Replies to This Discussion

Permalink Reply by John Denison on March 2, 2020 at 5:47

Hi Chuck. In the +/- twelve years since natgas activity in deSoto Parish increased, I have never been notified of drilling activity by an exploration company. In my experience, they don't send drilling notices to royalty owners until wells are complete, then you'll likely get a Division Order to sign. Per my O&G attorney, I never sign them. Louisiana law doesn't require it.    

• ▶ Reply

Permalink Reply by cca on March 2, 2020 at 7:36

Thanks John for the reply, I guess the notices I've been getting were for a public meeting for an application for permit to drill.  I don't live in DeSoto parish, so these notices were helpful to me, and they show plats with the proposed wells.  I used to get them for proposed wells anywhere in the vicinity, not necessarily that close to our land.  I just found it surprising that these wells are being drilled and we didn't have any notice.  

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on March 2, 2020 at 10:30

Notice letters are not well permits.  Notice is required to all surface and mineral owners of record when there is an application for creating a drilling unit, dissolving a drilling unit or requesting permission for the spacing of alternate unit wells.  Once that application is approved and becomes a Field Order, it is effective indefinitely until such time as it may be dissolved by a subsequent application/field order.  All wells must meet spacing/set back requirements.  In the case of horizontal wells, none may be closer than 330' from an east or west unit boundary and no closer than 660' from an adjacent horizontal lateral.  It is common for operators of Haynesville Shale units to apply for a group of horizontal wells with no intention to drill them in the near term or even to drill then all as one group.  Once they have the spacing approval they can get a "permit to drill" whenever they want, for however as many of the approved wells as they want.  There is no notice required for the application or the awarding of a permit to drill.  You don't have to drive by the land in question, you merely have to periodically check for well permits in SONRIS.

LDNR Office of Conservation

All Permitted Wells

Enter "From Date" (MM/DD/YYYY):

Enter "To Date" (MM/DD/YYYY):

http://sonlite.dnr.state.la.us/sundown/cart_prod/cart_con_allpmtwels1

• ▶ Reply

Permalink Reply by cca on March 3, 2020 at 3:04

Thanks Skip, that clears it up, I assume based on your comments, the notice for application for the drilling unit may have come in the past .  I did find the well paths on sonris, I need to visit it a bit more often. 

Thanks for your input,

Chuck

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on March 3, 2020 at 3:17

You're welcome.  The sequence for development currently goes something like this.  A company applies to the Commissioner of Conservation to form a drilling and production unit.  In the case of an application anticipating horizontal development certain boiler plate language is included regarding how wells will be drilled and spaced.  The application may or may not include the path for the first well, the unit well.  For the Haynesville Shale this largely occurred from 2008 to 2011. That unit well must next receive a permit to drill from the state.  When the unit operator wishes to drill additional wells, they apply for alternate unit wells and provide a plat that shows the lateral locations, or "slots" within the unit boundary where the wells will be located. Like the original application to form the unit, an application for alternate unit wells requires a notice to Interested Parties and the offer of a local meeting.  Upon approval that application allows the unit operator to request a permit to drill for any number of the wells approved as alternates.  Those permits to drill are posted in the SONRIS database on a daily basis.

In the case of Cross Unit Lateral wells, designated by the state as "HC", the horizontal lateral is allowed to penetrate the 330' unit boundary set back on the north or south in of a unit.  This was a significant development as the shale does not give up its hydrocarbons unless it is fracked.  Prior to HC wells there was ~80 acres per unit that was not produced.  One of the reasons that current design HC wells are so much more productive is that by crossing the unit boundary they tap ~160 acres of additional rock.

• ▶ Reply

Permalink Reply by cca on March 3, 2020 at 3:43

Thanks Skip, that makes sense, the cross unit designation allows the drilling to start in sec 9 to have room to build angle to horizontal before entering the producing unit.

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on March 3, 2020 at 3:56

What you are referring to, a surface location (well pad) off the section to be produced, is a different situation.  Early in Haynesville Shale development operators decided that the best means to get the maximum length of perforated lateral within the unit (usually a section) to be produced was to drill from a location immediately outside of the unit/section.  This was accomplished by the fact that O&G leases provide for surface operations and companies regularly request to use a surface location on a lease operated by a competitor as that facilitated drilling for all the companies.  The portion of the well  that is "off section" or out of the unit is not perforated and therefore not fracked and not produced.  For that reason a well bore may pass through the 330' set back zone in such cases even though it is not a "HC" well.

• ▶ Reply

Permalink Reply by cca on March 4, 2020 at 2:54

It kind of uses the landowner in that case who has the pad but doesn't get any royalties. these laterals all show to be planned to go through the the next unit and into the following, I guess that is why they are all HC designated wells.

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on March 4, 2020 at 3:30

Yes, as to HC wells, Horizontal Cross.  If a landowner does not own the mineral rights, and therefore is not bound by a lease, the operating company must negotiate surface use and pay for it.  If the land owners does own the minerals and is under a lease, the lease language would allow the operator to choose a site and build a surface location unless the lease contained a surface use clause.  For the vast majority of land/mineral owners, they will get the benefit of wells producing their minerals from wells drilled off their land and off the unit.  So it is a wash. 

Where my clients have a strong negotiating position, I always advise a surface use clause and suggest that surface rights not be withheld pending additional negotiation which provides the landowner with input on the location/type of the surface use and additional compensation for that use.