Replies to This Discussion

Permalink Reply by JOHN on October 6, 2008 at 9:26

You set up the Unit, then you designate a unit well. Drill and confirm the Gas is there, then add your Alternate Unit Wells ect. See, you are getting upset over the thought that a unit is a one well deal. A unit should be looked at like a Motor, one spark plug will run it but you won't get what you expect out of it. Put an additional 7 plugs in and it will run as it should. It is not in the Gas Companies best interest to just run it chugging along, there is too much spent to get the gas to market. Pinelines, production Facilities, ect. If you had to spend the money it cost to get one well up and running, would you not drill additional wells now that you have the pipeline and facilities in place? John

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Permalink Reply by Grillin' - MmmMmm on October 6, 2008 at 10:43

The key to unit size is that with that ONE WELL a company can hold ALL of the unit acreage as HBP and then come back later and drill the other wells. It makes a huge difference when a company has leased a lot of acreage and sees the need to reduce their level of capital spending so that they hold as much acreage as possible with the fewest number of wells and limit the amount of acreage they will lose when the primary term expires (and they need to re-pay bonuses).

Whew...6 lines of type with only two periods...that's one heck of a run-on sentence!

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Permalink Reply by Grillin' - MmmMmm on October 6, 2008 at 10:51

Thanks! I think! If by pellucid you mean clear, then thanks! Engineers aren't always known for our vocabulary, just number crunching!

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Permalink Reply by Snake Stewart on October 6, 2008 at 13:01

M....k and de nada,

I have to agree wholeheartedly with you 2. Not that the other posters dont make good points but at this early stage of the game it isnt about conservation and fully draining a section with one well. The market isnt here yet to sustain huge increases in production.But their market cant stand re-leasing people that may have been mowed over earlier on in this play either.It is about the almighty dollar and nothing else....HBP, as little production as possible to still maintain a profit yet hold reserves until price increases and a greater market demand ie N/G vehicles etc.

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Permalink Reply by Grice on October 6, 2008 at 9:36

The commissioner may find that one well would be sufficient to drain more than 920 acres. However, since Louisiana is divided into 640 acre sections, it is reasonable to consider the drainage of that 640 acres to be appropriate. Just because most applications only consider a 640 acre section, that should not be evident of the limits in which a well is capable.

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Permalink Reply by Grillin' - MmmMmm on October 6, 2008 at 10:45

There is no scientific/engineering/geologic reason for a 640 acre unit. It is an administrative issue. If the commissioner really wanted to look at proper drainage, these units would be much much smaller. But things would also be much more complicated and it would cost all of us money!

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Permalink Reply by mary on October 18, 2008 at 5:51

The only one on the losing end here is the interest holder. There is no scientific/geologic reason for 640 acres or greater but there is scientific/geologic reason for smaller units in HS as has been determined by drilling in Texas.

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Permalink Reply by Grice on October 6, 2008 at 11:03

Louisiana law stipulates that a (state) lease can not contain more than 640 acres. It is for that reason, 640 acres is used as a standard. Again, it does not indicate that 640 acres is the maximum drainage area.

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Permalink Reply by mary on October 8, 2008 at 4:38

Where did you find this state law?

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Permalink Reply by Grice on October 8, 2008 at 4:49

Louisiana code title 41 section 1216. You might also note title 30 section 148 subpart 6.

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Permalink Reply by mary on October 8, 2008 at 4:52

Thanks

Permalink Reply by The_Baron on October 20, 2008 at 9:19

What is your source???

My copy of the LA code shows title 41, sec. 1216 to relate to Restrictions of area, number, and transfer of leases; subleases

and title 30, section 148, part 6 to be Restrictions on area; term; rental for LEASES, not units.

You might want to look at the units in South LA (specifically the geologic units). These units anr not only not based on sections, but may look like an ameoba. They are also changed periodically based on new information from wells as they are drilled.

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