Replies to This Discussion

Permalink Reply by w.r. frank on Sunday

As an UMO, I got charged my share as LOE for building a fence around ONE HA well because of H2S. Go figure and guess who? Sort of hard to put second home there. Do I get compensation for loss of use of surface?

Permalink Reply by Skip Peel - Mineral Consultant on Sunday

Before seeking compensation I suggest you test for H2S.  Expand probably wanted the fence for other reasons and H2S is an excuse.  If there is significant concentrations of hydrogen sulfide off the pad, you may have a case but if you can't smell it the concentration is likely low.  If it exists at all.

Permalink Reply by Rock Man yesterday

Haynesville doesn't normally have H2S.

Perhaps this area is an exception?

Permalink Reply by Skip Peel - Mineral Consultant yesterday

In far south DeSoto moving into Sabine Parish the Haynesville is thinning and has concentrations of H2S and CO2 that exceed pipeline specs.  I was a scout for twelve years for Tristate Midstream and the company was the primary gathering and treating system in that area. The CEO told me that an operator could drill two Bossier wells and one Haynesville well, commingle the gas and reduce the concentration to meet specs without having to treat it.  Of course that means that operators will have to treat remaining Haynesville wells once they have drilled all their Bossier wells. 

I'm interested to see if Ensight IV and GEPH II drill the Haynesville/Bossier south of there.  Ensight has formed an HA unit in the Zwolle Field and GEPH II even further south in the Pendleton-Many Field

Permalink Reply by Lisa yesterday

Y'all are way over my head. Will HS2 be an issue in the Franklin County area?

Permalink Reply by Rock Man yesterday

H2S has shown to be present with Smackover production in Franklin County. Variable concentrations - all dangerous.

Remember it is Smackover water that will be produced for lithium extraction - good chance that this water will have H2S associated with it

Permalink Reply by Lisa yesterday

I can’t see previous comments past the last four to go back and reread to take in what I should think about regarding the lease process.

Should I only concern myself with the H2S issue if I were to enter a contract letting them drill on my land— where there is livestock, and I might want to build a house someday or open a retreat center. How concerned should I be if my close neighbors allow drilling on their land?

Permalink Reply by Skip Peel - Mineral Consultant yesterday

You can talk to your neighbors but you can't compel them to take precautions in their lease language.  Where my clients live on the lands they own, I suggest that they include a "no surface use" clause.  What that means is they control how the surface is used and how they are compensated for that use.  Some would benefit from a road built by the lessee but want to stipulate where it is located.  The same with a pond.  If there is no surface water to use for drilling a well, an operator will drill a water well.  That water well could benefit a land owner if located in the right spot.  With a "no surface use" clause, you are in charge of what you allow to be built and where it is located.  Without that clause operators will take the shortest cheapest path for their purposes, not yours.  You can also stipulate how gates are managed.  Many land owners require two locks.  One for the operator and one for them so they always have access.  In decades past land owners included lease clauses that prohibited hunting and fishing on their land.  Sounds surprising but that is how much say a lessee has on your land without a no use clause.  They will treat it like their own, not yours.  Many leases include a damage clause.  One I reviewed for a client recently called for $2500 an acre.  That's low especially depending on the land use.  If you have timber that must be cut to allow a road or a drill site, the compensation should be at least $5000 an acre.  When a client has land that looks to be a good well site, I'd double that and make sure it was not located such that it would interfere with your use of the land.

Permalink Reply by Lisa yesterday

We have CLEAR no-surface-use language. But I was considering a second agreement to allow drilling on my land later. But I didn’t know about the H2S!!

Permalink Reply by Skip Peel - Mineral Consultant yesterday

A no surface use clause doesn't preclude surface use.  It simply allows you control what is used where and to receive fair market compensation for that use.  I tell my clients to tell the landman offering the lease that they will consider consenting to surface use but wish to have a say in that use.  Most landowners don't know about H2S but your experienced attorney sure should.

Permalink Reply by Lisa yesterday

Our attorney is in the energy section of a very large law firm— but I think that means mostly O&G. Is H2S an issue in O&G? I think lithium is new to everyone.

I think our lease prohibits them from stepping on our property. Zero access.

Permalink Reply by Skip Peel - Mineral Consultant yesterday

Any experienced O&G attorney should know about H2S.  His firm should have lease language to address it.  One way to address it is to allow no surface use.  No drill site, no pipeline right-of-way.  Nada!

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