natural gas off your land ?

Discussion in 'Homesteading Questions' started by doodles, Mar 27, 2004.

  1. doodles

    doodles Well-Known Member

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    I have been looking at several farm in Tenn and Kentucky that have natural gas wells on the property. Alot of folks use the gas for home use.I wonder if they add a sent to the gas like the companies do so that you would know if there is a leak. One farm also pumps about a barrel of oil a day. Can some one tell me about oil and gas wells on the farm and what difficulties and assets that they might add. Any advice is welcome.
     
  2. nostalgia

    nostalgia Well-Known Member

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    We had a gas well on the property we used to rent. It saved us a bundle on our utilities. But sometimes, actually alot in the winter time the gas pressure would drop so low that the gas would go off and I had to climb the hill in snow and pull up the low pressure vowel. It was a pain because sometimes I would get back down to the bottom of the hill and have to climb right back up again because the pressure would drop again. Sometimes this was 3 or 4 times a day in the coldest part of winter. But considering how much we saved, it was worth all that hill climbing. I just hating having to relit the furnace, it was always scarey to me.

    If you consider buying land that has free gas, make sure you buy the mineral rights or you will be buying the land and not have any say over the wells or collect any royalties on it. I don't know how it works as far as paying taxes on the royalties but I am sure you would probely have to pay some.

    I also wouldn't depend on the wells because we saw 2 go dry in the 10 years that we lived there, luckily one did continue to put out.

    Not much help I am sure, but this was our experience. :)
     

  3. Michael W. Smith

    Michael W. Smith Well-Known Member

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    I have an old well on our property (drilled around 1920's or 1930's and also 5 new wells just drilled in the past 4 years.
    I would be surprised if you could buy any property that already had gas wells on them and they would sell the mineral rights with it. Around here, most mineral rights continue on down from generation to generation.
    They do not have to add a "scent" to the gas. As they are drilling, and if they hit gas, you can smell it.
    Most places that already have gas wells on them (and again you would be lucky to be able to get the mineral rights too) depending on how old the gas lease was when drilled will tell you how much free gas you get. Most old wells the lease states about gas for the house, perhaps for a chicken brooder house, etc. and does not state an amount. As long as you don't go hog wild and put gas in your garage, barn, outhouse, etc, the gas company won't mind.
    With wells already on the property, you will have to see who actually owns them. With the old wells and leases, the person got free gas and usually a royalty of $xxx per year. My grandparents have a lease that gives them $50.00 / year. The gas company is making money hand over fist on these old leases because there was a set amount and it never increases. (I have heard where you can take them to court to get current rates, but unless the gas company actually comes in to change something with the well, the old lease written will stand up in court.)
    Most times with the old leases, the gas company owns the wells and the property owners get free gas, the mineral owners get some sort of royalty. However, in our case, the old well that was drilled way back when, got sucked down so much that it wasn't "worth it" for the gas company to keep it. They sold it to mineral owners for $1.00. You say, what a deal, a gas well for $1.00 plus all the gas you can use right? Well, maybe. If that well happens to dry up and no more gas comes out, it will now be your responsibility to "plug" it. (Using cement, stones, etc. to fill the old gas well hole and prevent water contamination etc.) This is not a "do it yourself" job. It will have to be hired done, and I hear can cost $10,000.00 - $20,000.00 to do it. The gas company has made out again in this scenario. (Incidentally, that old well is still producing gas today.)
    For any new wells drilled nowadays, (and if it's a new gas lease), the mineral rights owner will get free gas (usually anywhere from 100,000.00 cubic feet per year and up) along with 1/8 of any gas sold. These royalties are considered "income" and will be required to pay income tax on them.
    If you don't understand what I have just told you or have any other questions, just ask!
     
  4. fordy

    fordy Well-Known Member

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    ...............There is also the possibility that current ownership might also subject an individual to either partial or total Responsibility for Plugging an old, marginal well that has been Pollting the Fresh water zones that people are using as their only source of water. I would be very curious about the "Willingness" of a land owner who is selling his property and might "throw in" the production rights (and responsibilities) for a well that maybe capable of marginal production....... :eek: :)
     
  5. coso

    coso Well-Known Member Supporter

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    My wife has a lot of natural gas but I wouldn't want to try and bottle it.