Has anyone given any thought to having an independent company frack their property? I know there are professionals on these discussion sites who can demonstrate the whys and why nots.
I know with a lot of landowners not having their leases renewed maybe they can form their own coalitions to drill and sell their minerals w/o the O/G companies.
This should be viewed as a fun discussion.
It's true there is pipeline everywhere. There is, for example, a gathering line very close to my own property. It was built and is controlled by the gas company. If they allowed access by those who refused to sign their lease I would be shocked. Doing so would serve as encouragement for (independent drilling) activity they want desperately to avoid.
The day any gas company facilitates independent drilling within its zone of operation will not soon arrive.
gas companies have been facilitating independents for years also other o and g producers sell into each others pipelines every day I am sure the bank would want prove you could sell your gas they were loaning money against.......this is the real world and no bank is going to loan millions on a hope they need to see you can pay them back
Not where I live. Maybe for small time, shallow, stuff in the old days. For Utica and/or Marcellus? No way.
what ever you think Frank but not all gathering systems are owned by O&G companies that's why the O&Gs are charging landowners for transportation cost they are using pipelines they do not own Williams company and markwest are not O&G production companies but they own pipelines and they gather from many different companies production eqt buys from companies other then there own......could you imagine the pipeline cobweb if each company had there own pipeline exclusively for there gas only
I take your point, Mike, in event of third party, disinterested, gathering line ownership. Such ownership does not exist where I live. Here there is only one show, with everything (wells, lines, compressor stations, you name it) owned or controlled by the same gas company. That's what prompted my analysis. Before the Marcellus there was no NG development here. That one gas company has built everything up from scratch over the last seven (plus or minus) years. I doubt they would be welcoming of interlopers drilling in the middle of their carefully-developed patch.
Too much risk to do a single well, no one would fund it. Companies/investors expect a certain percentage of wells to go bust, so you need a minimum of 100 or so wells before it's palatable.
I work for one of the large drilling companies. We drill Marcellus and Utica wells. By the time we get done paying the landowner lease bonus, royalties, gas/oil transportation costs, fracking costs, taxes, wages, reclamation fees, permit fees, pipeline right of ways, etc. combined with the drastic decline rates of the wells (especially the Utica) we aren't sure at this point that many of the wells will even break even. Why would anyone want to drill their own? Take your lease bonus and your 12.5% to 20% royalty, kick back and be happy.
Thanks for adding a few more costs to the horizontal drilling. You asked about the target formation for a Utica well. It depends on what area that is being drilled but mostly we go for the Point Pleasant because it has a higher limestone content and therefore fracks better.
If this were such a profitable deal as all these folks seem to think then why are so many E&P's going bankrupt.
When you have a simple mind and merely wait for the postman to deliver your check each month you tend to the think the world is a very simple place to live in when in fact it is extremely complex and risky.
I can only imagine the comedy of errors and missteps a landowner group attempting to obtain permits, insurance, ROW, capital, knowledge and the list goes on and on and on that it takes to successfully complete a well and monetize the hydrocarbon it produces. Even the smallest of companies have dozens of very skilled professionals doing all these complex and technical aspects.
If however you are inclined then call a townhall meeting and organize your own E&P company and learn for yourself. My prediction is you would quickly go back to watching for the postman each month.............. far easier.
Here's an idea for you......... instead of seeing an oncologist and spending all that money why not just develop your own cure for cancer............ seriously has anyone considered this..........Eureka
Excellent remarks Daryl. The drilling and completion cost, expertise needed, regulatory cost and burden, marketing and maintenance all are formidable. And someone needs to be the decision maker. If there is a group or coalition of mineral owners, who has decision making power? Another consideration: the unconventional business is a law of averages game. One well is too risky. Out of 10 wells (roughly $50 million D&C cost, depending on depth and lateral length), 3 may be very good, 3 may be dogs, and 4 may be average. Or all may be dogs, depending on rock quality and drilling and completion technique. One more thing. If the mineral owner is a holdout, and all the offsetting owners have leased, how much land does the holdout control? All laterals are not created equal, and a lateral less than 4000'-5000' would most likely not be economic. Recommendation would be to lease to a good operator and collect your royalties.