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Oil and Gas Leasing Commission Finally Appointed

Krugliak, Wilkins, Griffiths & Dougherty Co., L.P.A.

The Ohio Legislature passed a law in 2011 establishing the Ohio Oil and Gas Leasing Commission.  This new State of Ohio Commission was established to oversee, handle and authorize all oil and gas leasing of rights and property that is owned or controlled by a state agency, including state colleges and higher institutions of learning.  It removed any existing laws that allowed state agencies to enter into oil and gas leases.

It has taken Governor Kasich over six (6) years to appoint the five members to this Commission.  In the meantime, he has satisfied his purpose of the delaying the implementation of this law and any leasing of state owned or controlled oil and gas rights on state property.  Some may have thought this was to please environmentalists, however, the real reason was to apply leverage against producers and the Ohio Oil and Gas Association for opposing his proposed draconian increase in severance taxes that would have affected every lessor/royalty owner, not just the lessee/producer.

So finally, the Commission will begin its work in 2018.  Adjacent private property owners who have been unable to enter into oil and gas leases, will one day have land men knocking on their door to enter into a lease.  If you live next to Salt Fork State Park or other state lands, whether state prisons, museums, state colleges, highways, etc., now you may be able to enjoy the fruits of an oil and gas lease.

The Commission members must meet and establish guidelines and procedural rules for submitting lease nominations of the property wanting to be leased, the nomination process and factors as far as approval or rejection.  Procedures also must be enacted for advertising and selection of bids for leases.  The state agency, upon receipt of a nomination and its approval, the State Agency that owns or controls the parcel of land is requested to submit within 60 days special terms and conditions that will apply to the lease.  The Commission’s standard Oil and Gas Lease form is to be consistent with the practices of the oil and gas industries and will be provided to the bidders in advance of their bids.

In my opinion, the earliest that any bids may be accepted will be late 2018.

NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.

 
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