Lee County records reveal who owns rights to drill for natural gas

jmurawski@newsobserver.comFebruary 16, 2013 

 

Kenneth Alexander and Mary Edwards bought more than 100 acres in pastoral Lee County in the mid-1990s on former Weyerhaeuser Corp. timberland. The property deed didn’t include some obscure “mineral rights,” but that made no impression on the couple at the time.

That was before fracking entered the common vocabulary in North Carolina.

The Sanford couple has since learned that such mineral rights are coveted for a potentially lucrative payoff to the owners of those rights when the state’s fracking moratorium is lifted. Those who possess mineral rights will share in the financial bounty from any natural gas that comes out of the ground.

Alexander and Edwards are among scores of residents in Lee County who are learning that they won’t have any say – or significant financial gain – if fracking takes place below their properties.

Lee County officials this month released detailed property data revealing who owns the mineral rights to extract natural gas or other buried resources. The data shows that the owners of 365 parcels, on about 12 square miles, do not own the rights to drill or mine under their land. Many of them are concentrated in the northwestern gas-rich section of the county.

Alexander was stunned to learn last week that in 2010, Weyerhaeuser leased its mineral rights to an energy exploration company, granting rights to drill and frack for natural gas under his land.

Alexander said he had no idea Weyerhaeuser “could sell their rights, and the person they sold it to would have access to my land.”

“I wouldn’t have bought land and paid the premiums I paid and the taxes I have to pay so that someone else could come in here and reap any benefit to that,” he said.

These residents without mineral rights are learning that they will have little say about drilling on their land. The owners of mineral rights have the right to use reasonable means to access the resources they own. Private property could be used for depth charges, truck access and to host drilling operations.

“If you don’t own the mineral rights, you’re vulnerable,” said John Humphrey, a property rights lawyer in Alexandria, Va. “You’re not in a position to negotiate with the gas operator – that’s the real risk.”

Some protection for owners

Fracking is an industry shorthand for hydraulic fracturing, a method of releasing natural gas trapped underground by pumping in water and chemicals to shatter the rock formations that hold the gas. Advocates of fracking say natural gas will offset dirty coal and imported oil, while critics say fracking brings risks of chemical spills, drinking water contamination and a rustic landscape marred by heavy industry.

This month, the General Assembly began debating a bill that would lift the state’s fracking moratorium on March 1, 2015. The bill includes a smorgasbord of sweeteners for the oil and gas industry – such as requiring regulators to promote business opportunities for energy companies – to encourage the industry to invest in North Carolina.

Last year, in anticipation of fracking activities here, legislators passed an energy law with some of the nation’s broadest protections for landowners, giving Lee County residents a measure of security that other states don’t offer, said Ted Feitshans, extension associate professor at N.C. State University.

The law requires drillers and explorers to give landowners 30 days notice if they plan to disturb the surface. It requires them to compensate landowners for damage to their water supply and personal property as well as livestock, crops and timber. The law also requires drillers to restore the surface within two years of completing operations.

Additionally, the N.C. Mining & Energy Commission is writing at least 100 regulations to govern fracking, including consumer protections, well shaft construction and the disposal of chemical-laden wastewater. The commission could require extra landowner protections, but the final decision would be up to the legislature.

Hopes of big payoff

Most Lee County residents own the mineral rights beneath their land, and some have signed leases in hopes of hitting the energy jackpot if the state’s natural gas deposit exceeds preliminary estimates. Others are organizing to block fracking, saying it will depress property values and destroy the county’s laid-back lifestyle.

The ownership of mineral rights in Lee County had been shrouded in faulty land records that obscured mineral rights ownership, unless someone bothered to pay as much as several thousand dollars for a title search. Such information was not carefully recorded because it had negligible value – until several years ago, when geologists reported that Lee, Moore and Chatham counties sit atop a cache of natural gas trapped in prehistoric shale rock formations.

The property data, which took Lee County officials more than a year to compile, for the first time shows the extent of “split estates” such as the property belonging to Alexander and Edwards. The data also shows that the two biggest owners of mineral rights – Weyerhaeuser Corp. and J. Daniel Butler of Southern Pines – have every intent on cashing in on their holdings.

Weyerhaeuser, a global lumber operation, and Butler, a timber farmer, have between them leased about 6 square miles to energy exploration companies, most of the mineral rights they own. Weyerhaeuser and Butler acquired the mineral rights decades ago and leased them to energy interests in the past several years.

Butler said he’s eager to see drilling and fracking get underway, and he expects energy companies to act responsibly and compensate property owners for use of their land. He has leased all of the 2,691 acres of mineral rights he owns in Lee County to Whitmar Exploration Co., a Colorado fracking operation.

“I can understand the anxiety of people not familiar with the industry,” Butler said. “I know this business in Pennsylvania and other places. It’s very amiably done with surface owners. The surface owners are always fairly compensated for the use of their property.”

Weyerhaeuser owns 1,163 acres of mineral rights and has leased 941 acres to Tar Heel Oil & Gas, which is based in Charlotte.

“We only lease to reputable entities,” company spokeswoman Nancy Thompson said by email.

That’s small consolation to Richard Harrison, who acquired 60 acres in Lee County in the mid-1990s at a land auction.

“They said, ‘The mineral rights don’t bid and convey,’ ” Harrison said. “And that was while they were chewing gum and muffled.”

The mineral rights had been severed at least two decades before. Lee County’s cross-referenced database shows a document recording the mineral rights transfer from Harrison’s property in 1975, conveying the rights from Weyerhaeuser to Butler for $8,146.72.

“It certainly doesn’t sound fair but I guess that’s what it says,” Harrison said. “It’s like buying a car without owning the engine in it – how can that be?”

Murawski: 919-829-8932

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