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Permalink Reply by Skip Peel - Mineral Consultant on August 4, 2015 at 10:56

The operator of a drilling unit must seek the permission of the state to drill an alternate unit well. Regulations allow alternate wells but the application is required to assure that the location of the well and perforated lateral meet spacing and set back requirements.  The rules for such applications require notice to all the mineral and surface owners within the unit and those immediately adjacent to a distance of 1000' as part of the process.  You don't need to do anything.

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Permalink Reply by FEW on August 6, 2015 at 4:16

Thank you Skip.

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Permalink Reply by Skip Peel - Mineral Consultant on August 6, 2015 at 4:22

You're welcome.

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Permalink Reply by 208ef0t5wi05p on August 5, 2015 at 1:47

Where are the laws that protect the landowners?

We have Unit Plat Maps in Ohio that have been approved by the ODNR that are obvious Retaliation Units with laterals 600 feet from landowners property, but Chesapeake claims they can reach out to 1250 feet to hold a parcel by production.

If you have a parcel with a lateral 600 feet from the western border that ends at 550 feet you aren't in the unit. Then on the East side there's a lateral 1250 feet from the parcel that Chesapeake claims is holding the unit by production.

We rely on the ODNR to protect us from this type of abuse, but there are no laws for them to enforce and they approve any unit Chesapeake asks for. We even use the Honor System in Ohio for Producer reported volumes taken quarterly. If that's not having the Fox guarding the Hen House then what is?

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Permalink Reply by Skip Peel - Mineral Consultant on August 5, 2015 at 2:03

This discussion is about Louisiana and its unitization regulations, Ron.  Your comments are not germane to the question and answer.  Regulations regarding how units are set up and unit wells are spaced are different from state to state. In Louisiana all operators must conform to the same regulations, it doesn't matter who the operator is.

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Permalink Reply by 208ef0t5wi05p on August 5, 2015 at 6:08

Skip,

     Do the Louisiana Utilization Regulations adequately address Units that a producer requests that take well products from a landowner without the landowner being in the Unit?

I know PA has plans for a Producer Retaliation law that will prevent a producer from singling out a landowner who reports/complains about theft and unusual Units that are close enough to take well products without including that landowner in a unit. The law will specifically address stopping well production and taking well products without payment. 

I was thinking that we need to put our heads together across the countries shale plays and come up with a list of laws that could be submitted to each states legislators for future laws to protect the landowners uniformly across the nation. Ohio has no laws to protect it's landowners and Kentucky will be next to see the abuse. It would make sense to protect all landowners instead of doing this one state at a time after years of lost royalties by the landowners of each state.

I'm blocked from gomarcellusshale.com for unknown reasons, but as I have said this is a Nation wide issue. We can stand together as a country of landowners or fall one at a time as state landowners as we have been doing.

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Permalink Reply by Skip Peel - Mineral Consultant on August 5, 2015 at 6:36

Ron, LA has considerable, and in many cases unique, regulations that benefit the mineral owner.  I deal with clients who own minerals in LA, TX, AR and MS.  The differences in regulations among just those 4 states are very significant.  Regulation of O&G exploration and production on private and state owned lands has always been the purview of the individual states.  For that reason it is impossible to come up with an over arcing federal law to address all the various issues we discuss.  Also what is often over looked is the fact that there is a tremendous amount of existing case law unique to the historic hydrocarbon producing states. 

Your concern seems in some large part based on your statement, "Units that are close enough to take well products without including that landowner in a unit".  LA does not allow a perforation in a horizontal lateral closer than 330' from a unit line.  That is based on two facts:  the average radius of a Haynesville Shale frac cylinder is 150 to 200' and therefore does not allow for stimulation of rock beyond that distance (even if the radius was 300' there would still remain a 30' buffer) and the Haynesville Shale is so impermeable that only rock that is fracked will contribute to production.  The area produced is largely limited to the area fracked as natural fracture networks are limited and not extensively connected.  In addition it should be recognized that the target interval is generally ~150 to ~300' in vertical depth and operators do not attempt to have their frac cylinder grow much beyond that interval.  It's not only a waste of money with no increased production, it risks fracking into adjoining formations that may be water laden.  That would be a big and costly mistake.

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Permalink Reply by 208ef0t5wi05p on August 5, 2015 at 9:05

Skip,

    Thanks for the response.

I can see LA & OH drilling methods are no where alike since the typical unit is 900 feet on each side of the lateral in the Appalachian Basin.

The 1200 ft/550 ft distances from the lateral are special cases for holding leases by production and forming units without those landowners who are outspoken about how Chesapeake operates.

I believe there are laws that could be recommended to each state to improve royalty payments to the landowners since O&G companies have traditionally short changed US landowners. The laws could be tailored to each state as required without the loss of protection they were intended to provide for the landowners.

Some very basic Federal Laws would help as well. I noticed the Federal Government goes into great detail to protect Federal Lands and Native American  lands but leaves the rest of us citizens unprotected. Must be some oil & gas lobbyist hanging out nearby when the laws are written.

Now that's another issue (lobbyists) that needs to be addressed in the future.

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Permalink Reply by Skip Peel - Mineral Consultant on August 5, 2015 at 9:17

Ron, IMO LA has some of the best mineral statutes in the country.  They are not perfect but they are far ahead of most states in the protections afforded to mineral owners - those who are leased and those who have chosen to go non-consent. I doubt you will find many members in agreement with you on GHS as to greater federal regulations. 

Well spacing does not hold leases in a unit formed for horizontal development. All the lands within the unit boundary are held by any and all producing wells. The unit size is requested by the operator and approved by the state.  Here in Louisiana land is mainly organized under the Public Land Survey System (PLSS) of sections-townships-ranges.  The vast majority of drilling units for horizontal wells are one section in width (E to W) and one, one and one half, or two sections height (N to S).  On 80 acre spacing that would equate to 8 horizontal laterals per unit with lateral length dictated by the number of sections included in the unit.  Since most of our preexisting units were a single section and operators desired to drill longer laterals the state now approves Cross Unit Laterals to facilitate development. 

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