I have received a letter about a multiunit horizontal well application that is before the Commission. I am trying to understand what this means to me. Any insight would be appreciated.
Cindy
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It is rather hard to explain in words, but I’ll try. Most wells are drilled vertically (straight down) and have spacing regulations mandated by the state they are in i.e. how much acreage is attributed to each well. As an example, Joe had a well with 160 acre spacing; that means he could only have a single producing well, aka a unit, per quarter section of land. Frank is Joe’s neighbor and also owns 160 acres. Sam wants to horizontally drill a well, which would put him under Joe’s land and Frank’s land. Thus, both Joe & Frank’s land (multi-unit) would be included in the well spacing and share in the mineral royalties.
Horizontal drilling is much more complex, but also more efficient as it allows for more resource extraction than vertical drilling.
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Thank you, that’s very helpful.
You may get quite a bit more OCC mailings. It is helpful to put them in Case Order and then by date with the newest on the top. Look at the exhibits to see where the well path will be going.