Title: Understanding the Oklahoma Subsurface Underground Gas Storage Lease and Agreement (With Landowner; Long Form) Introduction: The Oklahoma Subsurface Underground Gas Storage Lease and Agreement (With Landowner; Long Form) is a legally binding contract that governs the rights and responsibilities of parties involved in gas storage activities within the state of Oklahoma. This detailed description aims to shed light on the various aspects, types, and essential keywords associated with these agreements. Types of Oklahoma Subsurface Underground Gas Storage Lease and Agreement: 1. Depletion-Type Lease and Agreement: This type of lease and agreement pertains to the depletion of underground gas storage sites. It covers the rights and obligations of both the lessee (gas storage operator) and the lessor (landowner) for the extraction and storage of gas. 2. Cyclic-Type Lease and Agreement: Cyclic leases differ from depletion leases by allowing injections and withdrawals of gas in a cyclical manner. These agreements may involve multiple cycles of injection and withdrawal, aiming to optimize gas capacity and enhance operational efficiency. 3. Partially Exempted Lease and Agreement: Some leases may fall under this category, which grants partial exemption from certain regulations or requirements imposed by state agencies. The parties involved must adhere to specific conditions with regard to gas storage operations agreed upon in this type of agreement. Key Provisions and Keywords in the Agreement: 1. Definitions: — Underground Storage Reservoir: Depicts the subsurface geological formations designated for the storage of gas. — Working Gas Capacity: Refers to the maximum volume of gas that a storage reservoir can contain. — Injection/Withdrawal Rate: Specifies the rate at which gas can be injected into or withdrawn from the storage reservoir. — Cushion Gas: The minimum volume of gas that must remain permanently in the storage reservoir to maintain pressure and integrity. — Storage Rights: Grants the lessee the right to inject, store, and withdraw gas from the storage site. 2. Duration and Termination: — Primary Term: Establishes the initial period during which the lease is valid. — Extension Options: Defines whether the lease can be extended beyond the primary term, subject to specific conditions and requirements. — Termination Rights: Determines the circumstances under which either party can terminate the agreement. 3. Payment and Royalties: — Rental Payment: Specifies the monetary amount payable by the lessee to the lessor for the use of the storage reservoir. — Royalty: Addresses the percentage of gas that the lessor is entitled to receive as compensation for the storage and extraction activities. 4. Operations and Maintenance: — Right of Access: Grants the lessee the right to access the leased property for necessary operations and maintenance. — Safety and Environment: Outlines the lessee's obligations to ensure safe operations, prevention of environmental hazards, and restoration of the site after completion. Conclusion: The Oklahoma Subsurface Underground Gas Storage Lease and Agreement (With Landowner; Long Form) plays a crucial role in regulating gas storage activities within the state. By understanding the various types, key provisions, and associated keywords, both landowners and gas storage operators can enter into fair and mutually beneficial agreements that align with legal requirements and operational goals.
Oklahoma Subsurface Underground Gas Storage Lease and Agreement (With Landowner; Long Form)
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A Pugh Clause terminates the lease as to the portions of the land that are not included in a unit if the lessee does not conduct independent operations. Therefore, the Pugh Clause requires the lessee to develop areas of the lease that are not included in a unit.
Without any royalty income it comes down to what buyers think the future income might be. For non-producing properties, the Mineral Rights Value in Oklahoma could be anywhere from a few hundred dollars per acre to $5,000+/acre. It really depends on which county your property is located in.
Returning to our example, a properly drafted Horizontal Pugh Clause would not only terminate the lease as to the 180 non-pooled acres but also as to all horizons and strata below the deepest depth drilled, i.e., 7800 feet. In other words, the entire lease would terminate as to all horizons and strata below 7800 feet.
A Pugh Clause is enforced to ensure that a lessee can be prevented from declaring all lands under an oil and gas lease as being held by production. This remains true even when production only takes place on a fraction of the property.
An oil and gas lease is a legal contract between a land owner and oil company that gives the right to explore for oil or natural gas on a piece of land. The agreement outlines the terms and conditions between the two parties, typically including the rights and obligations, fees, length of contract, and more.
What is the Pugh Clause and what does it accomplish? In general terms, the Pugh Clause provides that production from a unitized or pooled area located on or including a portion of the leased lands will not be sufficient to extend the primary term for the entire leasehold.