New Study on Fracking Highlights Mineral Rights

As of Tuesday, May 1, 2012

Stronger laws to protect landowners and mineral rights holders will be needed if North Carolina legalizes fracking, according to a new draft report.

“This is still an emerging issue for lenders in North Carolina,” the Consumer Protection Division of the N.C. Department of Justice said in its draft report last week. But “at least two North Carolina lenders ... have stated that they will not make or purchase mortgage loans on residential properties where the buyer does not own their mineral rights, or has leased their mineral rights.”

Jordan Treakle, mineral rights project coordinator at the Rural Advancement Foundation International-USA in Pittsboro, said North Carolina landowners who sign such leases could be ineligible for mortgages from the State Employees Credit Union (SECU) and mortgages backed by Fannie Mae or Freddie Mac.

“The (SECU) policy adds another layer to the debate over legalizing fracking in North Carolina,” Treakle said. “It highlights the risk that mineral rights leases present for landowners even before drilling starts.”

In addition, there is no requirement under current state law for a property seller to disclose to a prospective buyer that the mineral rights on a parcel of land have been sold or conveyed to another person or company.

“If hydraulic fracturing is allowed in North Carolina, the existence of severed mineral rights will be an important disclosure and consumer education issue for homebuyers,” the report said.

The Department of Justice report — titled “Impacts on Landowners and Consumer Protection Issues” — highlights many other potentially “long-lasting and profound impacts on landowners” from oil and gas leasing.

“It is critical that North Carolina get landowner protection rights, and the report is a good first step,” RAFI-USA Executive director Scott Marlow said.

Molly Diggins, state director of the N.C. Sierra Club, said the report makes clear that “the landowners’ voice hasn’t been heard in the debate as much as it needs to be.”

“We’re really concerned,” Diggins said. “The report is compounded by the proposed Senate fracking bill that takes away the ability of local government to protect landowners.”

Fracking, a controversial method of natural gas extraction, is important to northern Moore County, which lies atop the Deep River Basin, where state geologists believe a 40-year supply of natural gas exists.

Fracking is illegal in North Carolina — for now. But legislation passed last year by the General Assembly authorized a study by the N.C. Department of Environment and Natural Resources (DENR) and moved the state closer to shale gas development.

DENR issued a draft report last March concluding that fracking can be done safely and responsibly as long as the right laws and protections are in place. The Department of Justice draft report complemented the DENR report.

The final report was scheduled to be submitted yesterday to the General Assembly.

Contact Ted M. Natt Jr. at (910) 693-2474 or tnatt@the-pilot.com.

More like this story

richardstaggart 1 year ago

When you're shopping quotes from lenders, beware of points that they'll try to impose on your refi. Each point is a fee of 1% on the amount you borrow. I worked with 123 Refinance search online for them. I would strongly recommend them since they got me 3.24% rate on my mortgage refinance.

Bflat 1 year ago

Folks in Pinehurst had better look at their deeds, because many do not have mineral rights, or that was the way it was done in the past.....

LeeMcGraw 1 year ago

I have a "Bait" letter from a friend in the Carthage area...rest assured the oil companies have sent their packages to these landowners by now...actually many way before.I have a copy of a bait check paid to a fracking landowner for over a million dollars. (1,282,480.77) it is from Cimarex Energy co out of Ok. NOONE knows the dangers of polluting our water supply, but we all know that once these chemicals get in it, there is no turning back. Blimps used to be filled with explosive hydrogen because it was cheaper and helium was in demand for the war. I am sure the gurus knew the great risks...in fact, you can't be smart enough to design a blimp and not know. They probably had the same non caring greedy bulldoze ahead type people then saying...awwww you worry for nothing...just fly the thing" Well, this mess coming here dosen't fly...not with me. I am not a treehugger. I hunt responsibly, love the land and animals, and respect the fact that one persons rights end where another's begin. As I told my friend, I love ya man, but if you allow this in the name of money, you are prostituting yourself and affecting thousands of others. Give it some time. The gas will be there.

KevinStewart 1 year ago

I agree with you Lee. One thing we need to look into is that municipalities in PA are holding oil companies responsible for contaminating the aquifer and watershed, so we need to be prepared now to protect our water. If fracking is legalized, towns should ban the sales of water that support the drilling process. I don't know if these two things can make it cost prohibitive for the oil companies but it's a start.

Bflat 1 year ago

Years ago the gas/oil companies has leases with landowners in northern Moore, so they already knew where the supplies are located. In fact they did a flyover with some kind of measuring device and also did ground testing in some places.