In Texas, sub-surface mineral interests have senior rights to surface owners, if drilled upon by oil companies. I wish to repeat that: oil companies have senior rights to the surface of a land, even though they do not own the surface of the land.
See this link to Texas House
Bill 2633 - 2013 Session. http://www.legis.state.tx.us/tlodocs/83R/billtext/pdf/HB02633I.pdf#navpanes=0
Plans are that I will be testifying before a Legislative Committee concerning
this Bill, perhaps in April 2013. Really busy,
here on the farm, now October 2013, I did testify in front of the committee, May
2013. Bill introduced by Rep. Stephenson, not my congressman, that
man would not help me. Bill was held up in committee, we think by the
Committee Chairman. The bill died in Committee because of
this. Rep. Stephenson told me he thought the bill would have passed on the
House floor, the injustic was so great - but one man held it up. Rep.
Stephenson also told me he was under pressure, from Gov. Perry's office to
remove the Bill - the Governor's office saying "it was a
bad Bill". The system is corrupt and it is flawed. Our laws and
justice system should be by the people, not kings in Committee chairs or
kings in the Governors office. J Kent Crutcher, CPA,
FULL ASSAULT ON THE FAMILY FARM
This is my family homestead. In Texas the family history goes back to the founders - it was a ggggrandfathers brother, Thomas Jefferson Chambers, 1st Supreme Court Justice of Texas, under Mexico, that gifted the War Between the States cannons on the entry way, into the Texas State Capitol. There were four grandfather Texas Rangers too, 1842-1848. American family genealogy goes back to 1618 Jamestown. My family homestead is 640 acres, pivot irrigated, southwest of Lubbock. My father, G.H. Crutcher, bought this land in 1947 after WWII; he was an infantry sergeant, awarded 3 bronze stars, his company liberated Dachau, 1945. He bought the land without the minerals title; Dad tried to purchase the minerals, but the owners would not sell. No one in their right mind would sell off the mineral rights today - it is like throwing a rock into the irrigated farm operation machinery.
STATE OF TEXAS OIL AND GAS LAWS
2. Oil company damages paid are limited to one-time payments. This is in contrast to real loss of income many times the nominal one time payment as prescribed by corrupt Texas oil & gas laws. In my case, one well: #2, discussed below, had damages offered of $6,000, but loss of income for the life of the oil well for the next 70 years, the difference between irrigated and dryland will be $19 million. See worksheet you can access and download an online Excel Worksheet to experiment with here: http://www.assaultfamilyfarm.com/pvincomeloss.xls.. According to the 3 lawyers I spoke with, Texas law does not recognize loss of income, to surface owners, in oil and gas cases. I want to say that again - Texas oil & gas law does not recognize loss of income, to surface owners, because an oil well has been placed on the land.
This is what a "developed" oil field looks like from Google Earth, a well every 40 acres.
This is a nightmare for someone trying to farm it dryland. Irrigated is impossible: caliche roads, well pads, tank pads and batteries from every direction, underground and above ground electric lines, gas lines and oil flow lines all without the surface owners permission. Damages (per Texas laws) for a section, 640 acres, average $6,000 per well and pad X 16 wells = $96,000: for a wasteland of 640 acres that used to be productive, irrigated farm land. Market of irrigated land here - $1,500 to $5,000 per acre, or up to $3,000,000. But I would not take $10,000/acre for my family farmland - do not want to sell it.
This is a surface view of what 160 acres - partially converted to oilfield, looks like. A hardheaded farmer might try dryland, but irrigated is impossible. This is an oilfield west of me 20 miles. The oil company is trying to "develop" about 20,000 acres around me.
This is oilwell #2 (see chart below) being drilled next to my pivot irrigation system. Texas oil & gas laws do not directly require an oil company to recognize that this pivot system exists - sort of an iffy situation. Oil companies have senior surface interests, without owning any. #2 was drilled July 2011.
LOST IRRIGATION RIGHTS
This represents section of land, 640 acres. The dots are irrigation wells. The red are two oilwells with roads leading to county roads. The circles are pivot circle irrigation systems, common in West Texas. When I am complete, there will be 4 circles on this section. Yellow is land lost to irrigation because pumping units are in the way. I was never offered anything on well #1 for damages, because I refused to sell water and I strenuously objected to the oil company entering my land without my permission. Think about that, no offer, so I must spend $5,000 to 10,000 on attorney fees and court costs, to collect $6,000. I was offered $6,000 for about 5 acres, bottom dollar for irrigated land for oilwell #2, road and pad, middle of my field.
However there is an additional 25 acres that I cannot irrigate (in the yellow), because my pivot will not go over the pumping unit. My loss of income is estimated to be $19 million, the difference between yields in dryland and irrigated, over the estimated life of the oilwell, 70 years. See worksheet here, download to your computer: http://www.assaultfamilyfarm.com/pvincomeloss.xls. I want to repeat this fact - offered $6,000 as prescribed by Texas laws, but my loss of income will be $19,000,000 over the life of the oilwell.
Irrigated cotton on the left, August 2012, unable to irrigate on the right, due to oilwell, August 2012. See diagrams above. I 've had to backup pivot 9 times in 2012, takes a day or two, double wear and tear on gearbox, loss of a day or two irrgation, countless additional wait hours for me, so I will not run the pivot into oilwell equipment. In everything done on this farm, consideration must be given to the oilwells, etal. From my observation, these oil men possess absolute ruthless self-interest and they simply do not care about all this. They have two faces, one for the public; they donate in large to causes like "to help the children", or "to help the soldiers families", or even "to help the children of soldiers who gave their life for our freedom". Damage control buzz words. The other face = $6,000 offer for $19,000,000 lost by landowner, plus all the mental grief for 70 years, 24/7, two generations. Actual losses for the 2012 season was $74, 300. Go here for the detail invoice: http://www.assaultfamilyfarm.com/invoice2012.doc
DRILLING PIT TOXINS 30 ft. FROM WATER TABLE
That is a full-size pickup. Behind it is the drilling pit, about that size squared. The pit is full of drilling waste, including chemical fluids and toxic waste. Think about it, the drilling company line the pit to keep from polluting the land and the water. Then when the drilling rig moves off, the oil company digs a hole 20 ft. deep and buries the pit. The Ogallala aquifer is replenished by rainwater, so rain seeps down through the soil, leaching whatever is between the ground level and the water level. My water table starts at 52 ft in some wells. There are 4 close by this pit. I called the Railroad Commission to try to get the burial stopped, hauled off my place. They said there was nothing illegal about pit burial that way. I contacted the EPA; they too will do nothing until the water supply is actually poisoned. Legislation is needed to stop this poisoning of the water supply.
This is a full size pickup and a full size-pumping unit. Oil companies have senior surface rights in Texas, meaning they do as they please with the surface. I have no surface rights, but I own the surface. This is oilwell #1 and my pivot will not clear the pumping unit. Oilwell #2 is a black pumping unit, same height as this one. Loss of income on this pivot is $4 million (average for 1st and last of year cotton prices) and I was offered $0 in damages. #2 well 70 year loss is $19 million, offer of $6,000.
Download this Excel file online from here: http://www.assaultfamilyfarm.com/pvincomeloss.xls. This is exactly the same type of worksheet oil companies use to value whether or not to drill, or whether or not to buy an oilwell from another oil company, except theirs has a decline curve factor (oilwells produce less per day as they age). They use cash flow to determine investment potential, but they deny landowners and farmers the same logic. Why? Because present value cash flow is a lot more money to pay out than a fixed, one time payment of $6,000.
OTHER LOSSES I HAVE SUFFERED BECAUSE OF THE OIL COMPANY
#1. For that section, I had planned a full half mile pivot irrigation system. Because of the uncertainty, and even if I can irrigate any, with oilwells in the way, I must buy (4) quarter mile pivots. The price difference between the (1) half mile pivot and (4) quarter mile pivots is about $100,000.#2. On a dry hole, where they remove the pad and road, the topsoil has been removed, and crop production is zero (chemicals in the pit kill the soil).
#3. Not able to go around the pumping unit, a farmer must back up the pivot irrigation unit all the way to the beginning of the partial circle - meaning double wear and tear on the gearbox and tires. Plus during a dry season, the time required to back up the pivot will result in lost time watering, thus lower crop yields.
#4. The land that holds the pumping unit and tank pads, has the same production costs, excluding seed. For example, fertilizer and herbicide are broadcast over the sites, but no production income is obtained. It costs around this non-productive land, as if it was in production.
#5. Roads and pads never come out even for row equipment, always some land left out of production. Rock is scattered 15" on each side of the road too.
LEGISLATIVE SOLUTIONS TO CORRECT PAST OIL & GAS LAW CORRUPTION
1). It could be that it is impossible to return seniority surface rights to the surface rights holders. Think about that for a moment: returning surface rights to surface owners; an impossible task. Oil companies have had it 100% their way for so long - to not be able to do as they please to the surface, will sound very radical to them. To require an oil company to negotiate a deal with surface landowners, a fair deal, before any work is done, is not going to be acceptable to them. No agreement, no oilwell. This one piece of legislation will fix everything below. If this is impossible, then consider the remainder of these legislative requests.
2). Loss of yearly income is a reality, when land is removed from crop production. And irrigated land, lost, is compounded significantly. A one-time payment, in my case, of $6,000 is criminal. The law needs to recognize loss of income to farmers as a reality. Retroactive.
3). When an oilwell is drilled on farmland, that land drops significantly in financial value. No farmer wants to navigate around oilwell pad, tank pads, maybe hitting an electric line, gas line, or production line, and this does happen often in farm country. It becomes a major problem for farmers to have just one oilwell on their land. Loss of value on farmland is a reality and farmers should be compensated. I am thinking a percentage of operating revenue, gross oil sales, as it occurs. Retroactive.
4). Pits: the water supply on all my irrigation wells and house water well is going to be poisoned in 10 years or so; and poisoned for 100s of years. And at present, neither the RRC or the EPA can make the oil company haul away the pit remains. A clean and non-toxic water supply is a reasonable expectation. Make it mandatory for any land owner not wanting it buried there; a mandatory haul off. Retroactive.
5). Respect pivot circle systems, existing and future.6). No flowlines of any type nor any electric lines of any type, without surface owners permission.
Texas House here: http://www.house.state.tx.us/members/
Texas Senate here: http://www.senate.state.tx.us/75r/senate/Members.htm
firstname.lastname@example.org Kent Crutcher, CPA, MBA 2196 FM 402 Brownfield, Texas 79316 806-755-2512 email@example.com