I am in a "production Unit" where the well has recently been classified on state records as Inactive. The well is one of the first East drilled in Tioga County and is vertical. I do not think it was ever fracked and no horizontal wells were drilled for the pad. The well is less than a couple hundred feet from a new pipeline.
I understand the word "inactive" but what does it mean in regard to the future operation of the well?
Is anyone else in a Unit where the well has been classified Inactive?
I am seeking and Looking for opinions.
Interesting term. Did you recieve a "shut in" fee in the past? I wonder, does inactive mean no-producing?
The way I read the lease, the 'shut-in' fee doesn't start until 12 months after the primary term of the lease ends. So you wait the 5 years of the lease, then an additional 12 months before you get a shut-in fee. Some of the original leases of properties in that unit are probably up, so they may be getting shut-in fees ($5/acre/year).
The well has to be a producing well and the lessee is unable to .market the production
The SWEPI lease says: "If after the primary term of this lease, all wells on the leased premises or within a unit that includes all or a part of the leased premises, are shut-in, suspended or otherwise not producing for any reason whatsoever for a period of twelve (12) consecutive months, and there is no current production of oil and gas or operations on said leased premises sufficient to keep this lease in force and this lease is not otherwise kept in force by other provisions of this lease, Lessee may maintain this lease in effect by rendering to Lessor as shut-in royalty, a sum equal to five dollars ($5.00) per acre."
Lynn that sounds like an infinite lease extension for five dollars an acre ?
It does sound infinite. It is basically saying that as long as a unit is in place and operation in any way shape or form have been suspended they can take as much time as they would like to "get back to the OPERATIONS". Operations of course are never clearly defined or made specific.
I was always under the impression that in order to shut-in a well it has to be capable of production. This well in its current state may be capable of production but they obviously changed the intent of this unit to being a Marcellus well when they filed the most recent declaration and permits. I think all it would take is for someone within the unit to challenge the shut-in or inactive claim and you would see Shell move this up it's priority list. They obviously have intensions for this well. They just don't have specific motivations if they are not held by law or contract to any supposed requirements as an operator.
I have a SWEPI lease and there is no mention of this in it. However, they did try to sneak in a resign at $5.00 an acre if the lease ran out.
A SWEPI lease without a shut-in clause?
The way I understand being declared inactive its the start of the time clock for the operator to progress with the well or close it down,there is a time limit once that is declared?
Are there any time limits at all on wells, beyond those in the lease? The Kennedy well was drilled 4 or 5 years ago and nothing has been done since. I assumed the 'inactive' status was just a way to get around the impact fee until they do something with the well.
I don't get it. The Butler well is listed as 'active' in the production report, but it's not producing...how can it if it isn't on a pipeline? Maybe 'inactive' means that they don't plan to do anything with it for now? The 3D survey is still going on; I saw their 'drill buggy' for drilling shot holes across the street last weekend, and the helicopter is flying around dangling equipment all the time. BTW there is a really bright light to the west of me; saw it for the first time last night. That usually indicates a drilling rig. I'll drive around this weekend and see if I can find it.
The Butler well is now producing.It went to active status in either the last couple of days in Dec. or Jan, 1. We have not been contacted by Shell yet but from what I understand it is three months until royalty checks start coming. I know it is hooked up and is running, you only need to go by it to recognize it.
Production reports are always months behind in reporting.