Can property be in more than one Unit? Sewickley Township, Westmoreland County, PA

We have currently been under production since 2013 with 3-horizontal wells that cross under our farm. We were recently notified that there is another well pad that has been completed and the drilling will soon begin for five horizontals located just about two miles away. Chevron sent a map asking us to identify "any active, inactive, abandoned, orphan or plugged oil/gas wells that are on our property". According to the Chevron map provided, the bore ends right on our property boundary line (not on our property) but they want me to identify everything within a 1000' lateral buffer. I believe that we are not part of the unit, although the buffer goes completed across our current farm and onto another property that we own and is not yet under a gas/oil Lease. 

We talked with a Representative from Chevron and he told us that since we are already in a producing Unit, we can not be placed in a second Unit and if they decide to come under our ground to take the gas, they won't pay us. 

Any thoughts/advice is greatly appreciated.

Mary

Irwin, PA

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Permalink Reply by JK on March 27, 2018 at 6:40am

Time for a good O&G attorney.

I do not take any rep's word for anything. PERIOD

One thing I did was contact the DEP Chief and get the plats for all of the wells.

They will send them to you.

That is your definite proof.

You can do this before talking to the attorney.

I swear we must all think for ourselves.

Permalink Reply by Bullfrex on March 27, 2018 at 11:46am

So I am a bit confused, are both the existing unit and the proposed unit being developed by Chevron?

I can't imagine a scenario where you would be included in both units, especially if there are different producers for each unit.

There is a setback distance they must observe in PA, which I believe is 330', but I don't know that for certain.

How can they do this? "We talked with a Representative from Chevron and he told us that since we are already in a producing Unit, we can not be placed in a second Unit and if they decide to come under our ground to take the gas, they won't pay us". That doesn't ring true to me.

I also don't understand this statement...."I believe that we are not part of the unit, although the buffer goes completed across our current farm and onto another property that we own and is not yet under a gas/oil Lease". Not certain why they can take gas from an unleased parcel of land....

A good O&G attorney is in order here. Good luck to you!

Permalink Reply by Mary on March 27, 2018 at 2:05pm

Thank you J.K. and Bullfrex....we have a call into a Oil & Gas Attorney. Yes, both the existing Unit we are in and the proposed unit is with Chevron. I'm not heard of the 330' setup although I've not looked into anything since we had negotiated our Lease for our current farm back in 2011.

The Rep from Chevron that called us yesterday specifically indicated that we would not be part of the 2nd Unit since we are already in another Unit. With the bore ending at our boundary line, no doubt, they are taking our gas. 

We'll just wait to talk with the Attorney to see what we can do.

Thank you again.

Mary

Permalink Reply by BW_Appalachia on March 27, 2018 at 11:28pm

Mary, 

You can look up on the plat fairly easily on the PA DEP site. You should be able to see from there if they are actually including your property in the unit or not.

You should also be able to see the prospective producing formation on the permit. Did they mention if this is a Marcellus or Utica Unit? You could be included in a second unit if it's in a different producing formation.

Hope that helps.

Permalink Reply by Bullfrex on March 28, 2018 at 12:32am

BW,

That is a question for which I had not found the answer. Thank you for your input.

It seemed reasonable that different target formations could have overlapping yet different Production Units, but I wasn't certain of the legalities.

Permalink Reply by LewPa on March 28, 2018 at 3:17am

Bullfrex,

I have property in Butler County,Pa that is in two different units with Rex Energy. One unit is drilled in the Burkett formation and the other unit is drilled into the Marcellus formation. Both share some of the same acreage and get two separate royalty statements. This happened years ago. Lew

Permalink Reply by BW_Appalachia on March 28, 2018 at 4:03am

Thanks, LewPa/Bullfrex,

That is a perfect example. If you think about the purpose and intent of unitization, it is to prevent waste and incentive efficient development. If you couldn't differentiate units by producing formation, a lot of today's PDP laterals wouldn't exist.

Back in the conventional hayday, unitization was common for shallow wells. If there was a complete prohibition on multiple units, a lot of Marcellus production would have been prevented due to previous units.

You will start to see this utilized in areas where depth severances have resulted in a different Marcellus and Utica owner. There may be an existing Marcellus Unit with operator A, but operator B if free to put together a Utica Unit that may contain the same or overlapping acreage.

Permalink Reply by Bullfrex on March 28, 2018 at 10:50am

Thank You LewPa and BW!

This all makes perfect sense, and one of my 'burning questions of gas life' has been answered!!

Um....that's natural gas....the other, I all too well understand!

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