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Permalink Reply by Skip Peel - Mineral Consultant on December 7, 2017 at 7:21

I visited with staff at the Shreveport District office of DNR/OOC.  They were very helpful.  I'll wait to hear more from them before commenting on the Range Weyerhaeuser 10-15 HC #1's lack of reported production.

I would like to address the SDM2G test procedure.  That is the initial production flow test for all wells.  The test period is 24 hours and operators do not flow for a shorter period and then extrapolate that to a 24 hour cumulative production total.  The well operator performs the test on their approved flow meter and the state field inspector is normally not present.  The inspector does however read the meter sometime relatively soon after the test to confirm the volumes produced in the first 24 hours of flow.  Modern digital flow meters can be used to read the flow for any period of time.  The field inspector records the first 24 hour flow volumes and compares them against the volume reported by the operator to confirm the accuracy.

In the case of an oil well, the SDM2G test may be run without a pipeline connection with liquids flowing to the tank battery and natural gas being vented.  In the case of a gas well, the well must be connected to a pipeline and venting is not allowed.

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Permalink Reply by Skip Peel - Mineral Consultant on December 7, 2017 at 8:43

There are several issues with the subject well.  In a discussion with the Shreveport staff I think we identified each and they are looking into the situation.  The DT-1 test is the semi-annual flow test.  The SDM2G is the missing initial production (IP) test that is associated with the fact that there is no reported production.  It has been determined that the well did indeed start production on 12/4/16 and has been producing continuously since.

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Permalink Reply by Skip Peel - Mineral Consultant on December 8, 2017 at 5:25

Re:  Range Weyerhaeuser 10-15 HC #1.  There is no reported production listed for this well in the SONRIS database because Range has not been issued an LUW Code which is required for reporting purposes.  The hold up on issuing an LUW code number is caused by errors in the "as drilled" unit survey plat submitted by Range.  The errors relate to differences in the total length of perforated lateral.  In addition to the inability to properly report production, this error has implications for the proper allocation of production volumes between the two drilling units.  The difference is relatively small but needs to be corrected in order for Range to be in compliance with the state and for mineral lessors to receive accurate royalty payments.  The OOC staff will review other Range wells that have not reported production in a timely manner to ascertain any problems and institute corrective actions.  Hopefully this will be corrected in the near future.

For any members who are royalty interests in Range wells, please let me know if you see your particular problem solved.  I know of additional Range wells in this situation and will check them periodically as I have time over the holidays.

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Permalink Reply by john goodday on December 8, 2017 at 8:07

So an operator can produce a well for over 368 days (with no end in sight) and not be subject to report production to the State of Louisiana because of a lack of LUW code assignment - due to a small error in a unit survey plat.  It almost sounds as though this loophole allows them to delay royalty payment for well past a year.   Am I missing something?

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Permalink Reply by Skip Peel - Mineral Consultant on December 8, 2017 at 11:19

To report production an operator must have an LUW number,  No number, no way to report.  Is this a deliberate attempt to avoid reporting or paying royalties?  I don't think so.  Range applied for a LUW number in what appears to be a timely manner.  OOC did not provide one owing to the "as drilled" well plat error.  When Range did not receive a LUW number, they did not follow up to remind OOC.  And OOC is short staffed and lag time for reviewing reports has increased.  At some point OOC found the error but I don't know if or when they notified Range. 

In order to accurately pay royalty, the "as drilled" perforated lateral length must be approved.  IMO, the problem here is an over worked, under staffed and under paid OOC Baton Rouge staff.  Numerous regulatory functions are taking longer than in the past and errors have become more common.  I do not blame the staff.  This is a result of constantly cutting funding to state agencies.  This a problem that is the fault of the legislature.  Many of them would like you to believe that the state has too many employees and/or employees are not diligent in performing their duties.  State government is in crisis but unless it affects someone personally, they can't grasp the extent of the problem.  

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