Yes he is obtuse, yes he speaks his mind, yes he can be an A%$hole, but he is the landowner's $%#&^*$.
He speaks for us.
I have followed Fang's post from when he first appeared, who is he, it really doesn't matter to me because he is never personal and he debates obviously with facts and knowledge. What I know about him from this site is he is an old timer landman from the days of the first clinton wells. He is a veteran of urban unitization which is the toughest part of the well unit development. He is very experienced in my book.
Now many here question his agenda when they no longer can debate. Let me tell you what I see as his Agenda, it is the same as mind and the same as landowners and the same as professional people in this trade. We and Fang are outraged how those who never understood a clinton well royalty check, never managed real estate, those who's knowledge of a lease was an apartment lease............those who jumped up and preached to the masses who owned land that they could represent them in this once in a life time gold rush. Yes we have an agenda to see justice for fellow landowners and the RETURN of the professionals in the continuation of this energy development. The banishing of those who unjustly enriched themselves at the expense of the landowner, big or small.
Fang's Agenda IMHO is the same as Jack Straw, Marcus, Townsend, Brink, The oil patch man, all of us who post and learn here everyday, just local community folk.
Fang , would like your opinion. My lease expired Nov.28th 2012 with Chesapeake. The paragraph 19 was taken out of the lease. There is no activity going on but there is a proposed well that I will be unitized in. Chesapeake refuses to release the lease and my attorney has sent a forfieture of lease letter to them. My attorney believes they will make an offer if not I have to go to court to have my lease released which my attorney says I will surely win. I can't believe your lease expires and they refuse to release it. Have you ever heard of this?
I'm in Jefferson county Ohio, Thank you for the reply.
Here is a hypathetical question. What if your land was unitized in a 640 acre pool 4 years ago by a single vertical well and your lease extended into a second term under HBP? Let's say a year ago, the same company drilled one or two horizontal wells in the unit and broke it up into smaller, 150 acre units closely corresponding to the horizontals. None of your land is included in those two wells. The gass company determines the area is only marginally profitable because it is dry gas and the market price for dry gas is too low. The company has publicly commented that it intends to mothball the area until a distant, later date - a date unspecified. No activity occurs in a year and your second five-year term runs out. How can you still be help by production if you are no longer within the original defunct 640 acre unit?
In your scenario that first vertical well would still be holding the lease.
To my knowledge, this situation does not exist. Let us say the first horizontal was executed from the original vertical and a smaller unit of 150 acres was set up, excluding any land held by our land owner.
My problem has always been that the original definition of being able to hold 640 acres, or even 1280 acres, was simply a ploy to hold land with a single, useless, vertical well for a term longer than 5 years. If the gas company needed 10 years to develop the acerage, they should have stated so openly and paid for 10 years. If a mile long horizontal well will only drain 150 acres, then that is all of the land that should have been allowed to have been tied up - when that horizontal was drilled. All other, undrilled land should have become available for new leasing. If the original drilling company did not have the capital to do the required horizontal wells to hold the acerage, it would have been replaced by bigger companies with bigger pockets.
Brian: That is the purpose of a Pugh clause: to release undeveloped land after a certain amount of time. However, the operators will not generally offer an uninformed landowner a Pugh clause for obvious reasons. Unitizing lands nowadays has nothing to do with drainage. Also, in a previous post you mentioned that the larger unit was broken into smaller units. I can see no reason why any operator would do this, even for joint operating accounting issues, if any even exist. Once the unit is declared and is HBP, there would be no reason to declare smaller units.
What, no takers on my comments? When this situation becomes wide spread, and it will become wide spread in the northeast of Pennsylvania, won't a condition of obvious, blatant fraud become evident? Now one might say lawyers, judges, the DEA, or public officials were either terribly ignorant or their judgement was compramized in some way a couple of years ago when they accepted the current definition of HBP. After all, I would assume these officals in high places would have demanded geologic and geophysical evidence that 640 acres of land could indeed be drained by a single, horizontal, fracked well, let alone a single vertical, unfracked well. Some record of this evidence from three or four years ago must be on record, right?
After ten years of litigation, some people might even be proven to have accepted bribes. Proper justice would be served, but it would be a waste of time. However, lawsuits challenging the current definition on HBP using evidence as my hypothetical case suggests, might make drilling companies speed up drilling to hold some lands. More likely, it might force them to make new and better offers for land that they will not be able to hold by the old definition of HBP.
Brian, your comments challenged me to make some “back of the envelope” calculations.
From what I have gleaned from the literature, in a tight shale such as the Marcellus, a frac extends (on average) 350-500 feet away from the well bore. Many Operators run a Microseismic Survey in conjunction with the fracing, in order to obtain tangible information on the efficacy of the particular frac job. By now, many of the Operators have a general idea of how far the frac extends (on average) for a particular area.
Holding to what I assume to be appropriate, I will generously allow for a 500 foot horizontal frac away from the borehole for the typical Marcellus well (a 1000 foot wide swath when both directions away from the borehole are taken into consideration).
For a well with a 5280’ horizontal well bore:
5280’ well bore x 1000’ wide fraced swath / 43,560 square feet/acre = 121 acres
If my assumptions are correct, a one mile long horizontal Marcellus well would have a sweep of 121 acres.
For a vertical well:
The area swept would be pi x r x r / 43,560 square feet/acre (where r = 500’) =
3.14 x 500’ x 500’ / 43,560 square feet/acre = 18 acres.
These (in my opinion) realistic calculations show that one horizontal well should not be able to “hold” large acreage (one horizontal well should hold no more than 160 acres).
These (in my opinion) realistic calculations show that one vertical well should not be able to “hold” large acreage (one vertical well should hold no more than 40 acres).
I believe that the current understanding of the Geology, Rock Mechanics and Reservoir Engineering support my rough calculations.
I invite anyone to challenge my approximate calculations; if they can propose (and defend) other parameters.
This is something I have never seen before and it makes total sense.
So WHY do 'units' have to be so large?
Seems like a big racket to me..
It's not fair to us landowners.
If this is all that is needed for vertical and for horizontal wells then we could be leasing for more wells and to more companies. Instead we are forced to be tied up for absolutley nothing.
This is an old discussion that took place at least once before 2 or 3 years ago. I participated in it when it happened in Pa. If you are a land owner in Ohio, West Virginia, or in the future New York, and have not signed a lease yet, you should think very carefully about signing a lease with a unit limit of 640 acres or bigger. Better yet, I would like to see the definition of HBP as viable on a single, unfracked, vertical well with no distribution pipe to it, be re-examined, if not in Pa. then in another state to set a precadent.
RE: "So WHY do 'units' have to be so large?"
I would expect a 640 acre unit to eventually support a pad with 4 x 5280' horizontal.
Or a 1280 acre to support 4 x 10,560' horizontal.
Or a 1280 acre to support 8 x 5280' horizontal.
The various State agencies allow the Operators to tie up large blocks with a single well (returning to fully develop in their Sweet time).
In Texas, the State's O&G interests are handled by the Texas Rail Road Commission (RRC).
They have developed their "Rule 86"
"RULE §3.86 Horizontal Drainhole Wells
If the well is classified as a horizontal well under the Rules and Regulations of the Railroad Commission then in effect, then the maximum size of the Earned Acreage Unit shall be determined by the following formula: 40 + .024 X L, where L = the length of the horizontal lateral component of the drainhole of the well, from the first take point to the last take point.
Production Unit Size = 40 acres + 0.24acres/foot x L
where L = the length (in feet) of the horizontal lateral component of the drainhole of the well, from the first take point to the last take point."
Using the RRC's formula for a 5280' well:
Production Unit Size = 40 acres + 0.24acres/foot x 5280' = 1307 acres
A number not too different from the figure I calculated using my assumptions.
PA, OH and WV are light years behind the Texas RRC.
RE: "Seems like a big racket to me.."
Al Capone and Bernie Madoff would be proud.
RE: "It's not fair to us landowners."
Goes back to the Landman's favorite quote: "There is more than one way to skin a Landowner!"
There seem to be two kinds of Landowners: the ones who do not know that they are being screwed ... and the ones who do know that they are being screwed, but can't do anything about it.