Shut In What's this all about?

Listening to the drum beats on this Forum recently, the term ‘Shut In’ has raised some hairs. Depending what side of the fence you reside on, your opinions are different. I don’t think I saw the term ‘Shut In’ in my Leases dated back about five(5) years ago. Maybe they were there but in different ‘word smith’. So what gives. If the Oil & Gas Lease includes a ‘Shut In’ clause/comment, what conditionals[ time, money, etc,etc] Should I be aware of & reacting to ??? Thank You in advance for any insight and/or comments pertaining to this situation. Respectfully Pamela F. Peterson

Hello Pamela,

If you did not negotiate the shut in your lease probably contains a shut in clause that says the operator can hold your lease forever by paying a $1 per acre per year shut in royalty, which holds the just as if production were occurring. The operator may shut in a well because there is no market or because there is not the infrastructure to get product to market. I think vague shut in clauses are a problem and one that most lessors overlook. $1 per acre per year is laughable, the lack of a cumulative time limit to how long a shut in well will maintain a lease without production is alarming. I have seen wells classed as inactive that have not produced for three years in ND and the state should have already given the ultimatum of produce or plug the wells but the state hasn't. Make sure your lease gives you whatever protection you need because the state does not even enforce their own regulations, except for when and as they feel like it. Pamela, I hope you have a good evening,


Your lease likely has a shut in clause, but let us know after you review it.

Good Afternoon Wade Caldwell, Thank You for your reply. Yes, my Lease does have a Shut In clause & it’s length is two(2) years. Once Thank You for your reply. Respectfully Pamela F. Peterson