Drilling within 100 yds of my gas and oil rights

I leased my gas rights to Chesapeake about 6 years ago for a period of 5 years...I didn't know there was a clause in it that they could renew the  lease for an addition 5 years and turn it over to another company..i believe the gas lease is now owned by Vantage  Energy   ...so far no one has contacted me about gas royaltys.......wouldn't it be almost impossible for them not to be taking my gas being so close to my property....and shouldn't someone be contacting me concerning royalty payments?.....any info would be appreciated....thanks Ron

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Permalink Reply by KAR on December 14, 2015 at 9:40pm

What state are you in? That will stipulate what offsets the operators might have to face. In Ohio an operator cannot frac within 500' of an unleased property side to side. However at the toe/heel portion of the well they might be able to get a waiver to be within 150' of the unit boundary. PA is considered a capture state so first come first serve. Many people who held out had laterals drilled around them and their gas is drained and they never receive royalties. However, if the well is a considered a conservation well (ie UTICA/PP) then the entire wellbore must have at least a 330' buffer around it to the unit boundary. 

To better explain your situation it would help to have the state, county and name of the well pad if possible. 

Permalink Reply by ronald edward disher on December 14, 2015 at 10:53pm

thanks very much for your reply...the state is Pa....I don't know what a capture state is ...and what do you mean first come first serve? I am assuming you mean that whomever drills first and gets the gas, tough luck for the landowner....don't know how to determine what a conservation well is  .the county is Greene,the township is Morris....they are drilling on land owned I believe by consol(part of bailey coal mine property) and in a place that used to be called the Village of Time OR JUST Time....but there is no village there anymore...they bought out the whole valley and just recently tore down all the farmhouses ...please stay with me on this..i am dumb as a box of rocks on this stuff..

Permalink Reply by Moldyoak on December 15, 2015 at 5:46am

PA is "rule of capture" meaning a gasco in the Marcellus or shallower can technically run a well bore right up to your property line with no setback.  If deeper than the Marcellus, I'm not certain of the exact layer depth but I believe it's the Onondaga, there is a different set of rules which then come into play which *do* involve setbacks - the "conservation well" scenario mentioned above.

If you know the company and name of the well or the permit # you can contact DCNR and get a free copy of the plat map for the well (or wells) which will show exactly where the well bore is in relation to your property and surrounding properties. 

Permalink Reply by ronald edward disher on December 15, 2015 at 8:17am

so basically..it looks like I am out of luck here...what does DCNR stand for?.....the well bore,i assume ,like the bore of a rifle is the hole.......they are plainly drilling it directly across the road from my property less than 100 yds away....they just started drilling about a week ago.........next question is... do you think I have any chance of ever collecting any  royaltys? ....Springbok energy wants to buy my gas rights outright.and  should I sell?  I am almost 65 and not in the greatest of health with no children to leave anything to  .. I realize these may be hard questions to answer...thanks very much for your time and consideration

Permalink Reply by KAR on December 15, 2015 at 9:13am
Unfortunately, I've seen this happen before. It sounds like you're leased with a company that is surrounded/boarded by another operators leasehold. This means you get cut out of the unit (if surrounded) or drilled near but are not included in the unit. In the future the company drilling might try to aquire your lease from your current operator, but it might never happen. It's always up to the landowner what decision they make (it might help to get a lawyer), but it sounds like you will not get a royalty check from these wells. Also it sounds like you live within 3,000ft of the top holes. If you have a spring, well, cistern, etc on your property you should have been sent a certified package letting you know the name/coordinates of the Wells being drilled. This is part of the permitting process for a horizontal unconventional well.

DCNR= department of conversation and natural resources
Permalink Reply by Brian Powers on December 17, 2015 at 12:49pm

O Moldy One - States that use Rule of Capture in their O&G law do so to promote competitive drilling, not just to stop gas flow across unit lines.

I once worked in another rule of capture state, Oklahoma, and testified in a corporation commission hearing as an expert engineering witness. The petitioner was trying to add a another well to a 640 acre unit that only had one well. I represented the company holding an offset lease and proved on the witness stand that the existing well would drain nearly twice as much acreage as was in the unit. Our lawyer was mortified by my behavior and testimony; we lost our protest, and the commission said basically: " if you don't agree with the decision, then drill you own offset well" Oklahoma is hugely pro-drilling and pro- independent producer, so their agreement to add another well to a unit that was already being drained properly by the existing well was economic waste, in my company's view.

One of problems in unconventional shales is adequately determining drainage area. The aforementioned Oklahoma example that I cited was producing from conventional rock where classical reservoir engineering equations were easily applied.

Brian

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on December 18, 2015 at 4:20pm

KAR,

     Do you have the Revised Code law that forbids the 500' you mentioned in Ohio. I'd like to see how it reads, so I can compare the law to what CHK has been doing next to one of my  parcels.

Thanks

Permalink Reply by Frank Walker on December 15, 2015 at 10:57am

RED wrote:   "wouldn't it be almost impossible for them not to be taking my gas being so close to my property"

There is a reasonable chance they will be harvesting a portion of your gas.  How much?  It depends on a large number of factors, too many for me to elaborate here.  

You have at minimum a legitimate gripe.  Were I you, I would be registering that gripe with my Lessee politely, but frequently.  Raise your profile.  Become a nuisance, but not a PITA.

There is a term of art in the O&G biz for what you need.  It has escaped me but others here will know.  The term I'm unable to remember just means your Lessee has an obligation to drill a well when your gas is threatened by a third party.  Of course, if your lease does not compel your Lessee to drill under these circumstances, then you hired the wrong lawyer.

Permalink Reply by ronald edward disher on December 15, 2015 at 11:04am

thanks Frank.....maybe the situation isn't as bleek as it looks

Permalink Reply by rmc on December 15, 2015 at 12:12pm
Why don't you stop down at the court house and get a copy of the drilling unit ?
Wouldn't surprise me that you are in the unit hence the offers to buy you're rights.
Permalink Reply by ronald edward disher on December 15, 2015 at 4:13pm

I think that would be a wise thing to do......a poor man like me chasing a dollar bill is a hard thing to shake off ! thanks rmc

Permalink Reply by Heidlebergman on December 15, 2015 at 1:37pm
They could be drilling in the other direction from your property. I don't know which company this is...but most directional layouts in the Marcellus run north south at 340 degree azimuth strike. You can probably eyeball...stand facing north and then offset yourself by 20 degrees...the laterals are probably running either north or south from that pad at a 20 degree offset. I lost my job so I don't have access to resources anymore...find out which company is drilling the well first.

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