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Options to Protect Your Clean Water Supply in an Oil and Gas Lease

Many farmers in southwestern Indiana rely on well water for their daily drinking water supply. Some farmers in southwestern Indiana rely on well water to irrigate their crops. Under these circumstances, the protection of this water supply when negotiating an oil and gas lease has significant importance.

The vast majority of operator generated oil and gas leases do not contain any provisions related to the protection of the farmer’s water supply. It is, therefore, important for the farmer to consider what protections they need prior to finalizing an oil and gas lease.

My recommendation is to include a provision in your oil and gas lease that requires the operator to test your well water prior to the commencement of drilling operations to establish a baseline for the quality of your water supply. This same testing provision should also contain an obligation on the part of the operator to continue to test your water wells on a consistent basis during the entire term of the oil and gas lease. The results of this testing performed by the operator should be disclosed to the farmer. This will help give the landowner more comfort that the oil and gas operations being conducted on their real estate are not negatively impacting the quality of the water supply.

In addition to including testing requirements in the oil and gas lease, we also recommend that you include provisions in the oil and gas lease that require the operator to clean up your well water if it is contaminated by the oil and gas operations being conducted on your real estate. Further, if it is not possible to clean up the well water following this contamination, we recommend that the oil and gas lease include a provision that requires the operator to replace the water supply that has been negatively impacted by the operator’s operations.