Encana Going with Cross Unit Laterals for Optimum Drainage

Per Encana this will allow for drainage at section line areas and will allow for future 10,000' laterals.  Very interesting development in my opinion.

Jay

 

 

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Permalink Reply by Skip Peel - Mineral Consultant on August 3, 2011 at 2:11
Jay, some mineral owners may have suspicions and fears about dilution or operator accountability for proportional allocation of production to royalty interests with these cross unit laterals.  As a mineral owner, do you see any reason for those concerns?
Permalink Reply by FXEF on August 3, 2011 at 7:57

Skip,

 

The cross unit laterals (alt. wells) would need to be pooled into a 1920 acre drilling unit and the retention wells remain pooled in the existing 640 acre units. That's about the only way to have true accountability.  

Permalink Reply by kittycatmama on August 3, 2011 at 2:30
Jay, have they permitted one of these yet? If so, what Township & Range? Didn't Encana get the go ahead to have longer laterals in Red River or Bossier Parish because of a fault
Permalink Reply by Les Bamburg on August 3, 2011 at 3:30
KCM, none of these wells have yet been permitted.  The location is Sections 6, 7 & 18 in T14N-R10W (see attached).  These do not appear to be fault related.  You may be thinking of EnCana's alternate wells in Section 12/13 of T13N-R10W which do seem to be fault related.
Attachments:
Permalink Reply by kittycatmama on August 3, 2011 at 11:45
Les, you are right. I was thinking of those alternate wells; however, isn't that what got Encana the  DNR approval to make larger units with longer laterals--from those areas with faults? Are they utilizing that approval as their precedent to apply for larger units & longer laterals
Permalink Reply by Les Bamburg on August 3, 2011 at 14:00
KCM, the two circumstances appear to be different and unrelated.  The extended lateral wells for the Woodwardville units would recover additional gas.  I believe that would be justification and it could be the mineral owners in these units support this proposal. 
Permalink Reply by The_Baron on August 3, 2011 at 3:38
I think their strategy is simple... drill more acres with less wells and therefore reduce costs.
Permalink Reply by Skip Peel - Mineral Consultant on August 3, 2011 at 3:44
Permalink Reply by buckmaster on August 3, 2011 at 6:54
I think there was one landowner that owned most of the property in these sections . that may have something to do with their decision
Permalink Reply by Kat Bloomfield on August 4, 2011 at 3:20

Oh, I think not just mineral owners may be concerned if the above becomes the norm.  I imagine a few lawyers are sitting or have already sat up late at night ruminating on this.  Indeed, some mineral leases floated around when Haynesville got hot included clauses that actually granted the lessee permission to drill under one's land to produce from a unit in which that mineral owner wouldn't participate.

I upload the attached merely for informational purposes.  It doesn't really address or explain Louisiana law and focuses primarily on Texas and a few other states.  Nonetheless, the history and the issues raised are interesting.

Attachments:
Permalink Reply by Kat Bloomfield on August 4, 2011 at 3:24

Uploaded is a newsletter circulated about shale play litigation

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Permalink Reply by Kat Bloomfield on August 4, 2011 at 3:46

I do not know but my money says, no.  And, further, I would venture to say they're not even "chemical engineers . . . ."!!!

But, laws of trespass typically aren't tied to economic recoveries.  Whereas, Capitalism is.  And, as we know, the two often do not overlap.  If it's easier and more economic and even safer to kill the deer over on C's land from A's land, shooting across B's land, why can't I just sit on A's land, shoot across B's land, and kill the deer on C's land?

In the above cross-unit horizontals, I would hazard to bet that these issues all were resolved and permissions acquired.  Were the LOC simply to authorize it, without any such provision in the lease, or some permission from the land and mineral owners, there could be a problem.  I truly doubt that's the case

 

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