Oil and gas firms ask farmers for cheaper land lease rates

Some farmers who lease land to oil and gas companies are feeling pressured to reduce their rates and break contracts amid the downturn in the energy sector.

Advocacy groups tell landowners to resist pressure to give energy sector price breaks

With oil and gas prices in the doldrums, energy companies are looking to pay lower rent to the farmers and ranchers whose land they use for drilling. (Getty Images)

Some farmers who lease land to oil and gas companies are feeling pressured to reduce their rates and break contracts amid the downturn in the energy sector.

Contracts typically last five years and allow access to farmland for such things as pump jacks and oil wells. 

But in this economy, some companies are trying to cut their expenses by paying farmers less to use their property or end contracts prematurely.

Daniel Kozak, who farms near Mundare, about 85 kilometres east of Edmonton, rents land to an oil company for a well.

He says now that his five-year contract with the company is up, it's seeking a major reduction in rent.

"This needs to be addressed because the more and more this is taking place, the more and more the landowners are losing their surface rights and rights to their land," he said.

Both the Action Surface Rights group and the Farmers' Advocate Office of Alberta are advising farmers not to give in to pressure from oil and gas companies.

Many farmers have received letters from oil and gas companies they rent land to, asking them to lower the rent, says Merv Cradduck, who speaks for Action Surface Rights.

"You can call it a request, you can call it a threat," he said.

"In the rich times, they've made money hand over fist. There's absolutely no doubt about that and they didn't come to the farmer to renegotiate and feeling sorry him and thinking that he should have some money as well."

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