clause gives them the right to do what they feel is reasonable after they listen to your concerns. If you disagree their definition of ‘reasonable’ is the definition they will use, not yours! Of course, you can go to court and sue them….better have a lot more than the $10,000 they gave you!

(4) Operator, their agents, employees and contractors agree to use reasonable care in the performance of their drilling, completion, operating and abandonment operations and to adhere to all applicable regulations of the Railroad Commission of Texas (RRC), the Texas Commission on Environmental Quality (TCEQ) and the Environmental Protection Agency (EPA). Upon conclusion of drilling and completion operations, Operator agrees to dewater any drilling pit or earthen storage pit by evaporation or trucking away the water, to cut away and remove the pit liner above the mud level in any drilling pit or earthen storage pit and to close the drilling pit or earthen storage pit per RRC guidelines.

Ask for a copy of all applicable regulations! You will find out that they have wide latitude in what they can do. If you think the RRC is in your corner you need to think again!  This agreement allows them to bury reserve/mud pits on your property. Gardap has tested two such pits and discovered that they contain elevated levels of benzene, a known carcinogen, and other unhealthy chemicals. It is not just mud! So much for Berry’s ‘commitment’ to use closed loop systems in Gardendale!

The provisions hereof shall be binding upon and inure to the benefit of the respective heirs, devisees, legal representatives, successors and assigns of the parties herein.

Operator’s rights under this Surface Use Letter Agreement shall be in addition to, and shall not diminish, any and all rights of Operator under its Oil and Gas leases covering all or any portion of said lands.

This portion means your heirs and successors are bound by this agreement for a very long time. You also agree to a document that you are not a party to, gain nothing from, did not sign and have no idea what it contains; the Oil and Gas lease!

Exhibit”A”

Received from….the sum of……in full settlement, satisfaction and discharge of any and all claims for injury to lands owned or leased by me that have or may result by reason of the location, drilling, operating, producing, and/or abandonment of the _____Well No……I hereby RELEASE the said ____________ and its subsidiary companies, their successors and assigns, from any and all actions, causes of actions, claims and demands for, upon or by reason of any damage or loss which may result or be sustained by me in consequence of moving materials, drilling, or operation and/or abandonment of such oil and gas well located on the land above described. Notwithstanding anything to the contrary herein, this release shall only cover claims for damages arising in the normal course of reasonable operations. This release shall not be deemed to cover any claims for damages arising, in whole or in part from abnormal and/or unreasonable operations or the negligence or gross negligence of the release, its agents, employees, or licenses.

Exhibit “A” is the crown jewel of this document. As long as they do what they believe to be reasonable you have no right to any claim.

Gardap recommends you think very carefully before you sign a document like this.  In it you agree to a small payment for use of and damage to your land. You allow them to do what they want whenever they disagree with you as long as they listen to your concerns. You agree to documents that you have never seen, had no part in, and don’t benefit from, and finally, you let them off the hook for damages and actions they consider ‘reasonable’.  Whose definition of ‘reasonable’ do you think they will favor when you disagree with them? Yours?

A landman may tell you that you might as well sign because they have the right to use their land anyway. The mineral owner does, in fact, enjoy the privileges of the Dominant Estate doctrine. If this is true why would they offer you any money at all? To be nice? Don’t kid yourself. We believe they really want you to sign this document in order to obtain the release of liability it contains. It can also be used to encourage you to keep your mouth shut when you have a complaint. This release of liability is important to their insurers, risk managers and investors. Most Gardap members have decided that the money they offer falls far short of reasonable compensation (our definition of reasonable, not theirs). The author of this analysis, having experience in negotiating many contracts in another type of business, thinks the agreement offered by Gray Surface Specialties on behalf of Berry Petroleum is the most egregious he has ever seen. In his opinion, it should not be signed without major changes.

Disclaimer: This is not legal advice; just good old-fashion common sense that tells you, “when the wolf comes knocking at your door dressed like grandma, he’s still a wolf.”

 

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