As more renewable energy projects are being developed across the United States, the number of projects in areas that contain active oil and gas and mining operations continues to rise. In the beginning stages of greenfield development projects, the oil and gas and mining operations affecting parcels within the site plan is sometimes overlooked, and if not addressed, these types of interests and operations can cause significant delays and costs when developing and financing a new project. However, some initial research and due diligence at the beginning of a greenfield development project can usually protect the project from these types of issues and costs and assure the project can stay on schedule and budget.
Once an initial project boundary or site plan layout is determined, research should be conducted to verify whether there are active oil and gas or mining operations within the site. Typically, this information can be found online through a state agency database that contains oil and gas well and mining records or through a GIS map format. Once these records have been reviewed, the developer will then know if any parcels within its site plan are affected by active oil and gas or mining operations, or potentially if there are any current permits for oil and gas wells or mining facilities. If there are, the developer can modify its site plan to avoid parcels with current or planned operations or pursue an agreement with the oil and gas or mining operator for co-development, if possible. Knowing this information up front will assist the developer by knowing the additional risks and costs associated with those parcels prior to entering into a lease or exercising a lease option.
In addition to the above research, a developer should order a review of the title records in the county in which the project is located to confirm (1) whether the surface rights have been severed from the mineral rights and (2) whether there are any oil and gas or mining leases within their primary term or being held by production from an active well or mine. To confirm this ownership interest, mineral ownership reports should be obtained by a company specializing in oil and gas rights and these reports should be reviewed to confirm whether there are any ownership issues that require curative prior to entering into potential agreements with the mineral owners. Obtaining mineral ownership reports is an important first step for a developer to determine if there are active oil and gas or mining leases on the property and to ensure that all necessary surface waivers and set-aside agreements are executed by the correct mineral and mineral leasehold owners.
Doing initial research regarding the oil and gas and mining operations at the onset of a greenfield development project will give the developer the ability to determine additional risks and costs within the site associated with oil and gas and mining operations. A prudent developer should proactively address mineral issues by 1) researching state online records for active development, 2) confirming mineral ownership and active mineral leases and 3) determining and obtaining the necessary mineral agreements that are a required for the site. By taking these steps upfront, the developer will likely be able to avoid project delays and unexpected costs.
For further discussion regarding real estate and mineral diligence on renewable energy projects be sure to register and attend Brian Pullin and Danny Cooper’s webinar “Wind and Solar Development: Mineral, Title and Site Control Considerations” on Thursday, May 27, or contact Brian Pullin, Danny Cooper or another member of Husch Blackwell’s Renewable Energy Team for assistance.