To FHOA Members
Recently, Mark Johansson, a FHOA member who lives in Victoria and owns mineral rights near the Town of Blackfalds, sent a letter to Premier Redford copied to Energy Minister McQueen, several newspapers and myself (to read Mark’s letter click here).
In his own words Mark has addressed an issue which the Freehold Owners Association has repeatedly raised with the Alberta Government.
The vast majority of the tens of thousands of individuals who own freehold mineral rights in Alberta are like Mark - ordinary citizens with no training or experience in oil and gas technical or legal matters who have great difficulty understanding the complex lease agreements which land agents present to them for signature or the operations of the energy companies that sometimes develop their mineral rights or mineral rights on adjoining lands. For the past 15 years, FHOA’s officers have filled a glaring need by providing leasing and technical oil and gas advice to freehold mineral owners on a volunteer basis. But neither I nor David Speirs have discovered the fountain of youth. When we retire it is unlikely that FHOA will be able to find anyone with the necessary expertise to replace us on a volunteer basis. Without some modicum of ongoing Government financial support, FHOA cannot afford to hire replacement officers and is unlikely to survive our retirement.
In September of 2011, prior to her election, Premier Redford pledged to support not for profit associations such as FHOA. “Tens of thousands of Albertans of all ages depend on nonprofits and while these service providers receive well-deserved respect for their outstanding track records, the funding and support they need to excel is too often absent,” said Ms. Redford on her website. “It’s time for a change.”
If FHOA has helped you or you think FHOA provides a needed service, I strongly urge you to do what Mark has done – write a letter in your own words to the Premier copied to Energy Minister McQueen urging the Alberta Government to provide financial support to the Freehold Owners Association.
Else Pedersen, President
FHOA’s principle objective is to promote fairer treatment for freehold mineral owners. Since 1999, the Association has pursued this objective based entirely on the efforts of a few volunteers. Although our volunteers have accomplished a great deal, much more remains to be done.
The difficulties FHOA has encountered in achieving fair treatment for freeholders pale in comparison to the problems recently faced by the citizens of Tunisia, Egypt and Libya in overthrowing their despotic leaders. The interactions of these citizens using social media clearly played a significant role in the ‘Arab Spring’. Going forward, FHOA will strive to provide opportunities for our membership to interact in an effort to achieve greater fairness. The first step in this process is the Association’s ‘Lease Initiative’.
This initiative is predicated on two factors:
- the vast majority of the questions that freeholders direct to FHOA’s help line (see “Contact Us”) involve the freeholder’s lease agreement;
- prices paid by the energy industry for Government-owned Crown leases have historically been substantially higher than the prices paid for technically equivalent freehold leases.
The first part of the Lease Initiative involves a request to all FHOA members to send the Association a copy of their lease agreement. The second part involves a request for members who send in their leases to sign a consent form which allows FHOA to publish the terms and conditions in these leases on a map on our website which is only available to members.
Providing FHOA with a copy of your lease agreement will help you. Upon receipt, we will scan the document and include it in our confidential membership database under your name. Having access to your lease agreement in combination with our technical database will allow us to provide you with more meaningful responses to any questions you may have regarding your mineral rights.
Consenting to have the terms of your lease posted on the members-only portion of our website will help other freehold owners. One of the reasons for the discrepancy between the prices paid for Crown leases and the prices paid for freehold leases is that the Crown sells its leases by sealed tender at auctions held on a regular basis. Another reason is that Crown lease information is publicly available. An energy company bidding on a particular Crown lease knows the price paid for any Crown in the immediate area and also knows that other energy companies have the same information and may be interested in the same parcel. This creates competition and drives up the prices paid for Crown mineral rights. Interestingly, the Crown does not publish all of the bids received for any particular parcel, it only publishes the successful bid. In result, the successful bidder never knows how much more it paid than was necessary.
FHOA’s Lease Initiative will emulate the Crown process as much as possible. When a member receives an offer to lease, he or she can go to the members-only map on FHOA’s website and determine what terms and conditions have been negotiated by other freeholders in the area. Concurrently, the member can go to the publicly available map on our website and post the fact that he or she has an offer (revealing the terms of the offer will be at the discretion of the member). If enough members ‘buy into’ this initiative, it will result in increased competition for freehold mineral leases and, over time, the discrepancy between the prices paid for Crown and freehold leases will narrow.
At this time, FHOA’s maps cover only Alberta but with sufficient funds and interest the Association will expand its map coverage to include Saskatchewan and Manitoba.
FHOA urges all members to send in their leases and for Alberta mineral owners to sign the consent form (see “Lease Information Consent Form”) and help us to help you and other freehold owners.
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