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Make Money from Fracking on Your Farm

20 December 2012

UK - Fracking for gas has been given the go ahead by the Government with many farmers and landowners are already being approached by companies wanting to perform exploratory drilling on their land; however they are being urged to seek specialist advice before agreeing to anything.

There has been a lot of publicity recently about how shale gas reserves under Blackpool could solve the UK’s energy requirements. With similar gas reserves throughout England, Wales and Scotland, landowners potentially sitting on top of one of these fields must ensure that they speak to the right professionals before letting anybody begin any exploratory work or drilling.

Mark Newton of Fisher German chartered surveyors has seen an increase in the number of people approaching him for advice about fracking. He comments: “It is imperative that people receive the correct advice in this situation. Very few chartered surveyors have experience in dealing with oil and gas fields however we have dealt with hydrocarbon development sites (oil and gas) for over ten years.”

The gas is extracted through a process called ‘fracking’ which involves pumping water, sand and chemicals underground at high pressure to shatter rock formations and so releases the gas. This has caused minor earthquakes in the Blackpool area but the Government are happy that it can still go ahead.

In USA fracking has reduced the price of gas by over 75 per cent and George Osborne believes it could solve the UK’s energy problems. However it will not be until at least 2020 before commercial quantities come on stream. Burning gas releases CO2, so it does not help the UK reach its 2020 carbon emission targets. However the Government now seem more interested in the cost of energy rather than the environmental impact.

Mark Newton comments: “If farmers’ and landowners are approached by exploratory companies, the natural reaction is that if gas is found, they will be raking in millions every year and living the life of J R Ewing in Dallas. What most farmers do not realise is that gas, oil and coal are ‘hydrocarbons’ and belong to the Government who sell licences to the exploration companies, to drill for them.

“What farmers must understand is that they are purely selling the right for an access and compound area for these drilling sites. These can still provide a large annual rental income but not as high as the royalty for minerals like sand and gravel which are owned by the Government, not the landowner.

“It is normal practice that a reputable exploration company will pay, or make a contribution towards a landowner’s professional legal and surveyors’ costs for drawing up detailed legal documentation before any exploration taking place on their land. For a landowner to receive the best deal, it is imperative that they seek specialist professional advice.”

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