Hi everyone. I have had this nagging question that I thought could probably be answered in this forum, so here is the issue:
In approximately August of 2013, My parents received a lease offer for the minerals under their house in Williston, North Dakota. I know many other people around Williston had received these as well. Their particular mineral rights are in 13-154-101.
The first part of my question is: Has anyone heard when and where these (or this) well(s) will be drilled?
The second part of my question is: Can well(s) be drilled? And the reason for asking that is because the City of Williston has an Ordinance expressly prohibits it as follows ~
Sec. 12-55. Drilling, etc., for oil and natural gas: The drilling for and, production of oil and natural gas within the corporate limits of the city are declared unlawful and prohibited. (Code 1957, § 8.3)
Thanks in advance for any helpful information.
I didn't look at a map containing the city with a section grid on it, but I think I have a good idea of where the city must be from looking at the GIS map. The city is already bordered by wells and production. While the 10,000 lateral is common and it would be more difficult to drill 15,000 foot lateral or even 20,000 foot laterals, it can be done. Then too, I have not heard if the city ordinance has been tested in court. Someone thinks that the minerals can be extracted. I'd say that if your parents want to lease, they should go ahead and do so, making sure they get paid before the lease leaves their hands, as long as the royalty is acceptably high because the area is good and lastly, that there is no Force Majeure clause that would keep the lease in effect, essentially forever, or until the minerals can be extracted, because an ordinance that prevented drilling and the production of the minerals existed. Those minerals will be extracted eventually and 20 years from now they may be worth alot more than they are today.
Personally I would not have a paid up oil and gas lease, which I think is what they are looking for, pay one time and they have a lease that lasts as long as it has to until the minerals are produced.
I would not be surprised if they are mentioning that drilling is againt the ordinance, it's not really a "law", so some people may think it's free money.
Travis,
First of all, there are no wells permitted yet in section 13 and never will be because it is in the city. However, they could permit section 18 in 154-100 just to the east, near county road 9, and drill horizontal to the west. Statoil has permitted and drilled in section 25, two miles to the south. That well (Williston 25-36 1H) was drill horizontally south under the river. This area is also outside the corporate limits and they could permit additional wells and drill north, which would include section 13.
Second, there are 4 wells that were drilled in July 2012 known as the Pyramid 15-22 (Statoil), three in the Bakken and one in the Three Forks, that are under the west half of the city's new addition (Sand Creek Town Center area).
Because of directional drilling companies can drill outside the corporate limits and drill under the city. However the corporate limits extend much further to the west, but the area were these wells are located is still rural, surrounded by Williston corporate limits.
When one looks at the NDIC Oil & Gas GIS map, and turns on the corporate limits, it becomes quite evident that the city may have made an exception for these wells that were probably permitted at the time the corporate limits changed.
So even though the city has an ordinance, they can still drill outside the corporate limits under the city. I would check out the NDIC web page https://www.dmr.nd.gov/oilgas/ where you can see where all of the drilling activity has been, will be and is currently being drilled.
Hope this helps.
Thank you Ed and RW. Your input was quite appreciated!
Travis
Hello
Oil and gas Leases negotiated based on property within city limits is a growing issue in the oil patch. It has also been around in the mining world such as in the Black Hills and has some of the same issues. Such city leases are described as special situation leases. Special attention should be given to the terms of the lease because the many ‘producer 88’ terms won’t and should not fit the situation. I would consider asking for what I call guaranteed participation or some other firm form of compensation because of the smaller surface acres and consequent smaller net to the lessor. Also keep in mind that city ordinances are legitimate ‘laws’. On the East Coast they are often used as anti fracking policies but that has not shown to be the case with Western State's ordinance language and policies. Such ordinance restrictions can be addressed however by variances or special zoning exceptions. There are a lot of issues to be looked at before proceeding.
David L Ganje
Ganje Law Offices
Web: lexenergy.net
605 385 0330
701 355 6885
518 437 9000
d.ganje@ganjelaw.com