Split Estate Equals Splitting Headache: See the Documentary

 By Patricia Lee Sharpe

Take a look at this picture.  If you live in any of 32 out of 50 American states, this could be in your back yard—or your front yard, whether you like it or not.  Your ground water could be polluted, and the air you breathe could now be making you sick.  Really!  And this assault on your life and property would be perfectly legal.

We’re talking about the severance of surface rights from the right to gain access to the minerals below the surface.  Please, when you are about to buy a home or a ranch or a farm, ask if you will own both surface and mineral rights.

The theory behind the split estate regime is that “splitting the mineral estate from the surface estate allows those with the financial wherewithal and expertise to develop the land’s mineral wealth while allowing the surface owner to continue using his estate.” 

In practice, it works like this:

Exempt from federal protections like the Clean Water Act, the oil and gas industry has left this idyllic landscape and its rural communities pockmarked with abandoned homes and polluted waters. One resident demonstrates the degree of benzene contamination in a mountain stream by setting it alight with a match. Many others, gravely ill, fight for their health and for the health of their children.

The best quick introduction to the consequences of “split estate” laws is a harrowing documentary film entitled—you guessed it, Split Estate.  I discovered it at the Santa Fe Film Festival last year, and you probably won’t find it at your local multiplex.  But go to the website, where you can learn how your local environmental or other grassroots organizations can sponsor the film for your community.  Forewarned is forearmed.

In short, Split Estate shows how natural gas exploration and production turned a beautiful  healthful area in Colorado into an uninhabitable wasteland.  Yes, this is Colorado, and laws do differ from state to state.  But only in detail, not in essence. Local environmental lawyers know specifics.     

A little foreknowledge of what had been happening in Colorado gave the people of the Galisteo Basin just south of Santa Fe a head start when Texas-based Tecton Energy applied for a permit to begin drilling for oil on land for which it had acquired the mineral rights.  In fact, all hell broke loose:

Representatives from Tecton Energy took a pounding from angry residents Thursday night [1/11/07] at a meeting the company hosted to discuss its plans for oil and gas drilling in the Galisteo Basin.   

About 300 people armed with questions and comments filled the parking lot of Genoveva Chavez Community Center to overflowing. Late arrivals had to sit on chairs outside the meeting room. Some crowded doorways and pressed up against the windows, jostling for position so aggressively that one Tecton representative said he wished the police had been present.

Bill Dirks, managing partner of the Houston-based company that has leased 65,000 acres of mineral rights in the Galisteo Basin area, did most of the talking for the company as the crowd sometimes shouted him down, booed, hissed and yelled expletives.
   
Dirks spoke for about an hour about the company's plans to drill for the 50 million to 100 million barrels of oil it believes lies under southern Santa Fe County and outlined the steps it would take to ensure a minimal environmental impact.
   
Water quality and availability, negative effects on property values and environmental contamination were paramount concerns for the speakers.
   
Asked what the company would do if the aquifer under the Galisteo Basin became contaminated, Dirks said, "It's not going to be contaminated. It's absolutely not going to be contaminated."
   
Asked where the water used in the drilling process would come from, Dirks said he doesn't know because the company is still trying to find water it can purchase for the project.
   
Tecton purchased 67,000 gallon of water for $861 from Santa Fe County last spring for use in some of its preliminary explorations.
   
The company has announced plans to enter eight wells to determine the feasibility of extracting the oil, but Dirks said Thursday that if oil is found in the quantities the company suspects, "there will be lots of wells drilled," and companies like Exxon, Shell and Chevron could start drilling here.   

Betsy Siwula-Brandt, 50, who said she spent 18 years working in the oil and gas exploration business, said the type of drilling Tecton intends to do — which involves injecting pressurized fluids into the ground to fracture surrounding rock so it will relinquish oil — is the riskiest type of drilling in the business, and protective casings designed to guard water sources aren't fool proof.

"There is no way he can guarantee there won't be seeping behind the surface casings," Siwula-Brandt said. "Once it gets into the ground water, there is no remediation. There is no way to stop it."

On February 26, 2008, after numerous similar public meetings, Santa Fe County decided to suspend all business having to do with the application and the granting of oil and gas drilling permits for one year, with an option to extend the suspension for another six months.  Why?  “The Emergency Interim Development Ordinance....will allow additional studies to be conducted before granting permits for drilling activity.”

The pause time demanded by Santa Fe County was used to recruit knowledgeable consultants to help the Commissioners write ordinances to better protect the rights of surface holders, to require that surrounding communities be reimbursed for collateral costs, to ensure the potability and sufficiency of the water supply and to prevent degradation of the environment in general. All in all, the Galisteo Basin wasn’t available for cheap quick exploitation.  In the end, having discovered that the people of Northern New Mexico were ready to defend their environment and their way of life, Tecton Energy decided to look elsewhere for oil.

During this process, the state of New Mexico also looked into the feasibility of drilling for oil and gas in the Galisteo Basin.  Take a look at the very readable Report on the Galisteo Basin.  You’ll find contributions from the from the New Mexico State departments of minerals and natural resources, game and fish, cultural affairs, environment, Indian affairs, tourism and health in addition to a fascinating report on hydrology from the state engineer’s office.  Result: the state also determined that too much of value to the people of New Mexico was at stake.   Drilling didn't make sense.

If the people of Santa Fe county can stand up to get-rich-quick drilling proposals, others can, too.  All it takes is knowledge and passion.  Well, money helps, but people are generous when their homes are threatened.