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ABSTRACT: Environmental Liability and the Onshore Oil and Gas Prospector

James A. Jacobs, Phillip Davis

Environmental liability can be transferred to the oil or gas prospector along with the conveyance of an oil or gas lease. Should soil or groundwater contamination be discovered on a lease, an innocent owner or operator could be liable under state and federal environmental laws for court-ordered remediation costs if potentially responsible parties were unavailable or insolvent.

Potential environmental liabilities can be minimized, however, by a preconveyance survey. Existing storage tanks, wells, pipelines, and other anthropogenic features on site should be inspected and photographically documented, as should evidence of previous spills or leaks such as discolored soil and distressed vegetation. Land use and ownership history can be documented from historical maps, aerial photographs, tax records, and even interviews with knowledgeable sources. Contaminated groundwater from offsite sources even miles away may migrate onto potential drill sites. Offsite reconnaissance and a review of the Environmental Protection Agency, state, and local environmental agency lists of contaminated sites in the area of the prospective lease provide information to help the potent al lessee evaluate this risk.

The cost to research and document potential environmental problems on or in the vicinity of a lease is a fraction of the cost required to develop an oil or gas prospect. Performing a preconveyance environmental survey may be the best way to minimize environmental liability and subsequent costs of cleanup and damages in court-ordered remediation.

AAPG Search and Discovery Article #91003©1990 AAPG Annual Convention, San Francisco, California, June 3-6, 1990