Pugh Clause
December 20, 2016 09:33 AM to All Senate Members
Circulated By
Senator Gene Yaw
R Senate District 23
Memo
In the near future, I plan to re-introduce legislation requiring a Pugh Clause for natural gas development. This legislation was Senate Bill 145 of last session. The Pugh Clause essentially defines what happens to the portion of the acreage a person leased that does not either contain a well or is not included within a producing petroleum pool or unit.
Under current law, if a landowner has 300 acres and only 20% of it is included in a unit, the company would be able to tie up the remaining 80% by production after the primary lease expires even though there is no production on the remaining acreage. My language would release any land covered by a lease but not included in the unit.
By introducing this legislation, we are no longer allowing gas companies the option of drilling on a small portion of a landowners’ property to provide themselves additional years to utilize land. This will create a fair process for the landowners to either:
Under current law, if a landowner has 300 acres and only 20% of it is included in a unit, the company would be able to tie up the remaining 80% by production after the primary lease expires even though there is no production on the remaining acreage. My language would release any land covered by a lease but not included in the unit.
By introducing this legislation, we are no longer allowing gas companies the option of drilling on a small portion of a landowners’ property to provide themselves additional years to utilize land. This will create a fair process for the landowners to either:
- Re-negotiate the lease
- Allow the company to renew the lease under previous terms
- Lease to another company in the area
Legislation
Document - Introduced as SB 141
Pugh Clause
December 20, 2016 09:33 AM to All Senate Members
Circulated By
YAW
Memo
In the near future, I plan to re-introduce legislation requiring a Pugh Clause for natural gas development. This legislation was Senate Bill 145 of last session. The Pugh Clause essentially defines what happens to the portion of the acreage a person leased that does not either contain a well or is not included within a producing petroleum pool or unit.
Under current law, if a landowner has 300 acres and only 20% of it is included in a unit, the company would be able to tie up the remaining 80% by production after the primary lease expires even though there is no production on the remaining acreage. My language would release any land covered by a lease but not included in the unit.
By introducing this legislation, we are no longer allowing gas companies the option of drilling on a small portion of a landowners’ property to provide themselves additional years to utilize land. This will create a fair process for the landowners to either:
Under current law, if a landowner has 300 acres and only 20% of it is included in a unit, the company would be able to tie up the remaining 80% by production after the primary lease expires even though there is no production on the remaining acreage. My language would release any land covered by a lease but not included in the unit.
By introducing this legislation, we are no longer allowing gas companies the option of drilling on a small portion of a landowners’ property to provide themselves additional years to utilize land. This will create a fair process for the landowners to either:
- Re-negotiate the lease
- Allow the company to renew the lease under previous terms
- Lease to another company in the area
Document
Introduced as SB 141
Generated 05/15/2025 04:14 PM