This lease rider form may be used when you are involved in a lease transaction, and have made the decision to utilize the form of Oil and Gas Lease presented to you by the Lessee, and you want to include additional provisions to that Lease form to address specific concerns you may have, or place limitations on the rights granted the Lessee in the standard lease form.
West Virginia Shut-In Gas Royalty refers to the compensation paid to mineral owners for natural gas that is not produced due to temporary cessation of production. This occurs when the market conditions make it economically impractical to extract and sell the natural gas. The shut-in period can be caused by factors such as low natural gas prices, insufficient pipeline capacity, or operational issues. Gas royalty is a financial arrangement between mineral owners and gas operators, where the mineral owners receive a percentage of the proceeds from the gas produced and sold. However, when gas production is halted, the mineral owners may still be entitled to receive compensation, known as shut-in royalty, in order to protect their interests. In West Virginia, there are different types of shut-in gas royalties that vary based on specific circumstances: 1. Economic Shut-In Gas Royalty: This type of royalty is applicable when economic factors, such as low market prices or insufficient demand, make gas production financially unsustainable. Mineral owners are entitled to receive compensation for the potential revenue they would have earned if production had continued. 2. Operational Shut-In Gas Royalty: When there are operational challenges or issues that temporarily halt gas production, mineral owners may receive shut-in royalty payments. These operational challenges could include maintenance work, repairs, or a lack of operational workforce. 3. Pipeline Capacity Shut-In Gas Royalty: In situations where there is a lack of adequate pipeline infrastructure to transport the gas to the market, production may be shut-in. Mineral owners are then compensated for the potential revenue they would have received if the gas could have been transported and sold. It is crucial for mineral owners in West Virginia to understand their rights and the terms outlined in their lease agreements to ensure they receive fair compensation during shut-in periods. These shut-in gas royalties provide a degree of financial protection, allowing mineral owners to still benefit from their natural gas reserves even when production is temporarily suspended. In conclusion, West Virginia shut-in gas royalties are a means of compensating mineral owners for the natural gas that remains unproduced due to market conditions, operational challenges, or limited pipeline capacity. These royalties protect the interests of mineral owners and ensure they receive fair economic consideration during shut-in periods.
