Replies to This Discussion

Permalink Reply by John Capwell on May 3, 2016 at 5:52am

There are several answers to your question but the common denominator is money. The cost of giving up a well site means returning it to its original contours, among other abondonment factors. Gas prices will rebound in the future, how far into the future is purely a crystal ball question. Re-permitting these sites with the new requirements for drill pads is far more expensive than re-permitting. If pipeline plans for a delivery to larger national network are on the drawing board, then there is added value in holding on to these sites.

Many of these companies no longer have the cash reserves they had several years ago so allowing these sites to remain in economic hibernation is far better than the expense of closing them or developing them. When prices increase, banks will be willing to lend them money for development.

Permalink Reply by Matt Henderson on May 3, 2016 at 6:12am

I would agree with John, the company will renew or apply for new permits to stop the clock from ticking for reclamation. Without an active permit or activity on the site, the company is required to reclaim the pad within 9 months (up to 2 years) and that cost is much higher than a several thousand dollar permit.

Permalink Reply by N Bohl on May 3, 2016 at 7:13am

So it may be just a matter of holding onto a site and extending the time-frame. That would make sense. Thank you guys for taking the time.

Permalink Reply by James Young on May 10, 2016 at 2:09am

E&S stormwater permits are for Erosion and Sedimentation control only, and basically have nothing to do with the actual drilling for a well.   It is all to do with the pad construction site and the "acres of disturbed ground" on and around the pad and preventing storm water/erosion and sediment run-off.  It is required for any "land disturbance" activities that meet the scope of the general permit for land disturbance. ( a building site, large parking lot, pond, whatever land disturbance activity has to have a E&S permit in place to start construction if it meets certain size and location criteria)  It is easier and cheaper to renew permits than to start all over.  Not to mention without a renewed permit, they would be in "non-compliance" and be subject to legal action, or have to return the site to original grade, slope and re-vegetate etc...