Utah oil and gas royalty owners are beginning to feel like David taking on Goliath.
But some oil and gas company officials say property and mineral rights owners just need to have more patience with them. Members of the Utah Royalty Owners Association told members of the Utah Board of Oil, Gas and Mining who met in Roosevelt recently that they are frustrated and concerned by the lack of state rules and regulations to safeguard their financial interests and protect the environment from oil companies who don't conduct their business operations in good faith.Their list of concerns is lengthy and includes:
- Safety and health risks posed at abandoned oil well sites where broken-down tanks and equipment, sludge, oil spills and other debris remain for years after production stops.
- The lack of monitoring by the state when it comes to checking production records, which are filed by oil companies, for accuracy.
- Land locked up by an oil company claiming the lease is held by production when it's obvious the site has been abandoned. Such deception artificially inflates their property values resulting in higher taxes, and prevents the use of the land for other purposes.
- The practice employed by oil companies of deducting their transportation costs from royalty payments.
- The lack of enforcement when it comes to ensuring that oil companies reclaim the land when they leave the site.
- Oil companies who base royalty payments on a lower-than-average sale price and then resell the product to one of their subsidiaries at a higher price.
- Procedures now in place for having a grievance addressed by the Division of Oil, Gas and Mining.
"We're saying there's a problem and we're making a noise," stated Larry Murray, a Roosevelt businessman and royalty owner. "Who's going to accept the responsibility for it, the state? The county?"
In fact, there are no state laws that mandate the time frame an oil company has to reclaim land they have drilled on and later vacated. Similarly the county has no rules and regulations dealing with the issue. Even if there are reclamation orders stipulated in the lease agreement between the property owner and the oil company, they are often difficult to enforce.
The state collects a "blanket $80,000 performance bond" from oil companies for reclamation purposes, explained Dave Lauriski, chairman of the board of oil, gas and mining, but he admitted the money won't stretch far.
"If we forced cleanups at all these sites, it would bankrupt the oil companies," he said. Lauriski also noted that in many cases the complaints of oil royalty owners are "between royalty owners and the company. The division has no say."
The board of oil gas and mining is made up of representatives from various areas who are appointed by the governor. The board acts in a supervisory capacity over the Division of Oil, Gas and Mining.
"We are not here as an enforcement group, our job is to come out here and be educated and have a better understanding when the issues come before us," Lauriski commented.
He assured those with concerns that the board will investigate concerns of the royalty owners and try to address them, but also noted that the board represents the interests of oil companies as well.