Replies to This Discussion

Permalink Reply by Joseph-Ohio on May 22, 2012 at 8:59am

A Follow Up:

I also wrote to Teresa Fedor, one of the Bills sponsors, and indicated that in my opinion the original 500' setback (for a deep well) in a rural area worked fine in the past and I felt would work now (even in horizontally drilled wells).

To my way of looking at it, increasing the setback distance to 750' forces more drilling units and sharing into the equation.

With HB 493 you would need a little over 1500' to drill a deep stand alone well.  Under old rules you only needed a little over 1000'.

Just my opinions - maybe others feel otherwise.

I'd go along with the majority of landowners (if our voices / letters would make a difference as they deliberate).

As landowners I think we all ought to let them hear from us.

Give them a piece of your mind if you will. 

Permalink Reply by Joseph-Ohio on May 22, 2012 at 2:07pm

In terms of stand alone wells:

It's pretty complicated but, I guess I should qualify my perspective.

A setback of 500' from a property line considering a property a little over 1000' wide allows one (1) lateral of a given length to assemble a drilling unit of given acreage.

Question is how many laterals are required to drain a 1000' wide swath of Utica ?  Also how far apart must the laterals be to properly do the job ?

Question is also how many laterals are required to drain a 1500' wide swath of Utica ?  Like above, how far apart must the laterals be to properly do the job ?

I'd be safe in saying that a 1000' wide swath would take a lesser number of laterals than a 1500' wide swath would (length being equal) and I'm guessing there would be one (1) lateral centered along the length of the drilling unit (based on various literature I've been reading).  

Now (sticking my neck out a little by guessing) there would be two (2) laterals for a 1500' wide swath of the same length; and three (3) parcels involved (because you would be closer than 750' from the property lines across the width).  So, now I'm seeing that the whole venture provides the landowner with the well head on property a maximum royalty of 33% of the lease agreed to percentage of gross production instead of a royalty of 100% of the lease agreed to percentage of gross production.

In the above comparison I guess I'm seeing that I could stand corrected in that the number of wells would probably stay the same (seeing only one (1) well for either a 1000' wide swath or a 1500' wide swath).

However, another question would be: Would production be greater for the landowner with the well on property comparing a double lateral (perhaps draining more thoroughly) vs. a single lateral ?  I'm not really buying that take myself; as I'm thinking more along the lines of it working out to be that the landowner with the well on property contributes royalty income to neighboring parcels.  I can't see a double lateral being so much more thorough / efficient in draining / resource recovery so as to overcome the contribution made to neighboring parcels.

Just my take.  

Permalink Reply by Joseph-Ohio on May 23, 2012 at 12:44am

I guess a simpler way to say it all would be that it seems to me that a 750' standoff (of laterals and well heads from property lines) would translate into more royalty splits than a 500' standoff.

That's something I'm not all that enthused about especially should our land surface suffer the well head and neighboring parcels only the deep laterals.

Permalink Reply by Ed Ganelli on May 23, 2012 at 6:49am

Seems to me that one thing a 750' standoff WOULD do is encourage O & G companies to lease from more landowners who are neighboring drill sites with a pad on them...

Permalink Reply by Joseph-Ohio on May 23, 2012 at 7:03am

So let them standoff 750' then in those cases - I'm not suggesting prohibiting the 750' standoff - I'm just suggesting that we should not make it mandatory by law.

Above all I'm suggesting that we keep the 500' standoff as minimum thereby making it easier to develop drilling units if the shoe fits better.

Keep as many options open as we can !

Actually, I think we've got enough laws just the way it is.

Let's quit wasting time and start to rock and roll.

Permalink Reply by Ed Ganelli on May 23, 2012 at 7:16am

We could stand a FEW more laws, but they should be aimed more at the leasing procedure rather than at the actual drilling and production procedures.  More legal protections for those who really have no knowledge of what drilling/leasing/production entails NOW as compared to many years ago (elderly landowners, Amish landowners, etc.) would help a LOT!

Permalink Reply by Joseph-Ohio on May 23, 2012 at 7:58am

One of the  golden rules is to look after and respect your elders.

Ripping them off isn't what I would call looking after and respecting.

We need to make the golden rules law - then we need to follow them - then we could proudly proclaim to be compassionate, ethical human beings and not predators.

Will it happen ?

I think people need to work on it.

Unfortunately, there have been many times where I've seen the dollar speak with much more authority than compassion and ethics, and then prevail.

Permalink Reply by Joseph-Ohio on May 23, 2012 at 5:08am

I should also say that for the sake of my discussions I've been looking at a max. drill unit size of 160 A. (not having said that until now!).

Also, I see alot of smaller parcels in Ashtabula County, and because of that I've always been thinking in terms of the 640 A. drill unit as the exception rather than the rule - the rule being 160 A. drill units.

Perhaps I'm wrong in that perspective - it's just my impressions causing me to draw these conclusions - maybe others have more facts to base Ashtabula max. drill unit size on. 

Maybe it all has to be done on a well by well basis as nobody knows all of the pertinent and peculiar facts impacting a horizontal well commission.

To me, that's even more reason to keep the 500' setback in the mix of options. 

Permalink Reply by Joseph-Ohio on July 31, 2012 at 3:37pm

For years 500' from a property line to a well has been deemed fair and adequate protection.

That would mean 1000' between wells (and now horizontals in cases of lateral bores).

That to me means that if I have a well or a lateral 500' from my property line the adjacent property is not included in calculating royalty splits unless it is within the pooled unit. Same holds true for any well or lateral on the adjacent property as long as it is 500' distant from the property line.

Seems to me that the proposed 750' distance from property lines to wells / laterals includes lands within to be included in royalty split calculations that otherwise would not be included.

Another question that remains in my mind would be if the entire adjacent acreage would be included or only the lands within the 750' ? The Bill as presented is unclear on that detail.

In other words, 500' distance provides more protection from royalties being split than 750' does.

I see the biggest negative here as being an effort to further diminish royalty payments to those near the well / horizontal lateral.

Don't think we should stand for it.

Write your State Senator / State Representative.

No to 750'.

Maintain 500'.

Permalink Reply by Depolarized Farmer on August 1, 2012 at 12:00pm

Increasing to 750' is simply an unnecessary waste of 250' of otherwise productive land...  This costs the landowner real royalty dollars.  And in addition, the landowner's share of royalties will be diluted since this will force drillers to form bigger (wider) units than necessary.  HB-493 is a double-whammy negative for landowners!

Permalink Reply by Joseph-Ohio on August 1, 2012 at 12:09pm

Good to know more people are seeing through the smoke !

Keep your night vision and radar turned !

Tell our legislators how we feel and let them know they can lose their jobs if they lose their constituency by their constituency losing faith in them !

How can our legislators even draft such a Bill to ponder and waste time and tax payer dollars over ?

Do they think we're all stupid ?

Do they even care what we think ?  To answer my own question: Probably not just so long as they reside in their respective ivory towers.

For example, look at Cleveland's ex-commissioner going away for 28 years and maintaining that he did no wrong and nothing different than any other public official in office ! ? !  If there is a shred of truth to his statements then they all need to go away for 28 years. 

 

Permalink Reply by Depolarized Farmer on August 1, 2012 at 12:40pm

My bigger concern is if the Govenor tries to resurrect his proposed severance tax.  For a landowner receiving royalties, the state already charges an income tax of up to 5.9% (plus the IRS will tax you for up to 39%, plus you may owe the Ohio CAT tax, plus any local income taxes, plus your regular real estate taxes which by the way may be going way up if your County begins to assess for the value of your mineral rights).  In the end, the government gets more than half of your royalty income.  To whom do the minerals and royalties belong to ???  It's private property...  not the state's piggy bank!

Adding a severance tax on top of the state income tax is a huge double whammy against the landowner.  The Govenor's office in the past has tried to say that its just a tax paid by the driller.  However, under most old leases and even many newer leases (including the recent BP ALOV lease), the landowner pays some or all of the severance tax, typically via deduction from their royalty check. 

It is wrong and dishonest for Ohio to say "Let's charge a severance tax just because Texas does."  Texas does not have a personal income tax!!!  Ohio wants to double-dip!  Ohio is already getting a huge windfall based on its existing income tax.  Adding a severance tax on top of that is just plain unfair and greedy.

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