Gilliland/Weaver Wells watered out by Horizontal Wells

Some of our ongoing and growing list of vertical wells being destroyed by horizontal frackers.

This list is  Gilliland/Weaver Wells watered out by Horizontal Wells.

Steve was the one interviewed on the OETA video series. He was the one in his office.

 

HZ Well Impact List (Excel spreadsheet)

 

OETA story about horizontal frac jobs destroying hundreds of vertical wells

This is a Must See – An OETA story about horizontal frac jobs destroying hundreds of vertical wells.

This should begin to change the narrative from one of all out development at all cost, to one of judicious development with the rights of others and the environment protected.

 

Open Letter to OIPA Board

 

Gentlemen:

 

I would like to give you an update on the damage that is being done to small producers in the active horizontal plays in Oklahoma. I am a partner in Cimarron Production Co., Inc., and Brown & Borelli, Inc. The vast majority of our operated production is in Kingfisher County, Oklahoma. We have had, as of this date, 21 wells damaged or destroyed by the impact of horizontal frac jobs. Our wells producing from the Oswego formation are being damaged or destroyed by nearby horizontal frac jobs in the Big Lime/ Oswego formations, whether drilled in the same section, or nearby. The Mississippi formation horizontal frac jobs are hitting our vertical Mississippi production. Our core production area produces from the Hunton Dolomite. Those wells are being damaged or destroyed by nearby fracs in the Mississippi formation. We are not the only producers that are experiencing these damages. Most of the small producers in the Kingfisher area with whom I’ve spoken have been hit even harder than we have. I’ve been told by Legislators and people at the Oklahoma Corporation Commission that the OIPA is still taking the position that this damage is rare or non-existent. That statement is simply not true. Our engineer is of the opinion that, upon completion of infill drilling, we will no longer have any vertical wells producing from the Big Lime/Oswego, Mississippi, or Hunton Dolomite formations. Where we have contacted the horizontal operator concerning our damage, they have declined to even acknowledge it. Where I have spoken to vertical operators who have initiated litigation, the horizontal producers have indicated a willingness to spend whatever is necessary, taking as long as possible, to avoid any liability for the damages done by their fracs.

 

In addition to the damage done to our vertical production, our acreage is being taken in large blocks by the large horizontal operators, working through the Oklahoma Corporation Commission. Historically, the OCC allowed forced pooling only as to an amount of acreage which was expected to be drained by one well. Horizontal developers are now using the OCC to take mile wide swaths of acreage, capable, in the recent report of Devon Energy, of supporting the drilling of as many as 20 or 30 wells. The large drillers have reported acreage trades of $15,000, $30,000, to more than $40,000 per net mineral acre. Meanwhile, they routinely force royatly owners and small producers to sell their acreage at prices which are less than 5 and 10% of those amounts. We have a great number of interests which are burdened to slightly under 80% net revenue interest. The force pooling actions in which we are named routinely declare that those interests  are “over-burdened”, and are of no value.

 

Tim Wigley, OIPA’s incoming President, was recently quoted in the press that horizontal drilling is Oklahoma’s future, implying that the thousands of vertical producers are merely a quaint vestage of the past, and are irrelevant to today’s oil and gas industry. This is an astounding dismissal of the fact that the wealth of thousands of vertical producers, and tens of thousands of Oklahoma royalty owners are being transferred to the pockets of large out of state investors in the large horizontal operating companies. This transfer of wealth amounts not to tens, or hundreds, of millons of dollars, it amounts to billons of dollars of hard earned wealth owned by hard working Oklahomans into the pockets of these large horizontal operators and their investors.

 

OIPA was formed in the 1950’s in order that the small independent producers of Oklahoma could have a collective voice and influence which could be used to protect them from the abuses of the major oil and gas companies and their organization, which was formerly known as Mid-Continent Oil & Gas Association. OIPA should be standing and raising its voice to the rafters in defense of the disaster that is starting to overtake the independent producers and royalty owners in the State of Oklahoma. Instead, it appears that it is interested only in preserving and extending the advantages held by the large companies which have overtaken its governance. The regulatory system in the State of Oklahoma needs to be reformed to make it one that is equitable to all, and that should include a return to a gross production tax at a level that is the same for all producers, and sufficient by historical standards to help support the core services of the state that has provided so generously to so many in our industry over past decades. I urge all of OIPA’s remaining small independent producers to go to www.okenergyproducers.org , and join the Oklahoma Energy Producers Alliance, which is the only Oklahoma industry association which is dedicated to protecting the interests of Oklahoma’s small independent producers.

 

After twenty plus years of service on the Board of Directors of Oklahoma Independent Petroleum Association, I submitted my resignation from the OIPA board on March 29th, and joined the many longtime OIPA Board Members and former Chairmen, who realized there was no point in continuing to fight for an association we had already lost. We welcome the support of those of you that remain.

 

Sincerely,

 

Joe Warren,

Partner:

Cimarron Production Co., Inc.

&

Brown & Borelli Inc.

Letter from Oklahoman – difficulty getting justice when wells are destroyed by a horizontal frac job.

Here is a letter from an Oklahoman that demonstrates the difficulty getting justice when their wells are destroyed by a horizontal frac job.( the picture is a purging well during a horizontal frac job)
Almost everyone is either afraid for their names to be used or are in litigation .
The level of intimidation here reminds me of Karen Silkwood.

==========

Dear Mr. Cantrell:

I am certainly glad that someone is taking this on at long last. As I am sure has told you we are not opposed to horizontal drilling, except for the earthquake problem, which the Oklahoma Corporation Commission allowed to happen. We are opposed to third parties taking the property of existing vertical producers without compensation.

Regarding our situation we had 16 vertical wells which have consistently produced for the last 30 years. Our schedule is attached. All were gas wells on plunger lift so LOEs were very low and we had few if any mechanical problems. Water production was minimal, so we had no need for a salt water disposal well. A few years ago we received an out of the blue offer to buy us out. We weren’t interested in selling and declined. At that point I received several calls from their land VP. He informed me that if we did not sell to them, they would simply acquire toeholds and go to the OCC and get the prospect anyway.

When we declined to sell, they proceeded with their campaign . They were requesting 640 acre spacing. I conferred with our OCC attorney expressing my concern about the almost certain destruction of our existing production. To my dismay, he confirmed that the OCC would let them drill regardless and that we had no recourse at the OCC. When I inquired about the 50% consent requirement, he replied that it didn’t matter because they would apply for an exception to that rule and it would be granted. When I inquired about location exceptions and exceptions to 165: 10-3-28 I was also told it didn’t matter because they would get an exception to those rules also. When I asked if there was any recourse at the OCC when They ruined our existing verticals, I was told that there was not and that Our recourse would be private nuisance action as stated in the Greyhound Leasing 10th Circuit case. When we arrived at the OCC for the hearing the ALJ went “off the record” to state that he didn’t know why people kept protesting these cases because his docket was all crowded and basically, surely everybody knew that protests would not work out and the OCC would allow horizontal drilling even where verticals existed in the same formation. At that point, I realized that no matter how much we spent at the OCC, we had no alternative but to try to make a deal.

We farmed out our acreage. Our FOA provided that They would indemnify us from any liability or damage to our existing wells. They repeatedly insisted, and this appears in a few of the OCC orders, that there would be no damage to our existing wells. You will see from the second attachment that They drilled 14 wells and sent over 4 million pounds of frac sand and over 3 million barrels of slickwater our way. All pumped at 4-7 thousand psi,. Every one of our 16 wells is either watered out or full of frac sand. Because of the low volumes we could produce from some of the wells due to shut ins at their direction and after swabbing, DCP pulled our meters and cancelled our contract. There was a $350 per well penalty for volumes under 20 mcf per day. DCP’s suggestion was that we lay a gathering line, install our own meters at each well, and deliver to DCP at one central delivery point. We now have 15 plugging liabilities. While We were paid for its acreage and have an override on the horizontals, They haverefused to pay for the verticals .

I have tried to condense this, but I wanted you to get the full picture. The present proponents of some of these bills obviously don’t know what they are talking about when they claim existing verticals are protected by the OCC or the District Courts of Oklahoma. The OCC could care less. If you need any further information, just let us know. This family has joined OEPA.
If you want to help us get fairness and justice for the small producers in Oklahoma go to okenergyproducers.org and join this fight.

Tulsa Public Schools board urges Legislature to increase gross production tax

Saw a very nice article in today’s Tulsa World where the Tulsa Public Schools are requesting production taxes go back to the original 7%, which is still less than companies pay in any other state, on all wells in the state.

We want to ask all school districts around Oklahoma to have their patrons contact their legislators with the same message – restore the gross production tax to 7% for everybody and pay our teachers.

http://bit.ly/2qFhPGn

Dewey Bartlett: Oil and gas leading Oklahoma’s recovery — We don’t need subsidies

Stop subsidizing the few and start paying for critical state services.

Dewey is a practical, solution-oriented, principled leader.I’m quite sure as mayor of a major city he made a lot of unpopular decisions. I’m quite sure some of those might’ve been mistakes.But one thing Dewey Bartlett, Jr. never does is nothing! He is the kind of leader Oklahoma needs today that will stand and be counted and risk the fallout.

http://www.tulsaworld.com/…/article_317a157a-8c42-5f98-b6b9…

OEPA & POE Press Conference

Education and Oil and Gas come together for the first time ever to support paying our teachers by restoring the traditional 7% replacing the “Special Deal 2% rate” on new wells. 7% is still lower than any major oil and gas state.

https://www.youtube.com/watch?v=VIMeU-B5i9E

Historic OEPA/POE Press Conference at the Capitol

Here is a link to yesterday’s historic OEPA/POE press conference at the Capitol:

Listen to the entire approximately 30-minute press conference to learn about Oklahoma’s oil and gas industry and its place in our state as THE major funding source for core services and education! Yesterday was historic in that it was the first time in Oklahoma that an energy organization collaborated with an education association regarding education funding!

Here are two memorable quotes from yesterday…

Rep. Leslie Osborn: “If we do nothing this year, to fix our recurring revenue problem, we’re going to release 2600 prisoners early, we’re going to close half of our rural hospitals, we’re going to close at least half of our regional colleges, and we will never get a teacher pay raise. ”

Former Tulsa Mayor Dewey Bartlett: “There are many ideas that are being floated on how to pay for the needs of our core services. But in my opinion, they will all not really take effect for several years now at best if they are passed. By this one idea of making parity of an existing tax, we will see the effect immediately, this year…We won’t have to wait three or four years to suddenly see the entirety of our educational system gone. We can’t afford to wait…”

Our thanks to POE for allowing us to be a part of their journey to make the revision of this revenue stream a reality in order to fund pay raises for Oklahoma’s teachers.

https://www.youtube.com/watch?time_continue=10&v=VIMeU-B5i9E

Raising Taxes on Oil Drillers Would Help State Budget Woes

Yesterday a group of Oil and Gas producers from across the state led by Dewey Bartlett met with members of the House Energy Committee, both Democrats and Republicans. Most, if not all of them, want to do what is best for our state.

I am hopeful that they will allow amendments to the horizontal bills to protect existing vertical wells from being destroyed by horizontal frac jobs.

Many numbers have been distorted. We believe that the existing 7% tax that 86% of all Oklahoma producers pay is the lowest of any of the major Producing states; certainly from among those that are experiencing the bulk of horizontal drilling.

The other side puts out different numbers. Of course, numbers can be manipulated to say what anyone wants them to say, but facts are facts and these are not disputable.

Fact: Horizontal frac jobs in producing formations where vertical wells already exist are destroying those vertical wells.

Fact: The vertical wells they destroy are paying the historical tax rate of 7%

Fact: The horizontal wells that take their place are paying only 2%.

You do the math!

My first Mentor, outside my dad, was my 8th grade math and history teacher J.C. Treas . He had a profound impact on my life and is probably the reason I am envolved in the political arena.
One principle he taught us was “never be the first to give up the old , nor the last to take up the new”Oklahoma should embrace the new technology of horizontal drilling and massive frack jobs . But as we do we should not give up the old , over 100,000 wells some that have produced for Oklahoma for a hundred years and that unless destroyed will produce revenue, jobs, and lively hood for Oklahoma families for decades to come. At the same time the Oklahoma Corporation Commission has the responsibility to protect everyone’s rights as well as to promulgate rules to protect the environment in this paradigm shift in drilling technology.

Vertical Well Protection Act

 

VERTICAL WELL PROTECTION ACT

This is from Lee Levinson our OEPA Co- Chairman. Lee is a long-time Tulsa Oil and Gas Attorney representing over a hundred oil and gas producers and is also a long-time oil and gas producer himself. He has great insight into the problems facing hundreds of vertical well owner across Oklahoma as they lose their production to massive horizontal frac jobs. Here is a proposed solution.

This Act is patterned after Oklahoma Surface Damage Act, which was an act to protect the interest of surface owners in Oklahoma when wells were drilled on their property. This act, being the vertical well protection act, would provide vertical well owners a cause of action against horizontal well operators, which affected their producing wells

First, should a vertical well operator determine that a horizontal well has affected the production from its vertical well, he shall notify the horizontal well operator of the damages to its vertically producing well. Thereafter the parties shall have 30 days in which to arrive at a settlement of damages to the vertical well’s production as well as the reserves which were lost.

In the event the matter cannot be resolved within this 30 day period, the vertical well operator shall then have the right to file an application with the district court for an appraiser to determine the damages which were sustained to the vertical well, the damages to be considered shall take into account both the loss of oil and gas production as well as the loss of reserves attributable to the drilling of the horizontal well.

The appraiser can be mutually selected by the parties or if a mutually acceptable appraiser cannot be agreed upon between the parties then the district court shall appoint such appraiser.

The appraiser shall be a qualified petroleum engineer who is capable of evaluating the loss of oil and gas production, as well as the loss of reserves and is capable of presenting a damage report to the parties and the Court.

In the event both parties agree that the appraisal report of the damages is accurate and is accepted, this damage finding shall become a final determination by the Court and shall act as a judgment in favor of the vertical well operator, against the horizontal well operator and its working interest owners.

In the event, either the vertical well operator and the horizontal well operator do not agree with the appraiser’s damage report, the same shall then be placed on the district court trial docket and shall proceed in an orderly manner to a final resolution. Further, in the event either party recovers a finding by the Court that is 10% different from the appraisal damage report, the prevailing party shall be entitled to attorney fees calculated from the time of rejection of the offer by the parties.

 

“This is happening to me as well as many of the small oil and gas producers in our state. I am not totally against fracking but laws need to be placed so they do not get into our wells! This is devastating for small producers and if nothing is done big oil will keep taking the small guys out.” ~ Krista Shaver Herrera

Let us know if you have had wells destroyed by horizontal frac jobs! The opposition is saying that it doesn’t happen. We have heard of over a hundred cases where it has!