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Permalink Reply by Curtis on June 24, 2008 at 8:06

No actual knowledge of what it means, but i am guessing that it means the wells are drilled and ready to produce, just waitng on pipeline/infrastructure to be completed so the Gas can be transported and sold...would also like to know a definite answer myself, so will be keeping an eye on this post. Thanks

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Permalink Reply by Greyshades on June 25, 2008 at 0:32

I agree with what CaddoVisitor says. Wells cost money to drill and complete, so an operator doesn't necessarily want to just plug a well when it stops producing. They can use that wellbore to try and develop different depths. Also, they may be waiting to rework the well to restore production from the previously-producing depth.

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Permalink Reply by Sheila C on June 26, 2008 at 2:29

How long can those wells be left out of production?

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Permalink Reply by Lerret on June 26, 2008 at 3:02

Probably means they think there is other potential behind pipe or they think they can convert it to a disposal well or waterflood well (s).

If the lease is held by other production then the site can be held indefinately unless they have a Pugh clause or similar

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Permalink Reply by Dion Warr, CPL on August 21, 2008 at 3:05

B. Lassie:

"Shut-in productive - Future Utility (Well Status Code 33) means just that. The well is supposedly able to be produced, but is not producing, but could be used for something later. Practically, what does this mean? It could mean most anything, from "Company A made a well, but is waiting on pipeline" to "Company A made a well, but is going to make better from this well over there, for now, I'll just keep this well 'on the ready'" to "Company A thought they might have made a well (or had a well) at one time, but shut it in umpteen years ago and have yet to do anything with it".

Each situation described above describes a completely different set of circumstances, and, depending on the lease, and the activity surrounding the well in question, could mean something entirely different. If the well is shut-in because there is no market or availability to get to market (either no pipeline tie-in or no capacity on the pipeline), the operator could very well pay shut-in payments (couched in the lease as a shut-in rental or as a shut-in royalty) to hold the lease until such time as things open up (either the tie-in is completed or capacity on the pipeline becomes available). If there are other producing wells which hold your lease in earnest, then Company A can simply hold the wells shut-in until it becomes in their interest to open them up. If the well has been listed as shut-in productive for many years, it could be that these wells are not holding a lease, and it is just a matter of bringing the issue to the attention of Conservation and having them investigate and possibly give notice to the operator of record that they need to properly plug and abandon the well.

There are over 240,000 wells in the well files (counting active, plugged, and SWD), and sometimes Conservation cannot keep up with all of them, so sometimes extended shut-ins do escape their immediate attention.

As to your situation, the two wells to which you refer are actually each one of two separate wellbores having dual completions (meaning one serial number refers to a productive well set capable of separately producing from one of two intervals, and the another serial number is assigned to the other possible producible zone). Let's take them one at a time:

The Barberousse well is completed to two separate zones: Barberousse #1 (SN 224052) was spudded March 24, 2000. It was permitted and drilled to the Lower Cotton Valley, but completed to the Hudson formation (lower portion of the Paluxy); it was shut-in as of 4/30/2002. Its dual completion, the Barberousse #1-D (SN 224959) was originally completed to the Lower Hosston interval, but was recompleted to the Lower Paluxy B and Mooringsport A intervals on April 20, 2002. It is currently producing gas.

The Moreland well was spudded June 23, 2001. It was originally destined to be completed to two separate zones: Moreland #1 (SN 225772) was permitted and drilled to the Lower Cotton Valley, but appears to have been initially perforated at the Lower Paluxy B sand. It would further appear that when permission to downhole combine the L Paluxy B and Mooringsport A was granted under Order 457-5 (eff. 12/11/2001), the well was converted to a single completion under the serial number of the dual completion, the Moreland #1-D (SN 224959). Thus, the 1-D, originally permitted to only the Lower Paluxy B interval, became the only completion in the wellbore, and the #1 is listed as "reverted to single completion (Code 22). It is currently shut-in productive (Code 33), but it would appear that any lands located within the S/2 NE/4 or N/2 SE/4 would be held by the Barberousse.

To round out production, the two productive L HOSS SUH wells would serve to hold anything located within the West Half of the Section (which is pooled within said unit).

If your land is located anywhere else in the section, you would need to look at adjacent sections for production (as units do bleed over section lines in Minden Field

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Permalink Reply by Dion Warr, CPL on August 21, 2008 at 3:13

), or you may need to look into your lease (if you have no Pugh clause, any portion of your leased property lying in a productive unit will hold all of you leased property by production).

Hope this "pro bono" work helps (I usually charge for mineral history work) in your determination. If your land lies outside the units indicated (ie., your land is located either in the N/2 NE/4 or S/2 SE/4), let me know.

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Permalink Reply by Bayou Lassie B2, 20-19N-8W (1997 HBP) on August 21, 2008 at 9:15

Dion Warr,

Thank you for your time to explain what "Shut-In Production-
Future Utility" means.

If the Haynesville Shale news had never happened, we would have
never taken the interest in what is going on with our lease in this
section. The little royalty that we get every month is just deposited
in the bank with little questioning, trusting the oil/gas company
to be honest with payments/upkeep on well/wells and their plans
for the lease.

With our area already in production with no Pugh clause, just the
standard Bath form lease/1997, we will watch what is happening
with other HBP areas in DeSota, Caddo & Bossier areas.

Thank you again for taking your time to answer my question.

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Permalink Reply by Dion Warr, CPL on August 21, 2008 at 19:08

My pleasure.

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Permalink Reply by Mom A1 on August 22, 2008 at 1:15

When a O&G company plugs a well, do they normally use the "shut in production-future utility" scenario to hold the well? I was under the assumption that if a well is capped/plugged, then the landowner is released from the contract.

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Permalink Reply by Dion Warr, CPL on August 22, 2008 at 1:54

Mom:

In many situations, Well Status Code 33 simply reflects the shut-in status, and is not used to 'hold the well' for an indefinite period of time. In the case of the Moreland well cited above, the operator could elect from the Barberousse or the Moreland or both; for whatever reason it is more advantageous to produce from the former, and not the latter, at this time.

However, in some situations, "shut-in prod. / FU" status is in fact a precursor to the well being plugged. Sometimes an operator doesn't want to 'let the well go', or may be of honest belief that future operations effected at some other time may allow for future production.

Technically, the lease maintenance issues are in fact different from the well status. The main questions to be answered in most cases as to whether the contract is maintained usually revolve around production in paying quantities (or lack thereof), and whether the lease has been maintained by other means if drilling and/or production does not appear to have maintained the lease. This has very little to do with the well status at all, in many cases, but a properly maintained well file and well reporting can certainly put some doubts to rest.

Checking SONRIS for well permits, well status and production is a good method, as well as checking the well files. Sometimes, an inquiry at the district office level is important (particularly as it pertains to confirming operations on wells that are non-productive), as the lease may be maintained by continuous good-faith operations in the absence of production. The bottom line here is that as a Lessor, one should keep oneself abreast as to the current activities on or about one's lease (be it production, drilling, operations, etc.) and how these events serve to continue the lease, or whether or not one is due a release of some or all of the rights conferred in the Lease. This information allows you to ask the right questions of your lessee and/or operator.

As with any other type of business, most lessees and operators act in a sense of honesty, good faith, and fair dealing, but there are also the 'bad apples' who will attempt to use their knowledge and resources in an attempt to delay the timely release of their leasehold rights, particularly with uninitiated or unsophisticated mineral owners. If you find yourself over your head, you would do well to seek some learned counsel, either from an attorney or seasoned landman. If you fear that it may come down to possible litigation, always consult an attorney prior to 'tipping your hand'.

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Permalink Reply by Dion Warr, CPL on August 23, 2008 at 19:53

Mom:

Know O&G... yes.

Attorney... no.

Sounds like you have found some help since this post, though. Hope the (non-legal) advice helped, though...

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