Replies to This Discussion

Permalink Reply by Lance Nimmo on December 9, 2013 at 4:10am

There are no pipelines!

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Permalink Reply by Trapper on December 9, 2013 at 5:20am

Is this the result of leased landowners balking at pipeline row that are necessary to produce the leasehold?
I hope not.

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Permalink Reply by Chris Crawley on December 9, 2013 at 6:09am

Might be they just want to wait and use the gas themselves? (Think cracker plant).

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Permalink Reply by Trapper on December 9, 2013 at 6:25am

I sure hope your right Chris. I wonder about the plugging thing though.....it sounds so permanent or at least long term.....will we all end up held by this method for years and years?
I hate to jump to conclusions but it gives off bad vibes. We ain't getting any younger! Lol
If only Shell would explain itself.

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Permalink Reply by Chris Crawley on December 9, 2013 at 6:36am

Trapper,

I know nothing about this business but my gut tells me it should be cheaper to plug the wells, (no maintenance) and just hold them until they need them later. The money was spent to get them drilled so now its how best to utilize the resource. 

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Permalink Reply by pg guy on December 9, 2013 at 7:10am

I think plugged means they are kaput - in general plugging is permanent.  And a non-producing well doesn't hold property, so if the initial term of the lease has expired, then depending on exact language, after a year of non-production the lease is no longer valid. Of course if there are other wells in the unit still producing, the lease remains intact.  

It is likely bad news news for the quality of the formation originally targeted by Shell, but at least the landowner can pursue development of other formations once the leasehold is surrendered/abandoned.

 

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Permalink Reply by Trapper on December 9, 2013 at 7:09am

Chris
Perhaps there are tax advantages to this method of shutting in a well in PA....?

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Permalink Reply by Tom Brian on December 11, 2013 at 12:59pm

The 40-50,000 $ a year that is in place per. well  tax per year may be an incentive to bring down the well count ?  duh   20 less wells could cut cost a million bucks a year ,am sure they can find $100 million worth in Pa.  A real old timer once said the power to tax is the power to destroy ...............

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Permalink Reply by Chris Crawley on December 11, 2013 at 3:27pm

Why would you plug a $6,000,000.00 well to save $50,000.?

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Permalink Reply by Philip Thackray on December 9, 2013 at 7:02am

I speculated at the Butler County, PA discussion that the wells may need to be plugged so that Shell can write them off in the current year.  Lots of plugging activity here at year’s end.

During conventional well drilling, it is common to drill through cement inside a casing.  I think these wells could easily be revived when the time is right, mainly much more infrastructure.

Phil

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Permalink Reply by 015334grltd9m on December 9, 2013 at 7:49am

Listen up folks and learn to study!  In a boiler plate permit, there are two categories, "plugged," and "plugged and abandoned."  Which category are these wells?

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Permalink Reply by Lance Nimmo on December 9, 2013 at 7:56am

This thread is hilarious. I guarantee the O&G companies love seeing people in such despair over what is quite common in the O&G world. Everyone in a plugged unit is still HBP. Sure they'll get their garbage delay rental, but for a player like Shell it makes more sense financially to drill and plug than have to resign leases. You do realize they are one of the big players, so there is no one to "flip" these leases to. Sure they can do land swaps with HilCorp and the like, but they don't need the instant cash like a Halcon, etc. The have to get the infrastructure and prices they like. And they will wait for both. Calm down. if you're not getting any younger and need the money, get a different job.  

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