Facts About Non-Producing Leases
According to the American Petroleum Industry:
When oil and natural gas companies purchase a lease, it is because of the possibility the lease may yield enough oil or natural gas to benefit consumers and become economically viable. A lease is simply a block on a map and until a company actually completes the exploration process, there is no guarantee that it contains any resources.
The process takes considerable time. It involves geological exploration, data analysis and a series of government permitting steps, and that's before the industry even finds anything viable. If we do, more time-consuming steps follow before the first production of either oil or natural gas.
If a lease doesn’t produce energy, a company starts the process over again with a new lease – yet continues to pay rent on the original, non-producing plot of land. And if this land fails to develop natural resources within a certain time frame, it is returned to the federal government, forfeiting industry costs and investments.
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