Replies to This Discussion

Permalink Reply by Ringgold Redskin on November 5, 2009 at 14:09

The $50K up front sounds great. You may consider taking less $ up front and negotiate for 3 to 5 cents a barrel pumped and have it bump up a cent after a year/ two and another cent later. If its Commercial and they pump 15,000 to 25,000 barrels per day this will be steady income for a long time. I know a landowner with a Commercial SWD well in Texas and he is now at 5 cents a barrel @ around 15,000-20,000 Barrels per day. I don't think he was offered any up front money in the agreement.
SWD wells are limited in how much injection pressure can be used by the commissions in both states. The only problem is the well operator must keep what is pumped clean. There are problems with silting/stopping up the injection area and having the pressure limit the injection rate down to a low rate in barrels per day. This can happen from vacuum trucks that are not cleaned properly, bad screening and if any separating system is bypassed, a little oil in the injection water will have a bad effect.
Good Luck!
RR

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Permalink Reply by Phillip Briggs on November 5, 2009 at 16:29

If you have property that's far away from your home, it might be a sweet deal. I'd rather have royalties on each barrel instead of a large upfront fee.

If the well is near your home, be aware that there'll be non stop traffic 24/7/365 with trucks coming in regardless of weather. Dusty in the summer time. Noisy all the time. Lights on all the time. A small industrial complex.

I wouldn't allow one of them on my place for any amount of money.

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Permalink Reply by Missy on November 5, 2009 at 16:58

That's kinda my feeling too. A gas well, SWD well and pipeline are being planned. Do you think that having the SWD well would decrease the chances of other gas wells in a section? I wouldn't wnat to do something that would limit/decrease the number of possible gas wells our section could have? It isn't near where I live, or really many other rsidences either. The $$ they offer is never the first thing I consider. I tend to think more 'long term' than anybody I know. My timber property gone forever is a long time. I am that one fish that swims in a different direction...;-)

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Permalink Reply by Randy on November 5, 2009 at 17:53

Sounds like its a decent deal, I would have a qualified attorney handle the deal honestly. You don't want to miss something crappy in the agreement, and there are plenty of small, little bitty words that can come back to bite ya.

So yeah, for that amount of money, hire someone.

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Permalink Reply by jindallas on November 6, 2009 at 19:02

Randy and Tootin are headed in the right direction with advise. SWD wells are long term committments and I would lean toward annual surface rentals and per barrel fees. Commercial wells are small complexes with numerous tanks and possibly lined holding ponds. The underground injection programs are regulated by the states once they have proved to EPA that they have an adequate program. I would talk to the local UIC inspector before I signed anything. read more at http://dnr.louisiana.gov/cons/CONSERIN/Uic.ssi

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Permalink Reply by ur dern tootin' on November 6, 2009 at 3:49

PB, hours of receiving waste (i.e. salt water) at commercial disposal facilities (in Louisiana) are determined by Rule of the Office of Conservation (Sec. 537 of Statewide Order 29-B). These receiving hours are generally 6am-9pm. However, exceptions to the Rule for extraordinary circumstances may be granted (emergencies). This regulation is for the specific purpose of limiting truck traffic on public roads to reasonable hours. However, the facility may continue to inject waste "24/7/365", but not receive any new shipments during the regulated time.
As with any lease, financial terms are set by private agreement between the property owner and the SWD operator. The State has nothing to do with these private agreements (leases/contracts) - which is the same with oil and gas leases.

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Permalink Reply by Bacon on November 6, 2009 at 4:49

So can they put a SWD well anywhere or are there geological requirements? If you were interested in providing space for one these wells, would just start calling SWD companies? Thanks.

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Permalink Reply by S.H.M. on November 6, 2009 at 7:56

I'd like to know the requirements/prohibitions as well. I wonder if your neighbors have to sign on to this or agree? Of course large parcels of land might be exempt from any restrictions neighbors might want to hang on the deal.

I guess my main question is, how many acres of land are needed if adjacent landowners are not included in the agreement?

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Permalink Reply by Missy on November 6, 2009 at 15:35

It is my understanding that it is handled like any other well. It is a deal between the landowner and in this case, Questar. But according to some of what I've read regarding SWD is Texas, the $50,000 really isn't that great. It would be better to collect rent or some other sort of ongoing payment. They want to use the SWD for wells operated by Questar and/or units that they have a working interest in but are currently operated by other entities.

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Permalink Reply by Dion Warr, CPL on November 9, 2009 at 8:09

MIssy:

$50K may not be 'great', but it's not terrible either. Particularly if you can wrangle a per-barrel fee for injected brine.

Hopefully, STR is negotiable to this $50K as an upfront free for a limited term (say, five to ten years), reverting to an reasonably escalating annual rental (say 3% or so). You will want to make sure to have general and environmental indemnity and hold harmless, as well as damage and restoration provisions. If you're concerned about development of your unit, waive the per-barrel disposal fee on brine produced from in-unit production as an incentive for them to produce for you.

Personal preferences: make sure that all lines running on the property outside of the facility are buried. Moving around and maintaining your surrounding property around 'temp lines' can become an aggravation. You should also maintain access to any metering equipment onsite (at least remotely, if onsite physical access is purported as a liability. You (or your agents) should be able to inspect the site as to its condition, subject to notice - it is your land, after all.)

Good luck in your negotiations.

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Permalink Reply by The_Baron on November 6, 2009 at 10:46

There are geological requirments. You have to prove you are injecting into an isolated formationn for one.

Many SWDs are not planned, but sometimes a dry hole is drilled and can be a good use for the hole.

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