What is seismic testing?
By Paul R. Yagelski, Esq.
Seismic testing is a process whereby an image of the subsurface is created. The data obtained is then used by the oil and gas company to locate the most optimum place to drill for gas.
Seismic testing is usually generally conducted in one of two main ways. In one process, shot holes are drilled twenty or thirty feet below the surface. Dynamite is placed into the holes and covered over. With the charge from the dynamite, sound waves are sent into the earth and the data generated by the sound waves, being reflected off of the rock formations, is then captured by geophones on the surface and sent to a central location where the data is reviewed. Another method uses thumper trucks. These trucks contain a large plate in the center of the truck which is lowered to the ground. The weight of the truck is placed on the plate. Shock waves are then sent through the ground in order to collect data about the subsurface.
Seismic Testing is usually done by seismic testing companies. These companies are hired either by the owner of the oil and gas rights or by the lessee of the oil and gas rights, usually an oil and gas company. In addition, seismic testing companies obtain seismic data for themselves so they can sell this information to the oil and gas companies.
Do landowners have to allow seismic testing on their property?
If you own the oil and gas rights and have not leased them, you do not have to allow seismic testing on your property. If someone else owns the oil and gas rights or has leased the oil and gas rights, reasonable access is allowed. However, the seismic testing company must be employed by the owner of the oil and gas rights or the lessee of these rights. If it isn’t, you do not have to allow seismic testing on your property. You should ask for some proof that the seismic testing company is acting on behalf of the owner of the oil and gas rights or on the lessee’s behalf as sometimes the seismic testing company will approach you on its own behalf. If so, you do not have to allow seismic testing on your property.
If you have leased the oil and gas rights to an oil and gas company, the lease normally provides for the right to do the seismic testing. However, the lease can include restrictions on the type of seismic testing and where the testing can occur.
What are the down sides of allowing the seismic testing company to collect seismic data?
If you own the oil and gas rights and have not leased them, the seismic testing data may indicate that a lease of your oil and gas rights may not be fruitful, and you may not get a lease. Whereas, if you have a signed lease, you will receive an up-front bonus. Then if seismic testing is done and is not positive, at least you will have an up-front bonus.
What if you are approached by a seismic testing company and given an agreement to allow seismic testing on your property? What should you do?
If you are approached by a seismic testing company asking for permission to do seismic testing on your land, you will normally receive a permit agreement to allow seismic testing on your property. This permit agreement is usually only one page and is usually very sparse as to protections for you, the landowner. Do not sign this permit application. Have it reviewed by an attorney. An attorney can draft a seismic testing agreement with specific protections for you.
Some of the items that need to be considered when doing seismic testing would include the following:
- What is your property being used for? If there are farming, livestock or other operations going on, these must be protected. If the property is leased, the tenant’s rights need to be considered and protected.
- Are there buildings and/or water sources on your property? If so, setbacks will need to be established and provisions made for the protection of the buildings and water sources.
- Will the seismic testing be done through the use of shot holes or thumper trucks? The type of seismic testing and the location needs to be established.
- Where is the ingress and egress to and from your property going to be? This needs to be specified.
- When will seismic testing occur? A date and time need to be established. An expiration date for the seismic testing should be specified. You should also receive advance notice of the testing.
- When the seismic testing is done, what repair or remediation of your property will need to be done? The property should be returned to the condition it was in prior to the seismic testing.
- What happens if damage or injury occurs as a result of the seismic testing? The seismic testing company should be insured and should indemnify you against all loss or liability. There should be an indemnification clause in your agreement with the seismic testing company.
- What will you be paid for allowing permission to do seismic testing on your property? Usually the amount is miniscule; i.e., $10 to $25 per acre, but it may be possible to receive more.
The bottom line is that if you are approached by a seismic testing company asking for permission to do seismic testing on your property, you should contact an attorney to review and amend the seismic testing company’s agreement, so that your rights are protected.