On Tuesday, the day before the conference official opened, I attended a master class on legal and regulatory issues in bringing shale gas to market. Issues ranged from severance and property taxes on produced gas and gas held in storage, reporting requirements for fluids used in hydraulic fracturing, regulation and restrictions on water use in hydraulic fracturing, as well as the strategies and regulations in dealing with interstate pipelines to transport the produced gas.
Interestingly, it was the tax portion that touched off some of the most interesting discussion.
Who owns the gas?
Depending on where you are in the country, the mineral rights to produce natural gas found under the ground could be owned by the Federal government, the state government, or a private landowner, and in some cases a surface owner would not own the mineral rights for gas found under the property he or she holds.
I had an interesting conversation with a delegate from Poland who was surprised at the land ownership structure in the United States. Apparently in Poland, land is held by private landowners, i.e., the government does not generally own land; however, the landowner essentially owns only the surface rights, and government does own the mineral rights. The delegate was describing how difficult it is to build pipelines to bring produced gas to market.
With so many landowners to negotiate with and few tools such as eminent domain, I can only imagine the challenges in trying to get infrastructure built there.
Here in the United States, we should count our blessings. While there are difficulties and challenges in working with various landowners, for the most part the climate for building natural gas infrastructure is favorable.
We have all benefited from the tens of thousands of wells, thousands of miles of pipelines, and hundreds of Bcf in storage capacity that have been built even in the last decade. Our natural gas infrastructure provides a solid platform for meeting growing energy demand in an environmentally responsible manner. It’s helpful to be reminded of that every once in a while.