Draining oil from under my land - Correlative Rights


#1

Sorry for this basic question. I have leased by mineral rights % on a 100 acres in Grimes County, Texas. How do I know if the production company is drilling nearby, taking oil from under my land, and not paying me for it? (I know they are not drilling on my land.) Seems like it is in their best interest not to tell me…What am I missing and how do I find out? I really appreciate you sharing your knowledge with me and others!!! All the best.


#2

The Texas Railroad Commission regulates all oil and gas drilling in Texas. They have very specific rules that govern where and how wells get drilled. They set spacing rules that determine how close a well may be drilled to a property line before the adjacent owner must be included in the well. In order to get a permit to drill, the RRC must be satisfied that all correlative rights are being protected.


#3

Thanks Steve. So if my producer is drilling down the road from my land (beyond the TRC distance) and they know it is still pulling oil from under my land, they dont have to pool me in? I just lose my oil? Much appreciated.


#4

That’s the whole point of the RRC spacing rules. The well is far enough away that it won’t be draining your oil.

First off, you have know way of knowing if oil is even under your land. Even if it is, oil will only travel a short distance through the reservoir. That distance will vary depending on a lot a technical factors, such as pressure, viscosity, and permeability. This is how the RRC comes up with the spacing rules and is why spacing rules can be different for different areas. Contrary to common belief, oil is not found in big hollow caverns in the ground. It is contained within the pore structure of rock and will only migrate a fairly short distance.


#5

Just to add to my above post, if they have a producing well in the immediately adjacent spacing location to you, you can sometimes compel them to drill an offsetting well on your side of the fence. If they don’t agree to do that, then they must let your lease go.


#6

Extremely helpful! That is what I could not figure out…So, sounds like next steps are to go the Commission web site and see where my producer has wells. Is that what you would do?


#7

Steve,
I am curious as to when the RR Commission spacing criteria was set. Were the setback limits determined prior to the advent of fracking?

It seems to me that there are sufficient variables in the fracking process and the geology that it is conceivable that fracturing can extend across boundary lines resulting in oil being drawn from adjacent property. I believe I was reading on this site where well production drops have been documented when a new fracked well has started up next door.
Regards.


#8

Not to hijack this thread, but does New Mexico also have something like this in their rules?


#9

I can’t comment on the RRC specifically since I haven’t worked Texas in quite a while. I do know that other jurisdictions do continually modify and adjust their rules as more information becomes available. Interference between wells can happen but in my experience it occurs when wells are drilled too close together and doesn’t occur over long distances. Hydraulic fractures rarely extend more than a few hundred feet. In the case of Federal minerals, the BLM is actually reducing the size of spacing units to reflect the realities of shale production.