In Colorodo I've been seeing hearings for example- where Conoco is requesting an order to establish 640 acre -drilling and spacing units, consisting of certain sections.
My question is a) what is the difference between this and an actual drilling permit? And b) does this ever mean that they will soon be applying for drilling permits? What is the process and what might these order requests be an indicator of?
Any insight or opinions welcome.
Sorry if I've posted this in the wrong section.
In Colo. the first thing they have to do is establish a drilling and spacing unit with COGCC. They pool acres together to make up a spacing unit according to COGCC rules. Currently, I believe the smallest spacing unit for the Niobrara horizontal wells is 640 acres (does not have to be on section lines). Once they apply for the spacing unit, they can apply at any time or even concurrently with the spacing application, for a drilling permit and forced pooling order (if they need one). A spaced unit usually means they have plans within the timeframe of the term of the leases in that unit to drill. It's my understanding they have until the term of the leases to do something in that spaced unit, however, I'm not real sure how long the drilling and spacing unit order is good for under COGCC. Thom Kerr is the permit officer at COGCC and is happy to answer any questions.
Debbie
Thank you, Debbie!
That is very helpful and clears some questions up for me~!
Debbie said:
In Colo. the first thing they have to do is establish a drilling and spacing unit with COGCC. They pool acres together to make up a spacing unit according to COGCC rules. Currently, I believe the smallest spacing unit for the Niobrara horizontal wells is 640 acres (does not have to be on section lines). Once they apply for the spacing unit, they can apply at any time or even concurrently with the spacing application, for a drilling permit and forced pooling order (if they need one). A spaced unit usually means they have plans within the timeframe of the term of the leases in that unit to drill. It's my understanding they have until the term of the leases to do something in that spaced unit, however, I'm not real sure how long the drilling and spacing unit order is good for under COGCC. Thom Kerr is the permit officer at COGCC and is happy to answer any questions.
Debbie
John Doe:
I would also like to add that even though an operator obtains a drilling permit for an area, it not a sure bet that a well will be drilled. In MT and ND, drilling permits will expire within one year. These are easy to renew but the problem is that some of the leases within the permitted area might expire and the operator must negotiate a new lease with the mineral owner. I am in a similiar situation in ND at the present time whereas my lease expires in July 2012 and the area has been permitted. Most likely, the operator will do their best to beat any expiring lease date but sometimes they are forced to negotiate a lease extension with the mineral owner if the lease cannot be drilled on time due to lack of rigs, etc.