Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on September 25, 2013 at 3:25

Thanks, Sarah.  Upon approval of the unit application SWN will make their PLUM CREEK 13 #1 the unit well and change the name to L SMK RA SUB;PLUM CREEK 13H #1 as part of amending the permit from a vertical to a horizontal completion.

Permalink Reply by Land Rat on September 25, 2013 at 4:34

Can you explain this?  I thought they changed the well permit from a horizontal to a vertical and not as stated above.  It would seem that the unit stacked above this one would be undrilled and that they are trying to hold more acreage with a vertical well (albeit with the intention to eventually drill it or an alternate horizontally). 

Looks like the original unit, the 960 in S12 and S1 was to be held with the originally permitted horizontal (with surface locale in S13) and the new unit, consisting of 1280 acres in 13 & 24 is to be held with the newly (re)-permitted vertical well.

Permalink Reply by Skip Peel - Mineral Consultant on September 25, 2013 at 5:00

The unit application and the permit are separate processes moving on different time tables.  An operator may amend an existing permit from vertical to horizontal at any time prior to completion.  The new permit has a different surface location.  The plat should be posted this week when the new well file is created in SONRIS Classic.  Or those who would not care to wait may use the longitude and latitude coordinates for the two permits to view the difference in surface location.  I don't think that the Office of Conservation would look favorably upon an operator drilling a vertical unit well while holding a field order for a unit approved for horizontal development

Permalink Reply by Land Rat on September 25, 2013 at 5:09

I see.  I was using the FROM section line numbers to infer that the well was to be at the same surface location.  Is fairness your only basis for stating that the well will be permitted as a horizontal?

Permalink Reply by Skip Peel - Mineral Consultant on September 25, 2013 at 5:24

The  O of C is not concerned with fairness, a subjective term.  They are tasked to enforce the regs and promote the production of minerals for the benefit of state coffers.  SWN can spud the well as a vertical lease well and convert it to a horizontal unit well after the unit app is approved by simply amending the permit. 

Permalink Reply by Land Rat on September 25, 2013 at 5:49

Right, I was just asking about the basis for assuming that a horizontal well is going to be drilled.  What I am getting at is this:  if OofC approves this 1280ac unit, is there going to be something in that order that compels SWN to drill a horizontal well or will SWN be able to drill and complete a vertical well and hold this unit and all of the leases within it?

Not trying to be contentious, just curious as to what you think their strategy is here.  My impression is that they aren't looking to drill horizontals in the immediate future, but they are looking to hold onto acreage for as little $ and headache as possible.

Permalink Reply by Skip Peel - Mineral Consultant on September 25, 2013 at 6:11

The O of C doesn't like vertical wells holding horizontal units any more than mineral owners. The basis for the assumption is the language contained in the application particularly Section 4.  From the state's perspective large units are approved to allow for long laterals, not for holding as much acreage as possible although you will read that from time to time in discussion threads.  SWN could attempt to hold the leases covered in a two section unit with a single vertical well but their lawyers wouldn't be happy about defending that before the Commissioner or in a civil court. Looking back through the wells in my spreadsheet there are no vertical completions in units approved for horizontal development.  The L SMK RA SUA;HOLLIS 27-22-3 #1 is permitted and drilled to current TD as a vertical in a unit approved for horizontal wells however it is not completed.  I suggest we wait and see how this plays out as I think it will be made moot when SWN completes the well as a horizontal.  If they were to complete it as a vertical we would then have a really interesting topic to discuss.

Permalink Reply by obed w odom on September 25, 2013 at 6:37

The  Sharp well (L SMK RA SUA;SHARP 22-22N-1E), serial #246229, in Tick Creek Field of Union Parish is an example of a vertical well in a 1280-acre Lower Smackover unit containing, as yet, no horizontal wells. The Sharp may be converted later to a horizontal, but I'm not aware of any requirement that this be done.

Permalink Reply by Land Rat on September 25, 2013 at 6:43

I was thinking of the dean too. There is a horizontal, but certainly not producing and I would assume all of those leases are being held by the production of the vertical and maybe some continuous op provision for the horizontal...

Permalink Reply by Skip Peel - Mineral Consultant on September 25, 2013 at 6:57

I think the Dean Alt 1 would be in the same situation as the Sharp.  Status 31.

Permalink Reply by Land Rat on September 25, 2013 at 6:44

Any idea when sharp is coming online? Would continuous operations hold these leases as well?

Permalink Reply by Skip Peel - Mineral Consultant on September 25, 2013 at 6:54

Continuous operations are limited to how long leases may be held once the primary lease term has lapsed.

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