Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on December 22, 2013 at 4:55

The DNR/OOC is tasked to encourage mineral development and conserve the mineral assets of the state.  In pursuit of their mandate they often give wide latitude to the views of the energy industry especially where there is little or no history/data to inform decisions.  As currently practiced, horizontal development on a wide scale is still relatively new.  Larger units are required for horizontal development and that's an irrefutable fact.  It is unlikely we will see a lease well drilled as a horizontal excepting the possibility of a test well.  The experience of the Haynesville Shale makes obvious the need for units larger than 640 acres.  The question is how to determine unit size based on the formation/zone and the design of the wells required to efficiently drain the unit acreage.

Permalink Reply by Ben Barnhill on December 22, 2013 at 7:00

With regard to horizontal drilling, if a lease well is not the best model, what models are currently in use with regard to land/mineral owner relationships to energy companies?

Permalink Reply by Skip Peel - Mineral Consultant on December 22, 2013 at 7:40

Ben, a lease well is a well drilled on the minimum allowable spacing where the operator holds the leases for all the minerals.  Using the Haynesville Shale as an example in the case of 640 acre/section units, an operator could permit and drill a horizontal well on 80 acres.  In fact some companies did just that while they were actively acquiring leases in the remaining section acreage.  By the time the well was drilled and completed, the company would apply to form a unit for the entire section and have the state designate the lease well as the unit well.  An operator can drill a horizontal well in a compulsory unit whether they hold the leases to all the minerals or not.

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