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How can a surface damage clause protect your property?

You want to be able to benefit financially from the rich oil deposits under your California property, but you do not want the beautiful land around your home destroyed. Is there anything you can do to enjoy both the surface beauty and the riches underneath?

According to MineralWeb.com, you may be able to include one of these surface damage clauses to the lease:

Location approval

Maybe you have 100 acres, and the drill site will only take 10. The company may be able to locate the site on the opposite end of the property, where it cannot be seen from your home. This option may not be feasible if your property is considerably smaller, or other factors apply. 

No drilling within a specified distance

Instead of needing your stamp of approval on a specific location, the company may simply need to stay outside of a distance range you choose. For example, perhaps you want the location to be far enough away from your barn and corral that the operations will not upset your livestock. Or, maybe you want to protect your well, septic system or livestock pond from contamination. This clause may suit your needs.

Water clauses

You are not the only one concerned with water. The drilling and production process requires a significant amount, so the location must be one that ensures the company can do the work while protecting your water source. You should also include language that makes the company liable for any damage and responsible for replacement of your fresh water supply.

Surface damage payment

You may not have any problem forgoing any crop planting and harvesting while the well is active. However, once things close down, you want to be able to use your land again. You can include a clause that requires the company to compensate you for your lost income if the land is no longer productive. It is a good idea to have a professional appraisal done ahead of time to set the value before the land is destroyed.

No surface operations

You could state in the contract that you don't want certain operations to take place on your property. For example, you could state that the company cannot lay pipeline or roads across your property, that the drill site be located on adjacent property, or that no seismic activity occurs on your property. Keep in mind, though, that these options may affect the amount of money you are able to get from the lease, and they may even make it impossible for the company to access the oil.

This general overview of types of surface damage clauses is provided for educational purposes; it should not replace the advice of an attorney.

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