Jared Ritz
Havre Daily News
jritz@havredailynews.com
Dozens of people from around Montana on both sides of the oil and gas debate - industry people and landowners - showed up and spoke their minds Monday at the first meeting of an Environmental Quality Council subcommittee created by the Legislature.
The morning meeting, attended by about 80 people and filling a room in Montana State University-Northern's Brockmann Center, was the first in a series of meetings to discuss possible regulation of the industry. The subcommittee was created by a House resolution that passed after legislation addressing some of the issues failed. The results of the study and any recommendations for legislation will be reported to the 2007 Legislature.
The 12-person committee is made up of four state lawmakers who are on the EQC, two public members of the EQC, and five at-large members from Montana and one from Wyoming.
The majority of people who stood to testify from the audience were landowners. Each speaker had complaints specific to themselves or those they know, and most focused on inconveniences, both large and small, of the split estate system. Split estates happen when one party owns the surface and someone else owns the minerals underneath.
The most common complaints voiced at the meeting were about the need for an easier and less expensive system to settle disputes over reimbursement for damage done during and after the drilling process and the landowners' need for better notification and more input in the process.
Cole Chandler, operations manager for Klabzuba Oil and Gas Inc., a company that has drilled "a couple hundred wells and laid miles and miles of pipeline" in north-central Montana in recent years, said he knows his business has an impact on the landowners and their business.
"The goal is to minimize these problems, and to be good neighbors," he said. "There's conflict with any relationship, but through communication we can get it done."
So far, all problems have been worked out without having to turn to government regulation, he said.
State Rep. Bob Bergren, D-Havre, said some things should be simplified or changed to help the surface owner's situation.
"There's a huge boom in my county and the counties surrounding" Hill County, Bergren said, but he doesn't want to see a boom in one industry affect "the people who will be here long after the gas and oil are gone," he said.
He, along with numerous people at the meeting, said the surface owners need some form of recourse for reimbursement claims denied by the companies beside suing them in court.
The need for an arbitration process to settle disputes between the two parties was brought up frequently by landowners.
Using heavy machinery to dig wells and ditches on farm and ranch property necessitates road construction, and the process as a whole can disrupt the landowner's operations, they said. Sometimes the amount the oil and gas people think is fair to pay for the damage and what landowners would like is different, landowners said. Right now, the only recourse an upset landowner has is to take the company to court, which often costs more than the amount they feel they are owed, they said.
Some of the oil and gas companies have "more attorneys on their letterhead than there are people in Gildford," said Gildford resident Merten Freyholtz. There should be another process in which these disputes can be hammered out, he said.
Herb Vasseur, president of the Montana Land and Minerals Owners Association, said nobody wants to go to the trouble of going to court.
"It's going to cost a bundle, and often the private individual doesn't have the resources to go against a big corporation," he said.
The association filed a federal lawsuit in June against Devon Energy Corp., a major gas producer in the area. The lawsuit contends the Oklahoma City- based company owes $5 million in royalty payments to landowners in Montana, after improperly computing the price on which it bases royalty payments and underreporting the amount of gas produced.
Vasseur said he thinks more cooperation and discussion between the two parties at the start of the process, all the way back to when the lease for the underground minerals is sold, would go a long way to relieve headaches. Right now, oil and gas companies only have to give a 10-day notice before they begin drilling on someone's land. If people are given some "common courtesy" and are filled in about the process and their rights as the process moves along, things would run better on both sides, Vasseur said.
Many landowners are not educated about the oil and gas industry, he said.
"A lot of times, their ignorance is a detriment to them," he said. "I think the (industry people) should be more up front with these people about what their rights are."
Vasseur said he would like to see the committee "come up with some guidelines that are workable from both the industry and landowner perspectives.
"Some companies are considering that surface owner," he said, "and you have other companies that are disregarding them."
Another issue brought up was water. All of the drilling and piping can upset underground water wells and springs, making drinking water and crop water unuseable, some landowners said.
Wally McRae of Rosebud County, representing the agriculture and conservation group Northern Plains Resource Council, said working through issues of reimbursement and notification are "minor Band-Aid solutions to the real problem" of water.
"Reimbursement cannot come close to replacing" the natural water on a farm or a ranch, he said.
Chandler said his company does its best to have a good working relationship with every landowner it works with. Even though a 10-day notice is all that is required, it is common procedure for the company to send someone to speak with the landowner months in advance to give them a heads-up and discuss preferred access and sometimes damages, he said.
At-large committee member Joe Owen, a landman from Billings, said in an interview he thought the meeting went well. He said he was expecting most of the comments to be negative toward the industry, simply because those who are happy don't come to voice their opinions.
Sen. Mike Wheat, D-Bozeman, who chairs the subcommittee, said he was happy with turnout and the responses the committee received on its trip.
"This is exactly what we hoped for in coming to communities like Havre," he said. "It went just as I hoped it would."
