Royalties on Gas Production

General Mineral Rights Discussion
1

Hi,

I was wondering why there is gas production showing for Section 19, Township 146N, Range 97 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 overreacting on this?

At the moment I cannot 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?

Any help would be appreciated.

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 Sinclair’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 LOT 3 5 146 97 DUN 23459 2790 1805 30 2221 4107 3807

CROSBY CREEK 3-5H LOT 3 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 LOT 3 5 146 97 DUN 23459 3400 2385 31 4159 4573 4521

CROSBY CREEK 3-5H LOT 3 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

APRIL 2014

CROSBY CREEK 1-5H LOT 3 5 146 97 DUN 19304 2219 1437 12 2021 2831 2561

CROSBY CREEK 2-5H LOT 3 5 146 97 DUN 23459 4329 2875 30 4111 5526 5404

CROSBY CREEK 3-5H LOT 3 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 LOT 3 5 146 97 DUN 23459 4813 3953 16 4124 6167 5662

CROSBY CREEK 3-5H LOT 3 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 its 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 there 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 there a government agency? Does someone have a contact number?

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 nothing 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 waste 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 operator’s 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. There 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 too 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).