Factors Affecting Lease Compensation

Factors Affecting Lease Compensation

Every surface lease situation is different, and the factors that go into a negotiated settlement can include knowledgeability of the parties, and negotiating skills. The following list is not exhaustive, but provides some of the factors you need to consider when negotiating.

    • The market value of land before and after
    • The impact of the lease on the utility of the land – extra time spent seeding and cropping because of location of lease
    • Is there any land severed from farming operations or landowner use because of the location of the lease?
    • Proximity of proposed lease to house, barn, animals, water source
    • Decrease in number of animal units the land can support
    • Number of wells, and over what period of time will they be drilled and fracked
    • Extent of flaring
    • Hours of construction
    • Noise and dust
    • Increased traffic
    • Impact of Emergency Response Zone on family, lifestyle and market value
    • Stigma of Sour Gas
    • Effect of Compensation on income tax
    • The fact that Compensation in Kind, e.g. a “free dugout” is taxable
    • What collateral benefits are included in compensation, for example does the landowner get a contract to provide services during construction or operation?
    • Section 154 (1) of the Petroleum and Natural Gas Act lists items that the Surface Rights Board may consider; www.bclaws.ca
  • Section 154 (2) lists two factors the Board must consider in a rent review that comes before it, i.e. the change in the value of money and the change in the value of land. www.bclaws.ca/civix