Can a company horizontal drill under my land without a lease?

As I continue to educate myself on this site, questions come to mind.  What is stopping a driller from a nearby site from drilling into my shale without a lease.  Also, how close can they frack near my property to "steal" gas and oil?

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Permalink Reply by Jack Straw on March 22, 2013 at 2:05pm

RE: "By "moving target" I presume you mean changing geology / shale consistency."

By "moving target" I was referring to the fracing technology ... and the potential for there one day being improvements in that technology that might result in a further "reach".

Note there are a lot of maybes in the above.

 

JS

Permalink Reply by melissa humphrey on March 23, 2013 at 8:39am

If you search geo academic publications you can find info on frac reach. The extent varies by shale rock type, clay/sand ratios and many other physical rock qualities. Within a play, over long stretches, there will be variation as well.

In NE PA, middle Devonian Marcellus, studies have shown heavy frac effect rolling out 2-300 ft, moderate to ~500 and a few stray up to 750 ft.

Note, important, from a legal standpoint the issue has become a driver. It is uncontrollable, and the court isn't going  to disallow fracking, thus advantage goes to the operator. The court loks out for society's best interest at a point. a stray frac at 1000 ft, seen as trespassing would eliminate vast portions of resource extraction. The follow-up means reduced interest in portions of a play where there are considerable hold-outs- inefficiency =s lower bonus or none.

The big decision 3 yrs ago was it Ok or TX, is fracking trespassing, the court said, no. Individual parcel settings determine if this is a positive or negative for we who want our resource extracted. In most cases for PA with Rule of Capture, it is negative.

 

Permalink Reply by Jack Straw on March 22, 2013 at 9:15am

Although an Operator can legally, in PA, drill a horizontal well with the well bore located just inside a lease boundary, there is no certainty that they could get away with fracing that horizontal well without repercussions.

To my knowledge, Frac Trespass has not been adjudicated in PA.

It is my understanding that (again in PA) most O&G Operators are avoiding the situation in which they drill and frac horizontal wells with the well bore located just inside a lease boundary.

I suspect that most O&G Operators are avoiding a situation in which they would have to defend against Frac Trespass. It is my understanding that, in PA, most O&G Operators choose to stay around 350 feet from a lease boundary.

If a significant number of situations arose in which wells were drilled and fraced along boundaries, a Landowner class-action would likely result; and there is no certainty as to how such a law suit might turn out. 

The reality of a PA horizontal well is that thousands of feet of the producing formation are exposed to fracing; whereas the traditional PA shallow vertical well only exposes several tens of feet are fraced. This new reality begs for new rules; this new reality begs for a revisit, review and reworking of the existing old rules. It would be helpful if issues associated with Frac Trespass were settled by the State, settled before there is litigation.

 

All IMHO,

                      JS

Permalink Reply by melissa humphrey on March 23, 2013 at 8:51am

Jack Straw- Very informative, all, thank you. 100% the big Q has not been adjudicated in Pennsylvania.

Penna is conservative on property rights, that is about the only underpinning giveeing us hope, 

And100%, risk assessment depts in public EnPs have the issue as a focal point. Should the courts rule of course all along, Rule of Capture, goes to au naturiele, or what ever the correct latin spelling is then fracing is man-made, artificial and subsurface trepassing.

Odds? not 100% maybe 50-50.

Operatrors fracing close, how close? to unowned leases or unleased parcels would have to pay 100% of values stolen/extracted.

Thus risk depts impose limits on bore distance to edge of units.

Pretty fascinating.

Permalink Reply by Jack Straw on March 23, 2013 at 9:52am

The Rule of Capture has worked well in PA, and has done so for a long time; but, I would argue that it is time to relook at that "rule" and make adjustments (or place limits upon it).

In PA, when Rule of Capture was applied to a vertical well drilled adjacent to a lease boundary, the party on the opposite side of the boundary had the option to drill an offsetting vertical well ... in that fashion protecting/defending their resources from capture. 

If a horizontal well is drilled and fraced along a lease boundary, were an offsetting horizontal well to be drilled and fraced just across that lease boundary; the results would likely be the lose or severe damage of both wells.

The act of fracing of the second well would preferentially push the fracing fluid and proppant into the well bore of the first well. The second frac would take the path of least resistance, which would be into the first well.

So the defense against a neighbor capturing your hydrocarbons afforded for vertical wells does not in practice exist in a like fashion for horizontal fraced wells.

The "new" reality resulting from the application of new technology begs for "new" rules.

 

All IMHO,

                  JS

 

 

Permalink Reply by Joseph-Ohio on March 23, 2013 at 11:40am

JS

I'm on your bus and agree 100%.

If no new rules in PA and OH exist in the fractured horizontal application then there is a perfect example of where new legislation / rules need to be enacted and enforced.

J-O

 

Permalink Reply by melissa humphrey on March 23, 2013 at 12:07pm

100% on tract jack- In Penna,  the operators know it, some landowners do, the legal community does and slowly state legislators are becoming aware.

The Conservation law applying to Onondaga and older aged formations

doesn't tranfer well to the Marcrellus. And the advent of horizontal drilling creates greater legal problems.

IT IS getting underway, the battle and land/mineral holders need to be keen and up to date and PRESS their reps before something big blows through and it is too late.Mean9ing laws overly operatror orientated.

BIG BIG and will effect royaltty owners for 100yrs +..... Get involved.

Or if you are a n operaror  MOVE fAST..

Permalink Reply by Brian Day on March 23, 2013 at 9:43am

So is the Utica covered under right of capture in PA, or isn't it?  Is this why forced pooling is an option for a Utica well?

Permalink Reply by melissa humphrey on March 23, 2013 at 12:08pm

Some9one ? We are not familiar with OH O&G law, should be easy to look up.

link someone?

Permalink Reply by Brian Day on March 23, 2013 at 2:20pm

I'm being shunned Melissa.  Better not be asscociated with my posts.

2z248p19vqnh9Permalink Reply by 2z248p19vqnh9 on March 28, 2013 at 1:09pm

Brian - you aren't Amish or Mennonite by any chance? (THEY tend to 'shun' for GOD knows whatever reasons - god bless them...). You are NOT 'shunned' - I know that you may significantly add to these discussions - 'shunned' or not. WHAT do you say concerning these matters? Things ARE 'getting sticky' tends to make one's head spin in circles reading through the posts. SO MUCH information - matters changing 'by the minute'...makes one's head spin.

 --Melissa - are you a lawyer? or geologist?...HOW should individual really be looking at these matters? - Brian, your take? - New Field Farm, you also offer quite a few good insights - thank you. It was disturbing reading the individual's post that ... oh, for cryin' out loud - this is just ridiculous.

NOTHING should be so hard - but of course, EVERYTHING is these days (and getting worse). THAT's why I just 'pulled back/retreated' for a bit. Had to. WHY... WHY? - There is an OVERWHELMING FEELING of 'hopelessness' & being RAILROADED as well as HUNTED (literally). I, nor hopefully ANYONE ELSE, has been mentally in a 'black hole' concerning these issues. It IS 'painful' reading about individuals who DO try to 'do their due diligence' to DO THINGS RIGHT - for themselves & their families...to get run over & left to feel like roadkill. NASTY.

One TRIES...tries so very hard to be as wise as possible (whether there is any lawyer involved or not - unfortunately...). One 'does their life' in the best way that they can - they take care of their family (if they have a family to care for...), they do their job well, they help their parents (when they were around...), so WHAT is the deal? REALLY?...like I said - it shouldn't be so tough - or complicated...I know - but alas, it IS.

Why?...it's just not right (but MUCH in life is NOT 'fair nor right'...is it?). 

Permalink Reply by New Field Farm on March 24, 2013 at 4:32am

So if they run a lateral just off the property line and frack it, they're pulling from the property, little doubt about that, I mean that's the idea of fracking and so, I have to wonder how that's legal?  Put yourself on the other side......If you are a large corporation and an individual or collective entity benefits from your product whatever it may be, without proper payment, licensing fees, etc., you would have your attorneys litigate for damages.  A perfect scenario escapes me right now, but cyberspace or music copyright comes to mind.

To me, how this may potentially affect some landowners is that rather than holding out on a lease agreement until the market price is better, a producer moving through a land area signing leases almost implies that a drilling schedule exists and so, those who opt not to sign are  foregoing current and possibly future opportunities.  Current in loss of bonus and royalties and future due to the chance of partial or complete depletion on their adjoining parcel.

On the opinion blog, I provided some future energy perspectives based upon government research and the bottom line is, energy demand will double over the next couple decades and so, I prefer to lease in the future at double or perhaps multiples of the current $4 gas price and my cost to store in-ground is only the opportunity cost of not leasing today BUT I see some risk involved in not entering a contract now also.

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