I have a small amount of leased mineral acres and receive very small royalties. I am also receiving papers involving a horizontal well. What is happening here and can I expect compensation? Is there anything I should be doing at this point or in the future? I would appreciate any information about this area.
If you are leased already and do not have a depth clause, you do not have to do anything. Read the papers and make sure there is no pooling case in there. If there is, then pay attention to that one because it has a short time limit on it. As the cases are resolved, you will get the orders on them. I find it easier to separate by case number and put them in date order to follow them. They will explain what is happening.
Once all the OCC paperwork is done, you will be able to find the permit on the OCC wellrecords site searching on the name of the well or the surface location. Test
I just received notices from 2 drillers in July associated with S21-T1S-R4W. One of them made a Relief Requested: 1280 Acre Horizontal Drilling and Spacing Unit, for S16&S21-T1S-R4W. The other made a Relief Sought: Horizontal Spacing, for S21-T1S-R4W. Is it normal for 2 different drilling companies wanting to drill in the same section?
Yes, it happens quite frequently. They will work it all out and one will end up being the operator.
Meaning it always works out for only 1 operator in each section?
Not always. I have one section with an east-west fault in it. The northern half of the section is controlled by one operator and the southern half of the section is controlled by the other.
Or it could be operators in different zones such as an old shallow field and a new deeper horizontal one.
Brock- there could be differences operators in the section for different zones. All depends on what they work out but most times one company operates the unit.
One more thing. I have seen an operator apply for the drilling and spacing for 2 sections, just like the one I described above. I know S16 is directly north of S21, so why does the operator apply for doing the drilling and spacing in both sections? Does that mean that the rig will set in one section but will be drilling in 2 sections? If so, does that mean MRA owners in one section will share production from another section?
It is much cheaper to drill one two mile well than two one mile wells. Depending upon the permit, they may have a surface location in one section and drill the vertical hole and the turn in one section and only perforate in the second section. In that case, only the section with perforations will receive royalties. Another case is to have the well location at the far edge of one section and drill across both and perforate both, in which both sections share the royalties.
What is a “perforations”?
When they drill a well, they have a steel casing that lines the well bore. Securely cemented into place to protect the hole from collapsing. Inside that casing, they have production tubing to collect the hydrocarbons. The outer casing must have holes shot into it at regular intervals in order to let the hydrocarbons into the borehole for collection. The holes are called perforations. They shoot what look like bullets into the casing, then hydraulically fracture the shales by pumping enormous amounts of water and proppant into the reservoir. Opens up cracks in the formation by the water under pressure and the proppant holds the cracks open so the oil or gas can flow into the pipe. Think of a giant network of tree roots outside the borehole. Here is a very good video of how it works. Mineral owners only get paid if there are perforations in their minerals.
Not an engineer, by my understanding is that they are holes created along the pipeline so that product can be gathered along its entire length.