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79 Term Description Airport Sponsor The entity that is legally responsible for the management and operation of an airport, including the fulfillment of the requirements of laws and regulations related thereto. Bonus The amount paid to the lessor as consideration for his or her execution of the lease. The amount of the bonus is almost never set forth in the lease itself. It is paid when the lease is signed by the lessor and delivered to the lessee. Delay Rental Consideration paid to the lessor by the lessee to extend the terms of an oil and gas lease in the absence of operations or production that is contractually required to hold the lease. This consideration is usually required to be paid on or before the anniversary date of the oil and gas lease during its primary term and typically extends the lease for an additional year. Nonpayment of the delay rental in the absence of production or commencement of operations will result in abandonment of the lease after its primary term has expired. Downstream Refining of petroleum crude oil and the processing and purifying of raw natural gas, as well as the marketing and distribu- tion of products derived from crude oil and natural gas. Eminent Domain The right of a government or its agent to expropriate private property for public use, with payment of compensation. FAA Form 7460-1 Notice of Proposed Construction or Alteration. ⢠Any construction or alteration exceeding 200 ft above ground level. ⢠Any construction or alteration that exceeds an imaginary surface extending outward and upward at any of the following slopes: â 100 to 1 for a directional distance of 20,000 ft from the nearest point of the nearest runway of each airport described in 14 CFR 77.9(d), with its longest runway more than 3,200 ft in actual length, excluding heliports. â 50 to 1 for a directional distance of 10,000 ft from the nearest point of the nearest runway of each airport described in 14 CFR 77.9(d), with its longest runway no more than 3,200 ft in actual length, excluding heliports. â 25 to 1 for a directional distance of 5,000 ft from the nearest point of the nearest landing and takeoff area of each heliport described in 14 CFR 77.9(d). â Any highway, railroad, or other traverse way for mobile objects of a height which, if adjusted upward as defined in 14 CFR 77.9(c), would exceed a standard of 14 CFR 77.9 (a) or (b). â Any construction or alteration located on an airport described in 14 CFR 77.9(d). FAA Order 5050.4b National Environmental Policy Act (NEPA) Implementing Instructions for Airport Actions Federally Obligated Airport Airport sponsors agree to certain obligations when they accept federal grant funds or federal property transfers for airport purposes. The FAA enforces these obligations through its Airport Compliance Program. Good Title A title that is legally valid or effective and thus marketable. Not merely a title that is valid in fact, but a marketable title that can be sold again to a reasonable purchaser or mortgaged to a person of reasonable prudence as security for the loan of money. Hydraulic Fracturing Also called fracking, the process of drilling down into the earth and then directing a high-pressure water mixture at the rock to release the gas inside. Water, sand, and chemicals are injected into the rock at high pressure, which allows the gas to flow out to the head of the well. Midstream Transportation (by pipeline, rail, barge, tanker, or truck), storage, and wholesale marketing of crude or refined petroleum products. Mineral Deposit A concentration of naturally occurring solid, liquid, or gaseous material, in or on the Earthâs crust in such form and amount that its extraction and conversion into useful materials or items are profitable now or may be so in the future. Min- eral resources are nonrenewable and include metals (for example, iron, copper, and aluminum) and nonmetals (for exam- ple, salt, gypsum, clay, sand, and phosphates). Mineral Estate Ownership of mineral rights (more properly, mineral interest) is an estate in real property. Technically, it is known as a mineral estate, although it is often referred to as mineral rights. It is the right of the owner to exploit, mine, or produce any or all of the minerals lying below the surface of the property. Mineral Reserves Supplies known to exist that are economically and technologically recoverable. Netback The revenue after all costs associated with bringing one unit of oil or gas to the market. These costs include operating costs (production, transportation, and so on) and royalties paid. Part 16 Complaint Title 14 Code of Federal Regulations Part 16, Rules of Practice for Federally Assisted Airport Enforcement Proceedings. Anyone who is concerned about an airport's compliance with grant assurances may file a written Part 16 complaint with the FAA. Part 77 Federal Regulation 49 CFR Part 77 establishes standards and notification requirements for objects that affect navigable airspace. Part 77 evaluates the effect of the construction or alteration on operating procedures, determines the potential hazardous effect of the proposed construction or alterations on air navigation, identifies mitigating measures to enhance safe air navigation, and charts new manmade or natural objects. Primary Term The period of time during which an oil and gas lease will be in effect in the absence of production, drilling, or other opera- tions specified by the lease. The oil and gas lease can be extended past the primary term by production in paying quanti- ties, drilling, operations, or the payment of shut-in royalties specified by the lease. GLOSSARY
80 Term Description Pugh Clause A clause that can be added to an oil or gas lease to limit the rights of the lessee to hold only particular depths or amounts of the leased property. There are two kinds of Pugh clauses: vertical and horizontal. The vertical Pugh clause operates to release all depths below the deepest producing zone, typically at the end of the pri- mary term or after cessation of continuous drilling operations, if the lease provides for it. It may also release all depths except the producing zone or any other zone(s) to which the lessor and the lessee may agree. The horizontal Pugh clause operates to release all lands not included in a pooled unit, typically at the end of the primary term or after cessation of continuous drilling operations, if the lease provides for it. The horizontal Pugh clause releases land at the surface as to all depths. Royalty A percentage share of production or the value derived from production, paid from a producing well. Royalty Interests A royalty interest owner has the benefit of sharing in production revenue without exposure to the capital costs, operating expenses, or environmental liabilities associated with oil and gas production. Royalty interests have significantly higher netbacks with much less risk. Secondary Recovery The most common secondary recovery techniques are gas injection and water flooding. Normally, gas is injected into the gas cap and water is injected into the production zone to sweep oil from the reservoir. A pressure-maintenance program can begin during the primary recovery stage, but it is a form of enhanced recovery. Secondary Term The term of an oil and gas lease in which the lease is held in force after expiration of the primary term. Production, opera- tions, continuous drilling, or shut-in royalty payments are often used to extend an oil and gas lease into a secondary term. Shut-In Royalty A payment stipulated in the oil and gas lease that royalty owners receive in lieu of actual production when a gas well is shut in. Shut-In Well A well that is capable of producing but is not presently producing. Reasons for a shut-in well may be a lack of a suitable market, lack of facilities to produce the product, regulatory issues, or other circumstances defined in the shut-in provisions of the oil and gas lease. Unconventional Reservoir Any reservoir that requires special recovery operations outside the conventional operating practices. Unconventional res- ervoirs include reservoirs such as tight-gas sands, gas and oil shales, coalbed methane, heavy oil and tar sands, and gas- hydrate deposits. Under-the-Fence Lease A lease with no surface access, development, or impact on airport /aeronautical use. This type of lease is used for direc- tional drilling on airport property that originates at a well located off airport property. Upstream Exploration, drilling, and production sector. Wellhead The component at the surface of an oil or gas well that provides the structural and pressure-containing interface for the drilling and production equipment. Working Interest A participating or lessee interest in land. Working interest owners pay capital expenses, operating costs, operating expenses, and royalties to the mineral estate title owner. They incur all the costs and liabilities, but receive only part of the revenue. The working interest owner (lessee) drills for the oil and gas. If the drilling is successful, the owner receives a share of the revenues based on that production. If the drilling is unsuccessful, the working interest owner receives no reve- nues but is responsible for 100% of the costs of drilling and subsequently plugging an abandoned well.
