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O&G environmental certifications can benefit surface owners

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Triana Energy's wellpads control fluids with multiple layers that protect the liner, including a top 6-inch textile in heavily trafficked areas. Photo courtesy of Triana Energy. Triana Energy's wellpads control fluids with multiple layers that protect the liner, including a top 6-inch textile in heavily trafficked areas. Photo courtesy of Triana Energy.
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Surface owners arguably have been the "biggest losers" in the shale gas revolution. 

Where companies operate with lax environmental standards, surface owners and neighbors report slipping wellpads, spills that contaminate surface and groundwater, noxious smells and worse. 

So when companies undertake certification to high standards of environmental performance, as some now are doing, the surface owners where they operate could see big benefits. 

In West Virginia, that includes those in areas tapped by four of the state's top 12 producers in 2011, responsible for more than one-fifth of shale gas produced in that year. EQT, Chevron Appalachia and Consol Energy are developing and pursuing certification through the new Center for Sustainable Shale Development, and Triana Energy is certified to ISO 14001 standards for environmental management systems. 

These companies are committing to practices that include more conscientious prevention and containment of spills and early implementation of federally mandated "green" well completion that reduces unhealthy fumes. 

But here's a question: Knowing that some producers have committed to high standards, could surface owners in areas plied by other producers make use of that knowledge proactively? Could they, for example, insist that the producers that want to drill on their properties become certified, or invite certified producers to their areas? 

Maybe. 

For a surface owner acting alone, no gas producer can respond to an individual request for that company to be the one to drill on his or her property, said Triana Chief Operating Officer James "Eddy" Grey. 

"I can't go out and drill a well on your property and go 100 miles down the road and drill another one — it's uneconomic," Grey said. "I've got to have enough acreage in an area to drill several wells, to justify the pipeline, to take advantage of efficiencies by doing multiple projects." 

What if contiguous surface owners work together? 

Surface owners can get better terms of all kinds with gas producers if they work with each other, said Julie Archer of the West Virginia Surface Owners' Rights Organization. Asking companies to be certified could be one of the items a group of surface owners requests. 

Ultimately, though, the power of surface owners is most limited by the extensive separation of mineral and surface ownership across the state. 

Where the estates are split, gas producers and mineral owners typically sign leases without the knowledge of the surface owners. 

Even if a surface owner manages to determine who owns the underlying minerals and to locate that person or those people, most mineral owners will be focused on maximizing up-front lease payments and royalty percentages and much less on asking the producer to minimize damage to the surface. 

"(Environmental certification for oil and gas producers) could be of some benefit to landowners who also own their minerals, or to landowners whose minerals happen to be owned by someone who is environmentally conscious and aware," Archer said. 

In her mind, voluntary standards aren't as good as state-mandated safeguards with rigorous monitoring and enforcement. 

Even if surface owners don't have the leverage to pressure companies to get certified, they can use the Center for Sustainable Shale Development's performance standards as negotiating points, said Mark Brownstein of CSSD partner Environmental Defense Fund. 

"There's nothing that prevents a landowner from working to incorporate the substance of these standards into the agreements that are made," Brownstein said.