As many landowners in North Dakota and surrounding states are recognizing, wind development has not gone away, and seems to be ramping up recently. I have heard from several landowners who have been approached in recent weeks and months with wind development leases, and I’d like to discuss a few important issues related to these.
North Dakota has some strong statutory protections for landowners, including a required cover page for wind leases. This cover page must state that the developer will give you enough time to study and understand the agreement, encourage you to hire a lawyer to explain the agreement, remind you that you may talk with your neighbors about the wind project and find out if they also received a proposed contract, and let you know that you and your neighbors may choose to hire the same attorney to review the agreement and negotiate for you. In my experience, these statements are often the opposite of what a landman would like to tell you, so it’s very beneficial for landowners (although most of you likely know these things already).
I have also often advocated neighbors getting together when faced with energy development projects, whether it’s a pipeline or a wind farm. You not only gain leverage, but you can reduce everyone’s expense if you’re sharing a lawyer. Our firm has had significant success working with groups of landowners in this way. I would also like discuss a new idea for landowners and wind developers, but I need to give credit where it is due, to Brad Crabtree, VP of the Great Plains Institute. In the oilfield, most people are familiar with pooling. The idea is fairly simple: Prior to pooling, if you had oil under your land and drilled a well, it would likely drain oil from under your neighbor’s land as well. Your neighbor’s only recourse was to drill his own well. Then you would start drilling additional wells to capture as much oil as you could. To make oil production more efficient, we created pooling, which is a process by which the “pool” of oil is identified, and then everyone shares in the production from the most efficient number of wells proportionately based on their ownership.
This same concept should be applied to wind development. I have seen too many landowners sitting with wind turbines on the borders of their property, for which they receive no payments, simply because they had the grit to negotiate with the wind developer and the developer simply skipped over their property. The wind is a shared resource for the surface owners in the area, just as oil is underground, and it should be treated accordingly.
My suggestion to landowners is to band together when a wind project is coming your way. You can work with the developer to identify the footprint of the project, and then create a process where payments for landowners are apportioned fairly to all landowners who are dealing with the impacts of the development. Certainly, a landowner with a butte and high winds on his property should get more than a landowner who simply has those turbines on the border of his property, but the point is that everyone will be fairly compensated for the project as a whole.
Wind leases in particular have many traps for the unwary, and there are certain items that landowners must address, such as ensuring no liens are placed on the property should the project fail. And make no mistake, landowners, energy developers behave like energy developers, regardless of the resource being developed.
(Posted by Derrick Braaten)