Disposal well

Questions;  If I have 60 acres and I lease 20 of it to a company wanting to put in a disposal well, will the other 40 acres 's oil& gas never be extracted. I guess what I'm asking is; How close to a disposal well will a horizontal well lateral drainage area be positioned? Also; is the $$$ I will be getting from this disposal well be well worth never getting royalties from the rest of the farm's oil&gas?

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Permalink Reply by Philip Brutz on March 23, 2014 at 12:56am

Are you planning on living on your land?

Permalink Reply by Philip Thackray on March 23, 2014 at 1:34am

Bo,

Here in PA I would try to find a geologist at the PA Department of Conservation and Natural Resources (DCNR) and start there.  I have such a such a contact but I think you are in Ohio.

The disposal well should be targeting an exhausted or useless well sealed layer.  Some go almost to the pre-Cambrian well below any know productive shale layer.  If the 20 acres was assigned to the specific disposal layer(s) then I would think that the 60 acres would be available to lease to an O&G company.  Of course, I'm just speculating.

Can you identify the O&G company most likely to lease your property and talk to them?

There are a lot of disposal wells in Ohio - I know that trucks leaving here in Southern Butler County, PA go to Ohio for disposal.  Some of those disposal wells have to be in the productive shale areas so this situation has been dealt with.

Good Luck,

Phil

Permalink Reply by bo boboski on March 23, 2014 at 2:01am

Maybe someone in a similar situation that has the info will respond. I would be living on 1 acre of it. Far from the injection well site.

Permalink Reply by Alan Bowers on March 23, 2014 at 2:11am

It depends on how you write the Lease, what exclusions you put in, and depth.  Odds are the vertical disposal well will go deeper than 4000 feet which means the well will need forty (40) acres.  Who is kicking in the other twenty (20) acres?

Look up some of the depths of old Clinton wells that are being changed over to disposal wells.  You will find they are over 4000 feet.

If you limit the depth of the disposal well AND retain the deeper rights you can Lease the 20 acres for BOTH the disposal well AND a Utica/Point Pleasant well.

Do you intend to live on the land with the disposal well?

Permalink Reply by Alan Bowers on March 23, 2014 at 2:20am

You might want to think about creating an LLC and transferring the land being used for the disposal well in the name of the LLC.  You also might want to inquire about liability insurance to protect your assets against any claims in case the operator of the well doesn't follow the rules for disposal.

You probably would also want a clause in the lease that says that the operator of the well has to include you in being covered for liability for any claims and has to pay for any of your legal costs related to defending you (and your LLC) from a claim should one arise in relation to the operation of the disposal well.

Permalink Reply by bo boboski on March 23, 2014 at 3:53am

good points!  What kind of income does the landowner receive from these wells?

Permalink Reply by Philip Brutz on March 23, 2014 at 4:23am

Would it make sense to sell the mineral rights to the 20 acres before you turn it into a disposal well?

Permalink Reply by Philip Brutz on March 23, 2014 at 5:34am

This was in the CHK lease that they wanted me to sign:

The right to drill injection wells to dispose of "brine, completion and production fluids, waste water and any hydrocarbon related substances from any source, including, but not limited to wells on the Leasehold or lands pooled or unitized therewith or from properties and lands outside the Leasehold or pooled or unitized therewith, and to conduct all operations as may be required, for so long as necessary and required by Lessee for purposes as herein provided."

All for the sum of $1000 per year total, not per acre per year.

Many landowners signed these leases.  I don't think that they have any shortage of injection well sites.

Permalink Reply by David Perotto on March 23, 2014 at 9:58am
1000 is ridiculous for the risks you are now partnered with. An attorney is a must to protect yourself. You MUST be properly indemnified and held harmless. And what if an earthquake destroys structures?
Permalink Reply by Philip Brutz on March 23, 2014 at 10:11am

The way I read the standard CHK lease they could hold the lease until the end of time by converting your land into a injection well.  Held by Injection.  Without ever giving you royalties.  I wonder how many landowners signed this lease?

Permalink Reply by bo boboski on March 23, 2014 at 10:31am

By the time all these people get done suing them,they will have sold all their assets and be ready to file bankruptcy.

Permalink Reply by evan on March 23, 2014 at 10:45am
Don't say that Bo. I'm in one of their units. Haha

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