Property "units"

In a earlier discussion Mr. Knapp explained that the gas co. will assign the units for production useing "unit operation designation" filed at the court house, he also explained that these units could be any size because Pa had no legal limits other than what was stated in your lease. In the lease that I have been presented with it stated "no units can exceed 640acres plus 10% or 704 ac. I was wondering what the typical unit size is in Pa? Is it all based on the geological investigations? It's only logical that royalties would be higher for each landowner in a smaller unit. Has anyone heard of a unit that is has a 100acres or less?

 

 

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Permalink Reply by E. MACAY on March 28, 2011 at 8:19am
BE CAREFUL ...GAS COMPANIES KNOW THEY 'STEAL' GAS FROM AS FAR AWAY AS 800 FEET...AND HAVE ADMITTED IT!
Permalink Reply by rmc on April 5, 2011 at 1:06pm
Read the rest of that law it only goes down to the Marcellus but does not include the Marcellus .
Permalink Reply by Sarah Violet on January 20, 2011 at 8:18am
If your property is in the middle of a Unit ,  would this be to your advantage or disadvantage or make no difference one way or the other ?
Permalink Reply by FXEF on January 21, 2011 at 4:22am

Each state has its own set of O&G rules, but most allow land owners, in this situation, to be pooled into the unit, and therefore be paid for their proportional share of the O&G under the terms of their lease. I am not sure exactly how PA rules apply to pooling of leased land in a already formed unit, however I understand that there is some controversy over pooling in some of the states in the Marcellus shale.

I am not a lawyer, but I just want to stress the importance of having an experienced and knowledgeable O&G attorney in the state your O&G is in.

Permalink Reply by Frank Walker on January 22, 2011 at 3:53am

There's almost more misinformation on this thread than I have the time to deal with:

 

While a 330' setback might exist for the wellsite, there is no such PA setback for Marcellus horizontals.  Do not confuse Marcellus drilling with other shallow well drilling.  They can locate those horizontals within a foot or less of the property boundary.  This is not Texas.

 

The other important stuff would require a discussion of frac trespass.  No time to do a tutorial on that.

 

As for the doughnut hole problem:

 

It's real given production is now ongoing.  And I don't know of a solution;  maybe some sort of lawsuit, the threat of which might prod the companies to come to terms.  From what is being described, the doughnut hole property is being depressurized right now.   It'll do you no good whatsoever.  But know I am sympathetic to your plight.  The unfairness is overwhelming.  Talisman and your neighbors are benefiting from gas you own;  and Chief clearly does not consider your loss important enough to worry about it.  Pity.

 

The lesson for others:  Make every effort to lease to the dominant player in your area.  And don't lease too early without protective lease language.  You might choose the wrong company and end up losing your gas.

 

Permalink Reply by bill h on January 22, 2011 at 4:23am

Agreed Frank, I wasn't going to get into it, but I believe you are correct.

 

I'm sure this will get deleted, but I sure wish we could consolidate this site with p*************; it's a better, more active site with much more control exerted by the admin

Permalink Reply by bill h on January 22, 2011 at 7:15am

oh well it was worth a try

 

Maybe you guys should work out a consolidation deal.  This site looks better cosmetically...

Permalink Reply by Bob Thomer on January 22, 2011 at 7:32am

Frank

Your last commrnt makes sense, but what do you do if you are completely sourounded by one company and are offered a lease with good terms by another?  It stands to reason that they are going to try to flip the lease to the other. I think smaller properties are falling through the cracks because they seem to be moving landman around all the time. I am guessing that  when and if they finalize a unit the property owners that fell through the cracks  would be contacted.

Permalink Reply by Frank Walker on January 22, 2011 at 9:30am

I addressed this situation earlier, but did not provide the specific solution.

 

In the scenario you outline, you must include in your lease protective language which compels your Lessee to flip your land if drilling commences by the other company.  A good O&G lawyer can address this.

 

The other thing you should know is that (PA State) Senator Yaw (R - Lycoming, Bradford, Sullivan) is proposing legislation to address this situation.  However, I would guesstimate it could be one to two years before any legislation emerges . . . perhaps longer.  That's too long to help anyone threatened now.  Also, with the gas companies in charge in Harrisburg now, no such legislation is guaranteed to emerge at all.  They easily might kill it.

 

Finally, I doubt any lawsuit over a matter such as this could be won.  However, threat of a lawsuit, and a really nasty lawyer, might be enough to move a Lessee off the dime and prod Lessee to settle with the dominant company.  For even the big dogs sure of victory, defending any lawsuit is a nuisance.  Also, there is the threat of negative publicity, revealing their disdain contempt for the little guy, and all that.  You would need a lawyer who could play on those things and maybe a few that I am missing.  Absent Yaw's proposed legislation, I doubt any company today can be compelled in court to flip a property.  However, if enough flak is raised, it might be possible to induce one's Lessee to pay attention and do the right thing anyway.

 

Sorry but these are the only solutions that occur to me.  I'm a landowner, not a lawyer.  And I am not in the natural gas business.  Perhaps another landowner can think of a better approach.  I hope so.

Permalink Reply by john ginkel on January 22, 2011 at 9:47am
I agree, it does not make sense that you could own a piece of property within a producing unit and be left out. This is why I wanted to hear from propery owners about unit information. Sounds like there are some horror storys out there. Maybe a comment in the lease or a letter from the attorny to a gas co at time of lease signing is needed, this wordage could address the formation of units around you (no matter what gas co is forming them).
Permalink Reply by FXEF on January 25, 2011 at 4:46am

John,

 

A tract of leased land that creates a donut hole within a production unit, can be voluntarily pooled into the production unit. I am not a lawyer, but I believe a pooling clause will make this possible. 

 

Now, a unleased tract of land or undivided mineral interest would be a whole new ball game.

 

Permalink Reply by Mmmarkkk on January 25, 2011 at 4:18am

Frank:  are you sure about the set back on horizontals?  I was told that you cannot drill/perforate a lateral within a certain setback from property lines.  I've seen development plans from companies up there that show wells stopping several hundred feet from a lease line just to avoid this.

 

As for the doughnut hole, forced pooling would fix this problem you know.  That's how its done in many states that have active development.  I know PA landowners are skiddish about forced pooling but Louisiana law provides good protection AND effecient development.

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