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Permalink Reply by Skip Peel - Mineral Consultant on October 22, 2023 at 9:13

Steve,  the surface owner gets some compensation.  The surface location was a cost for the SWD company and there may be some marginal additional compensation based on the volume of salt water that is re-injected.  I've never been involved in negotiating a SWD contract so I am hoping your get more responses.

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Permalink Reply by Columbia1 on October 23, 2023 at 9:19

As Skip said, it is my understanding that the surface owner is due compensation for the SWD well.  Over 20 years ago, we negotiated a SWD agreement that included a fixed amount per month (between $700 and $1,000) and an additional per barrel amount for any over a certain volume.  Both were taxed as normal rental income.   As far as I know, no mineral owners were paid for SWD because it was a surface rental, not a royalty.  Back then, operating company for SWD well was charging other operating companies about $1 / barrel to dispose of the SW for them.  We should have, but did not, include an escalation clause in the agreement or renegotiation clause after so many years.  As a surface owner it would be best if you had input into the SWD well location because any leaks or damages before and after the well is closed out will likely mean the location will not be useful for much future use.  Also, be aware of where the water comes from as in our case it was from about 5 miles in almost every direction with little to no pipeline markings or knowledge.  It is logical that company B will at some point want to tie into company A’s SW line that goes to the SWD well so would suggest something in agreement to notify surface owner of SWD well of any additions to system.  We only knew the wells the SW originated from but did not know the pipeline locations.  All the folks with the knowledge were long gone so never knew where the line was until it leaked or was hit during any construction.  With a new well pipeline location should be less of a problem but try to get a professional survey or at least pictures and drawings of where the lines are.  May want to restrict to just piped in water from the local field to the SWD well because if do not then may get water trucked in from anywhere and no way to know what is included in any one load.  More water to be disposed of then more storage tanks and space required at SWD well location so may want to have agreement as to size of pad.  When any line on the SWD well pad leaked, it was usually a large volume because of the pressure put on the lines to get the SW back into the ground.  Hope that helps some.

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Permalink Reply by Skip Peel - Mineral Consultant on October 25, 2023 at 6:28

Good detail, Columbia.  Thank you.

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Permalink Reply by Steve P on October 23, 2023 at 9:27

lots of good information here. Thanks

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