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Coalbed Methane Joint Operating Agreements

Marla J. Williams, Coalbed Gas Development (1992)

Coalbed methane development presents a unique challenge to engineers and others involved directly in exploration and production operations—but the challenge doesn't end, or begin, there. The basic documents that the landman and lawyer often take for granted must also be re-thought, for many of the assumptions on which these documents are based may not apply readily to coalbed methane operations. This paper will undertake such a re-thinking with respect to one of the most widely employed of these basic documents—the joint operating agreement, or “JOA”.

Coalbed methane operations vary from east to west in ways that have practical and legal implications for the party attempting to draft a JOA. For example, joint operations conducted to date in areas such as the Black Warrior Basin typically involve large tracts of fee land owned by a [12-2] comparatively small number of parties. In western areas, such as the San Juan Basin, development often involves large tracts of federal land where issues of ownership are not a matter of major concern and where the coal strata from which the gas is produced are typically deep enough to make coal mining operations impractical.2 In those instances where title is clear, the coal seam is uneconomic for coal development and there is no historic dominance of the coal estate, a standard form JOA with only a few of the modifications discussed