The Restoration Clause

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The Restoration Clause

The typical industry lease form does not address restoration of the premises.  Restoration of the premises is an important issue.  It is likely to become more important in the coming years as environmental concerns become more widespread.  The following restoration clause has been accepted by oil companies in Alabama oil and gas leases:

Restoration. Lessee agrees, within six (6) months from the permanent cessation of production in Paying Quantities or abandonment of each well drilled by it, to restore the surface of the lands constituting that Production Unit to the same condition as they were prior to the drilling of said well.  Such surface restoration shall include, without limitation, the removal from the Production Unit and proper disposal of all drilling mud, drilling fluids, and all other substances extracted from or brought onto the production area in connection with Lessee’s operations and activities thereon, as well as the cleaning, filling, leveling and reforestation of the Production Unit, in accordance with all applicable federal, state, and local laws and the rules and regulations of any governmental authority or agency having jurisdiction thereover, including but not limited to the Alabama State Oil and Gas Board or other competent regulatory board or agency, and the Alabama state administrative agency responsible for environmental management.  Lessee shall complete such restoration within sixty (60) days of commencement thereof.  Lessee shall remove all fences, equipment, machinery, tanks, settlement ponds, pipes and all other structures and appurtenances, including concrete or other foundations or property of any kind or character, used in connection with one or more Production Units for which production in Paying Quantities has ceased permanently and that are not being used in connection with other Production Units that are producing in Paying Quantities as soon as possible after the cessation of such operations but no later than six (6) months after the permanent cessation of production in Paying Quantities from such Production Unit or abandonment of such Production Unit.

Copyright 2011 by Edward G, Hawkins. All rights reserved.