Replies to This Discussion

Permalink Reply by evan on January 28, 2014 at 8:16am

On my neighbors pad Chesapeake claimed that they will go northwest , I think 1800 ft before they reached the Utica so it would be easy to see where a land supporting a well pad may not receive royalties but I believe the landowner would..  I just looked at the unit papers and all his acres in the unit start right at the wellpad even though they wont reach the depth they need until they go north several hundred feet. Hope that helps

Permalink Reply by LewisClarku on January 28, 2014 at 11:26am

Scary to think you could have your land tied up with an ugly drill pad on it forever and not receive $1 of royalty for the millions of dollars being taken out other than the $15k upfront payment for placing a pad on one's land while your neighbors are all receiving long term monthly royalties based on having a drill pad on your land and not being able to use that land in one's lifetime...something's just not right here.  

Sounds like a word of advice to all those considering having a drill pad on their land to get it in writing from the OG company that your land will be included in a drilling unit(s) otherwise tell them go put their pad somewhere else....$15K (then deduct taxes) isn't  worth the aggravation, noise, truck traffic and scaring of one's land if there is no guarantee of long term reward and reimbursement for one's efforts to help the OG company get rich....not to mention the legal liability....the same people who tell you that you won't get sued if something goes wrong...yeah right.

Permalink Reply by Kathi Albertson on February 12, 2014 at 7:37am

1509.022 Location of wells using directional drilling.

Except as provided in section 1509.021 of the Revised Code, the surface location of a new well that will be drilled using directional drilling may be located on a parcel of land that is not in the drilling unit of the well.

Added by 129th General AssemblyFile No.28,HB 153, §101.01, eff. 9/29/2011.

The law above allows a G & O Co. to put the rig on your land and not include you in the drilling unit.  Be careful what you sign.

Permalink Reply by Kathleen on February 18, 2014 at 12:50pm

This one can be harder to explain. A pad does not guarantee you royalties but the odds are in your favor.
Each pad can have one huge unit of 1280 acres or two smaller 640 acres units. (Just showing the most common type)
Lets assume the pad has two 640 units which would require two wells. One well drilled for each 640 acres.
The owner of the pad will be placed in one of the two units. Or their land could be split between both units. It just depends on how the land is laid out with the wells running NW and SE and how the units get surveyed.
If they own more land then the pad sits on, I can easily see them not having all their land getting included in the royalties. This this when you hope you have a good Pugh clause in your lease.
I'm sure almost every pad owner is in a unit or two coming off that pad.

Permalink Reply by LewisClarku on February 18, 2014 at 4:33pm

Thanks Kathleen for the explanation...it's still not clear to me how a drilling unit is defined or what factors are considered when defining a drilling unit...is there some rules/ guidelines (issued by ODNR?) by which O & G co. need to abide when defining a drilling unit?

I'd presume that the primary driver in defining a drilling unit would be the location of the well bore head(s) and plot plan that they have to submit to the ODNR. Furthermore the final drilling unit would only be defined by the direction and length of the horizontals that are actually drilled....since a plot plan would only represent the "intent" but may not reflect what actually and finally got drilled e.g.the length of the horizontals.  Does this make sense???

I've heard some folks only learn from the O & G co that their land is in a drilling until AFTER they're done drilling??? Which kind of makes sense. Again I presume that this would be defined by the final lay out, direction and length of the horizontals.  

What I can't understand is how one could not be included in a drilling unit even with a drill pad on your land.  This would imply that a drill pad itself is NEVER part of or included in a drilling unit...is that true?  

It seems that in a situation where the landowner's parcel is rather small (<20 acres) and who has a drill pad placed on this small parcel might not be included in a drilling unit.  If on the other hand he owns a much larger parcel (> 20 acres) and the drill pad takes up say...only 10 acres of the total 20 acres then it would stand to reason in this scenario that the remaining 10 acres could be included in the drilling unit....again does this make sense????

Permalink Reply by Kathleen on February 19, 2014 at 2:11am

Last question answered first. Just assume the pad is in a pooled unit coming off the pad. There are times it would not be included but the odds are in the favor of the owner of the land the pad is on.
Remember of the landowners of the pad NO NOT own the minerals, all they get is the money from the pad.
This is where people get confused. There is a pooled unit and a drilling unit.
The drilling unit is where the well goes and by ohio law has to include all minerals within 500'. That would make them min 1000' feet wide (500' on both sides of the bore) and the length is determined by the driller. At the end of the well add another 500' to follow the law.
Back to the first question. This 500' feet set back helps the pad owner. Again most pads are included in at least one unit coming off the pad.

Permalink Reply by LewisClarku on February 21, 2014 at 4:50pm

Thanks but this is still confusing ..if I understand it sounds like a drilling unit (the area around the well bore) may or may not be included in a pooling unit...this begs the question why would anyone agree to have a drill pad unless you are assured to be also in a pooling unit?

Permalink Reply by Kathleen on February 22, 2014 at 3:07am

Hi,

Its really not a may or may not. Its a May, over and over and a tiny maybe not.

Permalink Reply by Kathi Albertson on February 22, 2014 at 4:00am

One problem is that some of the older shallow well leases state than another well can be drilled on the lease held property at any time. The land owner could find that they are playing host to a drilling pad to extract gas/oil from their neighbors property due to an agreement signed 50 years ago. This is probably not likely, but still possible under the old leases.

Permalink Reply by Kathleen on February 23, 2014 at 2:31am

Correct, but many of them (sorry to say not all) have an acreage limit that's not big enough to handle these large units. 40 acres, 80 acres, 160 acres.

Permalink Reply by LewisClarku on February 22, 2014 at 6:19pm

Thanks I still don't like the idea where the possibility exists (no matter how small)where having an unsightly drill pad on my land exists that produces a lot of revenue for the O&G company and my neighbors while I'm left lots of construction traffic, noise, and land I won't be able to use in my lifetime. Don't get me wrong I welcome a drill pad but I also want 100% assurance that for my contribution of my land being rendered useless that I will also be included in a pooling unit(s)...sorry a one time 16k payout isn't worth the trouble unless I have some assurances.....in writing that I'll be in a pooling unit....I'm a capitalist....not a socialist.

Permalink Reply by bo boboski on February 23, 2014 at 12:37am

$16,000.  is WAAAAY too low.for a drilling pad. If you can negotiate, get at least $25,000. and make sure you are included in the production unit. IN WRITING!

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