Friday, 15 November 2013

Drilling Wells – know the full impact first.

It all started when some nice bloke “from a property around here” had coffee with you one day and told you his company wanted to drill a couple of holes on your land – “down the back paddock, only about the size of half a basketball court, you won’t even know it’s there.”

This might be true once the well is completed, however during intensive construction, drilling occurs 24 hours a day and the drilling team needs a lot more space for all their gear, trucks, dongas and other equipment.  The more space the resource company takes up, the less space you have to run your business on.

It is very important to get as much information and detail as you can about what a resource company intends to do if they want to drill on your land - how long they need to do it (number of days); how much area they require; and how they will conduct themselves.  You should be able to receive detailed information for both the overall project and each stage of the activities. For example, the company may need to build a new road to get their well site.  They will have 1 bulldozer, 2 graders and 3 trucks, with 6 personnel, and will take 2 weeks to build their road at a rate of 500m/day.  The locations of the new tracks should be marked clearly on a map included in your agreement.   All company vehicles should be parked in a designated area.

The more detailed and more accurate the information you have available to you and included in your agreement, the better you can assess the true impact of the well (both lost income and day-to-day disturbances) and not be caught out with any surprises later on.  Be aware of the implications of lines such as “and any incidental activities necessary or convenient”.  If included in your agreement, six months down the track “convenient” for the company could be to lay a pipeline between two sites and you would not be able to claim more compensation for the additional disturbance. This is why is it important to have clear and concise terms in your agreement – exactly what the company can do, where they can do it and how long they have to get it done.

Being aware of what you are signing will ensure that you do not sacrifice your long term productivity, planning and sustainability.

Amy Gudmann is a solicitor in the Rural division at local law firm Rees R & Sydney Jones Solicitors.