Royalties on Gas Production

General Mineral Rights Discussion
1

Hi

I was wondering why their is gas production showing for Sec. 19, T146N, R97 West, Dunn County, North Dakota WELL NAME: Porcupine 1-19H but none is being sold. Sinclair is the operator.

They have other wells in Little Knife that are producing gas and the gas is being sold but not the gas from Porcupine 1-19H. Am I not understanding something or is the gas being sold and not being credited to me? Who can I contact to look in on this or am I over reacting on this?

At the moment I can not recall where I saw the gas and oil production data.

Would someone be so kind and take a look at the gas production for me and maybe give me an explanation on what is going on here.

APP. Any Help

THANKS

BRUCE

2

Bruce, I think it's most likely that they are lacking a market because the well is on a gathering line and gas was sold up to November 2013. Production in July, the last month I can see the numbers for, was 3,211 mcf. Bruce, as rich as the gas usually is from these wells, mine sells for between $5-$6 a mcf, there may not be a market. I think we are talking about $12.50 a month per acre under the best of conditions.

3

r w kennedy

I found the chart with Gas Production and I am pasting it here. Do not know how it will show on the forum but it shows that Sinclar's other wells that are producing gas in Little Knife, in the same area have got their gas sold. Why not Porcupine 1-19H and Hovden Federal 1-20H

PORCUPINE 1-19H 2014 PRODUCTION

JUNE 2014 GAS PROD. GAS SOLD

SINCLAIR OIL AND GAS COMPANY

CROSBY CREEK 1-5H

LOT 3

5

146 97

DUN

19304

2038

1081

13

1811

2326

1029

CROSBY CREEK 2-5H

LOT3

5

146 97

DUN

23459

2790

1805

30

2221

4107

3807

CROSBY CREEK 3-5H

LOT3

5

146 97

DUN

25303

390

82

30

439

18

16

HOVDEN FEDERAL 1-20H

SWSW

20

146 97

DUN

19520

2507

2435

30

2443

3652

0

PORCUPINE 1-19H

SESW

19

146 97

DUN

19269

2027

1945

30

1764

3320

0

MAY 2014

SINCLAIR OIL AND GAS COMPANY

CROSBY CREEK 1-5H

LOT 3

5

146 97

DUN

19304

2810

5993

14

3286

3262

2859

CROSBY CREEK 2-5H

LOT3

5

146 97

DUN

23459

3400

2385

31

4159

4573

4521

CROSBY CREEK 3-5H

LOT3

5

146 97

DUN

25303

443

97

31

478

54

54

HOVDEN FEDERAL 1-20H

SWSW

20

146 97

DUN

19520

2858

2642

31

3022

3787

0

PORCUPINE 1-19H

SESW

19

146 97

DUN

19269

2328

2230

31

2859

4008

0

APLIL 2014

CROSBY CREEK 1-5H

LOT 3

5

146 97

DUN

19304

2219

1437

12

2021

2831

2561

CROSBY CREEK 2-5H

LOT3

5

146 97

DUN

23459

4329

2875

30

4111

5526

5404

CROSBY CREEK 3-5H

LOT3

5

146 97

DUN

25303

485

117

30

464

195

41

HOVDEN FEDERAL 1-20H

SWSW

20

146 97

DUN

19520

3148

2692

30

3194

3410

0

PORCUPINE 1-19H

SESW

19

146 97

DUN

19269

2546

2314

30

2572

3676

0

MARCH 2014

SINCLAIR OIL AND GAS COMPANY

CROSBY CREEK 1-5H

LOT 3

5

146 97

DUN

19304

2235

1252

9

2039

2735

2340

CROSBY CREEK 2-5H

LOT3

5

146 97

DUN

23459

4813

3953

16

4124

6167

5662

CROSBY CREEK 3-5H

LOT3

5

146 97

DUN

25303

546

125

31

471

63

0

HOVDEN FEDERAL 1-20H

SWSW

20

146 97

DUN

19520

3058

2884

31

2773

2540

0

PORCUPINE 1-19H

SESW

19

146 97

DUN

19269

2932

2556

31

2586

3154

0
4

Sinclair seems to have a market for the other gas that is being produced in that area by their other wells and so does everyone else on the DNR charts for the past year (mid 2013 to 2014).

What happens to the gas produced that is not sold?

Thanks

Bruce

5

Bruce, I think you will have to ask Sinclair. I have a friend who has a well with them and they were easy to deal with for him. We could speculate all day and possibly not guess correctly. Another reason I could think of is if the Hovden and Porcupine are on the same gathering line and there is something wrong with it. Things are backed up enough in the Bakken that it can take a year or more to get something fixed. I had a well that went unrepaired for a year and only produced 13k barrels in it's first year then after being repaired it produced 14,800 barrels of oil in 15 days, I'm sure they really wanted to get that fixed but it still took a year.

I went through the wellfile (which is very detailed as some are not) and there is nothing there to indicate why gas is not being sold.

6

Bruce, some of the gas could be used on site and the rest would be flared because it's less harmful than simply venting it.

Bruce Wernow said:

Sinclair seems to have a market for the other gas that is being produced in that area by their other wells and so does everyone else on the DNR charts for the past year (mid 2013 to 2014).

What happens to the gas produced that is not sold?

Thanks

Bruce

7

I have not had a chance to contact Sinclair. Just checked on July 2014 gas production SESW Section 19 Township 146 Range 97 Little Knife Dunn North Dakota (3211 Gas produced and 0 sold). This has been going on for many months. Gas has been produced and sold many many months ago (last year some time I believe).

The other wells that Sinclair operates in that township and range are producing gas and the gas is being sold.

Lot 3 Section 5 Township 146 Range 97 Little Knife Dunn North Dakota for instance. I do not get it. I do not think it is because their is no gas market to buy the gas if the other wells gas is being sold in the same area.

I will try to call Sinclair this week and ask them. If I do not get an answer from Sinclair who else can I contact to look into this for me? Is their a government agency? Does some one have a contact number?

Thanks

8

Bruce, you could contact the NDIC O&G Commission. They have the inspectors and oversight over flaring.

Sinclair may be perfectly within their rights to flare that gas and if so, there is not thing one you can do about it. Billions of dollars worth of gas have been flared in North Dakota.

9

If Sinclair sold the gas in the past why would they Flare the gas now? Why would Sinclair have a production figure in their report to the NDIC if they Flared it? To me that is a wast of natural energy resources. I am just fishing around for the reason why it has not been sold in a long time but it is being sold from the neighboring wells every month it seems.

BTW r w kennedy I appreciate your input! THANKS!

10

If we turn that question around the other way, Why wouldn't they sell the gas if they could? I have already mentioned that there could be a problem with the gathering line. It can take a year to get something fixed in the Bakken even when the operator would really like it to be done right now.

I think it likely that that gas would sell for $5 per mcf with the liquids in it and that would beat writing it off on the operators taxes as a loss. Why wouldn't they sell it if they could? Especially since they already have a gathering line?

11

RW KENNEDY You hit the nail on the head. Their is a problem with the gathering line pump. Sinclair told me the company that they sell the gas to has a broken pump and it is to expensive to fix. They told me this a few months ago. Sorry it took me so long to get back to this. Been busy with other things. Sinclair told me they are working on other options for the gas. I think this is the reason they have cut back on oil production on this well (NOT SURE THOUGH).