HB 493 has been sent by the State House of Representatives to the Agriculture and Natural Resources Committee for deliberation.

Has anyone heard if / when the Committee will take it up - or have they already begun ?

I've made a few calls (just this morning and early afternoon) to inquire. I called four (4) Committee Members but wasn't able to speak to anyone and had to leave messages.

One (1) big change being discussed deals with a 750' standoff from property lines and laterals for the deep horizontal wells (unless the parcel is part of the drilling unit). Don't know what they mean by parcel either - if closer than 750' is the adjacent parcel in total then part of the drilling unit ? Or can only a portion of the parcel be included in the drilling unit ? The Bill right now doesn't elaborate. If I understood the original rule all you had to be is 500' back from property lines in deep well instances.

Anyone else have any info. ?

Here's a link to the proposed Bill:

http://www.legislature.state.oh.us/bills.cfm?ID=129_HB_493

Here's a link to a listing of the Committee Members:

http://www.house.state.oh.us/index.php?option=com_displaycommittees...

I left telephone messages with State Representatives David Hall (97th House District, Ashland and Medina), the Chair; Andy Thompson (93rd House District, Guernsey, Monroe, Noble, Washington, Muskingum) the Vice Chair; Teresa Fedor 52nd House District, Toledo) Sponsor and Ranking Minority Member; and Casey Kozlowski (99th House District, Ashtabula, Northern Trumbull).

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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.

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.

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.

From what i see here for one well with one lateral of 1500' it would require a minimum of a bit over 103 acres to drill one.  starting at 750' inside the property line extending down the middle 1500' with a left over 750' buffer with 750' on each side.

And I think that a single 1500' lateral might be too short (or at least less desireable) for a developer to mess with.  Maybe he'd opt to go somewhere where he could drill a longer horizontal and put the 1500' lateral on the back burner.

That's why I'm thinking it makes more sense to keep the drilling units more narrow and longer.

Once they turn 90 deg. (short radius) it would seem to me that they would want to go as far as they could.

I've heard mile long laterals where all the pieces fall together just right.

They're putting quite a few long narrow 160 A. drill units in the southern part of the state.

I'm just thinking it's better to keep narrower but longer drill units in the picture. 

Creating a law to make a 750' setback mandatory limits your options and pushes the 640 A. drill units - maybe even making the 160 A. drill units obsolete / impossible to accommodate.

I'm thinking it smart to keep as many options open as we can.

BPW:

Find attached a layout of a Devon proposed well in Ashland County.

It had a lateral of 3767' after the turn (and that turn took quite a bite out of the lateral in the target source rock - 1251' as I read the pdf).

That well started at the surface 351' from what appears to be the south property line and bottomed at 300' from what appears to be the north property line.

That drilling unit as I read the pdf was 134.313 acres and 1100' wide.

With a new law requiring a 750' setback, that well couldn't happen unless the drilling unit got wider and royalty splits were arranged.

Also, would only one (1) lateral be enough to drain the 103 A. you wrote about ? If not and you had to add a lateral you would be closer than 750' inside your property lines and you would be splitting royalty with neighboring parcels and suffering the well on your ground.

That's what I'm talking about when I say we ought to keep options open.

Attachments:

  TY JO I didn't think of the radius in the turn  so it would require even more! All O was doing was calculating out a minimum of acres under text book rules as proposed. What would be interesting is if slim trimmings of incorporating pooling of adjoining land will be attempted where adjoining land owners would have very little acreage in the unit but have their balance of land HPB. 

 

BPW,

I've also read (published data) that indicates it's possible to drill a '90 deg. short radius turn' (max. 6 1/8" diameter bore hole) in as little as 45'; and then achieve a 1500' horizontal / lateral.

That turn on the pdf sent earlier was a 900' radius (not the 1251' turn mis-read and mis-stated earlier). 

The 900' radius turn is easier than what the literature calls a 'medium radius turn' but a harder turn than what the literature calls a 'long radius turn'. 

 

I was with Andy Thompson, rep for the 93rd district last Friday when he met with Farm Bureau trustees in his district. I asked about the status of this bill and he said that he thought there had been one hearing but he wasn't sure.

In looking at the bill, I am especially concerned about the very first section (1509.022) (A) that states that the surface location of a new well that will be drilled using directional drilling may be located on a parcel of land that is not in the drilling unit of the well. Please help me out here. Does this mean that when they finally get around to drilling under state lands from adjacent properties, as they have said they hope to do, that none of the parcel of land with the pad needs to be in the drilling unit? This would be a huge bummer for a lot of folks.

I have looked at section 1509.021 and it only seems to mention the set back from dwellings and land not in a drilling unit in urbanized areas.

Kathi

Only my interpretations:

I interpret one of the intentions of the HB 493 is to increase the 'setback' distance of the deep wells (at the surface) as well as underground (including laterals / any part of a lateral) from property lines in rural areas.

I interpret that the modifications would not necessarily apply to wells and laterals in 'urbanized areas (also, what would the exact legal definition of an 'urbanized area' be ?).

As I interpret the old rules a deep well had to set back from a property line only 500' not 750'.

Lateral locations were not discussed or tied down to any setback distance that I've heard as applicable.

That would mean (only if my interpretations are correct) a well on any adjacent property closer than the suggested 750' (property line setback) criteria would cause the portion of that property within 750' to fall within the 'drilling unit' created for the well on the adjacent property.

Depending on the width of the property adjacent to the well - a new well on that adjacent property may be prohibited.

500' has proven adequate historically.

Landowners should not suddenly be inhibited / prohibited in their efforts to recover their resources via developing a private leasehold with a drilling company by virtue of some sudden / new minimum setback rules.

Especially so considering in 'urbanized areas' setbacks aren't discussed.

That might mean that a well could be developed regardless of proximity to a residential area, school, a hospital, etc. - perhaps even on the residential areas, school's, hospital's or etc. property. If new rules for deep well setbacks are being contemplated it's exactly in the 'urbanized areas' that they should be contemplated - not the exact opposite and contemplated only for rural areas.

Further, keeping the eye on the prize, how far apart do the laterals have to be to drain the resource effectively ? Seems to me that 500' appears quite often as the distance between laterals in these new horizontal, lateral wells.

I think they need to throw the HB 493 out the window.

Plenty enough laws, codes, ordinances, rules already.

Let's get the development wheels turning.

No more hurdles / delays / deliberating new laws and rules / wasting time.

Put people here at home to work.

Bring our youngsters back home from the oil wars to good jobs right here in the U.S.A.

No Committee date assigned yet.  Another provision is for Min royalty law.  It's about time Ohio Has one.  Page six indicates that the min royalty be provided via affidavit during the permitting process.   We have nearly 470,000 acres in Ohio under gas storage field leases (with Columbia Gas, and Dominion Transmission) where the royalty interest is set to receive just a flat rate of $50 to $200 annually no matter how much gas is extracted from their parcel- perhaps the greatest inequity of any lease, whereas the royalty is the sole essence of any lease.  This would change that to a fair metered royalty. And most other large storage field states created similar laws years ago.  PA's and WV's are 30+ years old.  Here's the newest version of the Bill.  Also, see the lead article in the attached publication to give you a better understanding of flat rate leases.  I would encourage all who read to contact their state reps to encourage upholding this provision.  Thanks

 

Attachments:

I wonder who voted against minimum royalty statutes to help folks in the storage fields.  When Columbia Gas farms out the production rights in their storage fields, many of the Mineral land owners are set to get just $200 or less as a GAS royalty.  This certainly needs to get fixed fast.

Canton Repository 5/28/12
Boards and ballots: Okey fails to amend ‘fracking’ bill
State Rep. Mark Okey, D-Carrollton, tried on the Ohio House floor Thursday to attach provisions to Senate Bill 315 he says will protect landowners in leasing their gas and oil rights. Senate Bill 315 establishes new rules on hydraulic fracturing.
Among several things, Okey’s proposed amendment would have:
• Set a minimum royalty rate to be paid to owners.
• Require the testing of ground water before and after drilling and notification of the landowner of any contamination.
• Require the company leasing the property for drilling provide an audit of gas or oil production to the property owner on request.
• Require the registration with the state of “landmen” who negotiate to acquire or lease mineral rights for drilling and requires them to provide a disclosure form to property owners.
The Ohio House voted 53-38 to effectively kill the amendment. State Rep. Christina Hagan, R-Marlboro Township, and State Rep. Kirk Schuring, R-Jackson Township, voted to table it. Okey and State Rep. Stephen Slesnick, D-Canton, voted against tabling it.
As part of the House’s Democratic minority, Okey has been unable to get the Republicans to agree to attach versions of the amendment to other bills. Much of the amendment is part of Okey’s House Bill 493, which has been awaiting consideration by the House Agricultural and Natural Resources Committee since late March.
The Ohio House and Senate later Thursday approved Senate Bill 315, sending it to Gov. John Kasich for his signature.

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