Have the oil companies found that their is exsessive water on all surronding areas on 158,north and all the ranges around 102, 103,,104,105, Their are no wells on some of theses ranges, yet. Butt are drilling companies, pulling out of this area.?
And with this knowledge the drilling companys are renewing mineral rights contracts with longer terms with the same or lower price per acre, with no signing bonus.
Mr. Wirges, how much water are you talking about and is this in reference to new wells or wells that have produced for a year or more? I don't think the problem is as much water as production. The production isn't necessarily bad but there is alot of territory in western ND that is just as good that doesn't have a well on it yet so the operator can pick and choose. 4 barrels of water for every barrel of oil is certainly not ideal but I don't think it's an automatic death sentence.
In the future they may drill a disposal well where 4 spacings meet and pipe the water directly to the disposal well to save trucking the brine from several wells, and it might not be a bad thing to be the surface owner that plays host to the SWD well. I think it will come, this development is going to go on for decades. The operators competed in the early years for the prime areas because the supply of those prime acres was more limited, they don't have to scratch and claw for merely profitable acres because there are still so many of them. There is no need to be the first in the area after it has been tested and found profitable but unexciting, everyone can wait for for someone else to get the infrastructure up and running. I think the lower bonus per acre is a sign of the lack of competition more than anything else. There is no longer a frenzy, you can tell by the number of second and third wells being drilled in spacings that are already held. If operators were worried about losing their acres the rigs would still be planting 1 well per 1280 to get the spacings held for later development. Infrastructure is needed, if you have to truck oil to a pipeline or rail loading center, truck brine away to a swd well, it eats away at profit. It would make sense to let some pipelines go in, some closer SWD wells to be drilled, to take advantage of someone elses work and investment. If you have to lease acres for a few more cycles, it's not like you are competing and paying top dollar anymore. It's still going to happen but the average mineral owner may have lost some clout since things have settled down. That's my take on it anyway.
I think Mr Kennedy has a good grasp of the economic thought process of Williams County in general.
In the NW portion of Williams County there are some other factors at work specific to the area and it doesn't appear that formation water is a deciding factor to drilling and certainly not to leasing. It is true that water ratios in some G3 wells and Marathon wells may be higher than areas in other parts of the county but these are also newer wells and some of the water being produced may be frac water. Im sure Marathon knows by now what percentage of water coming back is indigenous to the part of the formation fraced from the wells in 157. Marathon may be the most scientific based operator in the area and analyses everything. Watch Marathon.
Another more serious constraint to developing NW Williams ay be the energy value of the oil itself. Some scientists have interpreted the area to contain oil that has not been as well processed by heat so as to have as much energy per barrel (maturation) as other areas. But, as Mr Kennedy points out, there hasn't been enough drilling and production to make sure. Similar areas in Mountrail county thought to be immature are producing good oil.
The oil is certain to exist in NW Williams but it may cost more to transport and refine into useable products. Only time and drilling will tell. Again, watch Marathon.
The best protection for mineral owners in the meantime is to keep leases short, get competitive lease bonuses that you are happy with, deal with known operators only, and strike out any language that holds the lease without economic production and reasonable sustained development, and never take a bank draft. Clean up your title. It will eventually mean better cash flow to you or your heirs. If you have a lot of acreage consider deal alternatives.