Marcellus Shale Unit or Pool Size Limits
I brought up this subject recently in the Tioga County, Pa. forum, but I feel I should raise the issue to a wider audience. As I am informed, there seems to be no law in Pennsylvania limiting the size of a unit or pool around a given well. The assumption is that the unit will be around the size of a section - 640 acres- a square mile. Some units are a little bigger or smaller, depending on the geography of the actual drilling of the well's horizontal leg. If unit size is limited in a given lease to 640 acres, or even 1000 acres, the drilling company can only tie up a limited number of land owners within a unit by drilling a well, be it vertical or horizontal. Other land owners outside the unit are free to seek another better lease when their current lease runs out, as long as they are not part of a unit or pool. If no limit is put on the size of a pool in the lease, a drilling company might be free to set up pools of 2000 acres on a given well to lock up three times the amount of land with each well drilled. Granted, the driller must be issued a permit to set up this unit or pool. One would think, as tax payers, we could trust our well-informed public officals to see the error of issuing such permits. a safer garuntee would be to make certain such limits were part of any new leases signed. If a drilling company claims that they would never set up huge units to lock up land that they might lose the lease on if they cannot find the time or the number of drilling rigs available to drill upon before leases run out, I am personnally not sure I could feel secure in that verbal claim. Legal documents are the best. let them put it in writing.
I have written things at this website before and mentioned that I actually live in Wyoming. I did not come up with this question of pool size limits alone. I had a lawyer local to Wyoming, who deals exclusively with gas and oil laws and leases, look at my lease and a lease offered to me for a little more money to exchange fo my old one. One of the few differences that he COULD find was that my old lease had a pool limit of 640 acres in it . The new lease offered did not have an acerage limit on pool size. Perhaps it was a legal oversight mening nothing. Perhaps not.
one more note that may not be applicable to the situation in Pa. at all. In the western states, sometimes large blocks of land are set up in a specific type of unit, consisting of several thousand acres. if a land owner is talked into signing into one of these huge units, a well may be drilled on the far side of the unit from his property, locking him to that particular drilling company, and yet he may never see any royalties or a well of any kind in his near locality for many, many years. Yet he is part of that unit and bound to that drilling company indefinitly. This doesn't sound possible in Pa. but are there any laws preventing it? What if a drilling company locked up an entire township or several townships toigether? Just more food for thought. What does your lease say?
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Comment
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Comment by Brian Day on February 12, 2010 at 1:59pm
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If there had been viable shallow pools of gas in Tioga County, they'd of been drilling for it already. When so much is a stack for so many land owners, some geologic proof should be given to justify risking tying up a person's land from a better lease in the near future. If the well is drilled and doesn't bring up gas, then the land should be up for lease again at the end of the original lease's expiration. If the driller can't get the well drilled in the final days of his expiring lease, then he shouldn't be permited to start, unless he ponies up fees for a new lease at current market value of course. You know... any time a drilling company wants to pay something compatable with current market prices in a locality, no one has a problem with that.
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Comment by Brian Day on February 12, 2010 at 9:50am
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I am not sure that we are talking about the same thing, Ruby. I am not talking about water wells. I am talking about shallow gas wells in Tioga County,drilled for the xpress purpose of locking up leased land before the lease runs out. Please give more details of the situations that I may not have considered.
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Comment by Brian Day on February 12, 2010 at 4:00am
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thank you rfs. All that you say is true. But people get lazy and reading these things takes a lot of hard concentration. Thought is work. People put this boring task off and do other familiar tasks. Suddenly months go by and they have missed an opportunity to increase their profits by hundreds of thousands of dollars, or at least failed to protect their bonus money in 2011. Also, what they do affects their neighbors
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Comment by Robin Fehrenbach Scala on February 11, 2010 at 4:09pm
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Anyone who was part of a landowner coalition and signed the negotiated lease should be well aware of the HBP (held by production) clause. AND the coalitions were generally quite careful about keeping the size of the drilling units smaller.
If people signed the standard company boilerplate lease from the landman who knocked at the door, and did not do any homework beforehand, they are no doubt stuck with the worst possible scenario.
Yes, anyone who signed a lease should read it -- but they should have read it LONG before they signed it.
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Comment by Brian Day on February 11, 2010 at 2:26pm
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I wanted to add to my last blog a bit. Companies running out of time to drill proper wells to tap the Marcellus Shale and lock up leased land may look to drilling shallow vertical wells on land with leases about to expire. I would like to see a one year to 18 month hold on any new shallow vertical wells that not specifically designed to tap the Marcellus formation. If some drilling company says that it has found a surprise pocket of gas at 1000 feet, that pocket can wait for a year. There are plenty of legitimate, permited wells for companies to complete in the next year. This would prevent any drilling company from using a less expensive drillling outfit to go around to various plots about to expire and dropping shallow wells. One or two coal-bed methane rigs could tie up a lot of ground in a hurry. (I doubt that i am divulging any stratagy that gas drilling companies haven't already thought of or used elsewhere.) In a year or 18 months, a large number of leases would be up for more lucrative bidding. Even enhanced leases signed a year or two ago might be available. I believe that these enhanced leases had additional sums of bonus money promised in 2011. The drilling companies are probably not obligated to pay any of this bonus money if the land is locked up with even a shallow verical well. I wonder if people with these recently signed enhanced leases are aware of this. i would also like to see some limits on the unit size of a vertical well. Th rule of thumb seems to be for drillers to stay 500 feet from a boundry of unleased land or land not to be included in a unit with their horizontal leg. Using this figure of 500 feet as the radius and a vertical well as the center, I come up with a circle with a diameter of 1000 feet or 333 yards. Lets make the math simple and increase it to 440 yards or one quarter mile. Make it a square of one quarter mile on a side. this is one quarter of a section or 160 acres as a limit to unit size for a vertical fracked well. Why would the state government consider protecting the potential income benifits of land owners? More money means more taxable income. Better financed drilling companies in control of large blocks of land means quicker drilling and again increased tax revenue.
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pig dung replied to Theresa Kolk's discussion 'What's going on in your area?? any info???' in the group Tioga County, PA
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