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Author Topic: Possible ROW/Unitization trick  (Read 7881 times)

Back40

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Re: Possible ROW/Unitization trick
« Reply #15 on: April 08, 2010, 08:36:09 AM »
If shale is not being fracked under that particular landowner's property, why:

 

2.  Why wouldn't other people in the unit, whose properties ARE being fracked, complain about royalty dilution?  (I suppose some owners whose leases included deductions for ROW expenses might not care one way or the other, but it seems like the folks whose shale IS being fracked and whose royalties and deductions are calculated at the wellhead have a legitimate beef... don't they?

MichGuy

What good does complaining do? How much would it cost to mount a legal challenge? People probably do the math and figure what the legal fees are (large) to make a serious challenge, what their chance of winning is (very small), and fear what the company will do for retaliation - like shut in the well.

Mich-Pioneer

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Re: Possible ROW/Unitization trick
« Reply #16 on: April 08, 2010, 09:03:23 AM »
I suppose that depends on HOW one complains, though I'd like to add that I don't know enough to understand whether anyone in the example in this thread has a genuine complaint.  I wonder about that.... but I have not sufficient knowledge to make an informed opinion. 

The Michigan page on this site has a link to the Michigan regs.  Folks reading this might be interested to check those out, as they seem to be an excellent attempt to regulate the industry in a way that promotes the FAIR and REASONABLE development of the resource.  I assume Michigan's regulatory framework evolved as level-headed folks in the field made effective complaints, and level-headed folks at state listened.   

MichGuy

ruby_99

  • Posts: 3509
Re: Possible ROW/Unitization trick
« Reply #17 on: April 08, 2010, 09:04:30 AM »
I don't think is a trick regarding ROW.  I believe there are two pads the Johnston pad and Durkacs pad with multiple legs out but they come close to touching.  But Johnston 5 was already on what is now the Durkacs pad.  (Durkacs pad is on the property line basically).  Instead of making a huge unit to incorporate all the legs which would be close to 1000 acres they broke them in 2.  So actually wouldn't dilute some of the landowners.  After looking at the 2 Johnston unit it doesn't look like anyone would be hurting really from the change in that unit except Charles Johnston and even that wasn't a lot but he is now included in the Durkacs unit with those acres that came out of his unit so in the end, I don't think will hurt anyone.

Thanks for the man-on-the-ground info. I had figured that the CJohnston 5H was never drilled, since it was so close to the Durkacs wells.

I assume that CJohnson 3,4, and 7 are all verticals, given the naming and their position in their unit. The 5H is in a strange position relative to its unit. Have you looked at the layout of the wellbore? 5H might/probably payout to the Durkacs unit.
80ac AlleghenyCounty, PA still unleased, 70 ac Washington County finally leased
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Tuckabuckaway

  • Posts: 481
Re: Possible ROW/Unitization trick
« Reply #18 on: April 08, 2010, 09:21:48 AM »
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It's pretty common in CHK units; however, hopefully just temporary, as development continues at an unbelievable rate in SE Bradford

Quote
As g says, quite common in Bradford and surrounding counties. Units there are much closer to perfect rectangles, so parcels get cut in and out. It's difficult to say that it is intentional when the borders are perfectly parallel and not notched.

Chief's Black unit in Bradford also conforms to a pretty regular NNW-SSE rectangle with some properties held with a small percentage of acreage, however, I believe this unit has multiple horizontals and can at least make reasonable claim to full development at time of declaration.  My impression of CHK is they are generally drilling only the #2 and #5 legs before moving on to another pad, i.e. the declared units are not fully developed, hence I think it is reasonable to view CHK's actions with some skepticism.

Many (or possibly most) of Chief's Bradford leases had Pugh clauses so their HBP leverage is nothing like CHK's as very, very few of CHK's leases had Pugh protection for the landowner.  At best, the Anadarko/CHK leases had unit size limitation and we all know CHK is actively trying to eliminate both the size limitation and contiguous requirement.
A wise and frugal government, which shall leave men free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned - this is the sum of good government.   - Thomas Jefferson

one6974

  • Guest
Re: Possible ROW/Unitization trick
« Reply #19 on: April 08, 2010, 10:14:18 AM »
If you go to to the spudding report on DEP repot 5H Johnston was drilled 7 was not.  Johnston 1H ,8H, 9H, 5H, 2 were drilled

mohawk70

  • Premium Member
  • Posts: 10592
Re: Possible ROW/Unitization trick
« Reply #20 on: April 08, 2010, 10:19:59 AM »
Quote
It's pretty common in CHK units; however, hopefully just temporary, as development continues at an unbelievable rate in SE Bradford

Quote
As g says, quite common in Bradford and surrounding counties. Units there are much closer to perfect rectangles, so parcels get cut in and out. It's difficult to say that it is intentional when the borders are perfectly parallel and not notched.

Chief's Black unit in Bradford also conforms to a pretty regular NNW-SSE rectangle with some properties held with a small percentage of acreage, however, I believe this unit has multiple horizontals and can at least make reasonable claim to full development at time of declaration.  My impression of CHK is they are generally drilling only the #2 and #5 legs before moving on to another pad, i.e. the declared units are not fully developed, hence I think it is reasonable to view CHK's actions with some skepticism.

Many (or possibly most) of Chief's Bradford leases had Pugh clauses so their HBP leverage is nothing like CHK's as very, very few of CHK's leases had Pugh protection for the landowner.  At best, the Anadarko/CHK leases had unit size limitation and we all know CHK is actively trying to eliminate both the size limitation and contiguous requirement.

Out of curiosity, is the shape of the unit depending on the location of fractures in the rock?   The drillers want to avoid doing horizontal drilling through fractures.  How close can they go to the fractures?  Would they drill parallel to fractures?   Do fractures occur in "straight lines" or do they curve all over the place like snakes?
Please remember:  The planet Earth is a VOLCANO.   You cannot "save" a volcano ... and volcanoes do not NEED to be saved.

Tuckabuckaway

  • Posts: 481
Re: Possible ROW/Unitization trick
« Reply #21 on: April 08, 2010, 11:40:33 AM »
Quote
Out of curiosity, is the shape of the unit depending on the location of fractures in the rock?   The drillers want to avoid doing horizontal drilling through fractures.  How close can they go to the fractures?  Would they drill parallel to fractures?   Do fractures occur in "straight lines" or do they curve all over the place like snakes?

mohawk70,

I think you mean "faults" rather than "fractures"?  Generally speaking, the NNW/SSE drilling direction intersects the maximum number of natural vertical fractures (or "joints" as Dr. Engelder calls them) in the Marcellus.  That's a good thing.  The units tend to run along the NNW/SSE axis with the length and width of the rectangle dependent on the length and number of horizontal wells.

Faults are generally steered away from in the Marcellus, but I think much depends on the severity and size of the fault.  I can't offer much else...way above my pay grade.
A wise and frugal government, which shall leave men free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned - this is the sum of good government.   - Thomas Jefferson

mohawk70

  • Premium Member
  • Posts: 10592
Re: Possible ROW/Unitization trick
« Reply #22 on: April 08, 2010, 03:06:49 PM »
Quote
Out of curiosity, is the shape of the unit depending on the location of fractures in the rock?   The drillers want to avoid doing horizontal drilling through fractures.  How close can they go to the fractures?  Would they drill parallel to fractures?   Do fractures occur in "straight lines" or do they curve all over the place like snakes?

mohawk70,

I think you mean "faults" rather than "fractures"?  Generally speaking, the NNW/SSE drilling direction intersects the maximum number of natural vertical fractures (or "joints" as Dr. Engelder calls them) in the Marcellus.  That's a good thing.  The units tend to run along the NNW/SSE axis with the length and width of the rectangle dependent on the length and number of horizontal wells.

Faults are generally steered away from in the Marcellus, but I think much depends on the severity and size of the fault.  I can't offer much else...way above my pay grade.

I was chatting on the phone with a couple of seismic survey guys and the word "fracture" got used.   I think that you are right: fault, natural fracture, "joint", all refer to the same natural rock "malformation".  Fascinating stuff; if I was younger I would go to work in that "petroleum geology" field.  Never thought I would find something so interesting.
Please remember:  The planet Earth is a VOLCANO.   You cannot "save" a volcano ... and volcanoes do not NEED to be saved.

 


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