Lease Addendum for Water Related Issues
(Oil & Gas)

Summary

This template is an addendum to an oil and gas lease and addresses water related issues. Specifically, this addendum is concerned with the use of water during drilling operations, its disposal, and damage to and use of water wells during drilling operations. This template includes practical guidance, drafting notes, and optional clauses. Water is a vital natural resource and its protection gains importance as population density increases. State and federal regulators often struggle to find an appropriate balance between protecting water as a natural resource, property owners' correlative water rights, and allowing the sufficient use of water for oil and gas exploration. Fracking, which has become standard in the oil and gas exploration industry, utilizes millions of gallons of water, and has accelerated both litigation and legislation surrounding water use. This is especially true in states where fracking liquids are disposed of underground through disposal wells. This addendum clarifies and memorializes the parties' rights and obligations regarding water-related issues that may arise when negotiating an oil and gas lease. It attempts to resolve outstanding issues that result from distinctions among the various types of water encountered in the oil and gas exploration process. For more on water and water and property conservation issues associated with the oil and gas exploration process, see Oil and Gas Conservation and Leasing State Law Survey. For additional information on negotiating points within the oil and gas leasing process, and how landowners can protect their water rights and property interests, see Upstream Oil & Gas Lease Transactions as well as Oil & Gas Lease Agreement Drafting and Negotiation for the Landowner.