Debbie, Thank you. Makes one wonder if Miss Lime was just a smoke screen.
We called condensate ‘drip’ gas. I guess it can be used like gasoline, but it’s not good for high compression engines, because it makes them knock.
Catherine,
I’m not sure what drip gas was except it reminded me of our diesel today.
We didn’t get it out of the wells, but from the refinery in Enid. I know we had to raise the cylinder heads in order to burn it for power.
Here is the findings of the OCC regarding the metering issue, API gravity issue, and the oil going down the water pipeline and being recovered royalty free. I have asked the OCC field inspector to send it to me in writing. He told me this over the phone.
- Because OCC does not have a rule regarding oil metering there was no violation found. Basically, Devon or any oil company does not have to adequately meter to industry standard, crude oil. Using the oil going through the oil meters at the separator, they are estimating the oil taken from the top of the water tank and allocating that to each well by percentage. In other words if well A makes 40 per cent of the total, then whatever goes out the top of the water tank, 40 per cent of that is allocated to that well. As for API gravity, there is no difference in the API gravity or value of the oil in the woodford vs the mississippi formations, according to Devon.
As to the oil sold royalty free at the water injection sites, they are allowed by law to take up to 2 percent without violating OCC rules. Devon says the oil still in solution going to each injection well does not exceed that.
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Using ratio is not a recognized form of metering. The function of how much oil goes out the water meter is a function of how turbulent that particular well is flowing, or slugging. It is not a linear equation, in other words, the well that is slugging the most, is probably putting more oil out the water meter than the other wells on that location. In other words, it is a guess.
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As for the API gravity issue I do not know what the API gravities of the woodford or the mississippi formation are in this area. But I do know that two well from the same formation can have different API gravitys More research needed here.
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Basically, because of the poor design of the well pad facilities, there is no residence time in the produced water tank for the oil to separate properly. So my estimate depending on the characteristics of each well on location is that a significant amount of oil is being captured by Devon downstream. So they are using the law to get at least 2% legally, royalty free from each well. Take that times 200 wells. So for example if the average well makes 300 bbls per day the first year x 200 wells that is 21,600,000 bbls of oil the first year. x .02 is 432,000 bbls to Devon royalty free the first year. That is 43,200,000 dollars profit the first year by setting up these facilities this way at 100 dollars per bbl. So what the mineral owners need to do is figure their 3/16 royalty at 2.94/16 instead. My guess is that at least some of the slugging wells are losing a lot more than 2%.
The OCC inspector agreed that the ratio issue, is not going to hold water. While he thinks that Devon has integrity, basically Devon is guessing what each well is making not metering all the oil as they are required to do, (not by OCC rule). I have told a class action attorney about the issue and he said they are required to meter or gauge all the oil. He also said there are other issues, like timing involved. I guess he means when the oil is sold out of the tanks, vs when the wells produced the oil. But I don’t know if this is by statute or what. If anyone wants a copy of my letters to OCC regarding this issue, email me at [email protected] I will also send the written response by OCC when I get it. So the bottom line is that for all future leases, you better specify that you want dedicated oil and water tanks for each well. The law firm I contacted and asked questions of was Burns and Stowers out of Norman OK. 405 360 6191
Robert, Thank you so much for all your efforts and findings. I’m just a paralegal and not an attorney, but I do know that the OCC has done us mineral owners great harm by not regulating metered oil. The OCC is not plead ignorance of “Absolute ownership”, “The Law of Capture” and “contraband oil”.
“Absolute ownership is the theory that minerals such as oil and gas are fully owned in place before they are extracted and reduced to possession. Title to oil and gas may be lost by legitimate drainage and by the rule of capture.” (also known as “The Law of Capture”)
http://definitions.uslegal.com/a/absolute-ownership-oil-and-gas/
Sir Ron,
**Under Oklahoma Law: ‘the rule of capture’, also known as ‘the law of capture’, gives the operator/producer the legal right, by way of lease or force pooling, to drain your oil right out from under you, because the rule of capture (simply stated) is: ‘the first one to captures it owns it’. Now, the OCC does not regulate oil meters so mineral owners have to depend on the honesty of ‘the first one who captures the oil’ and honestly is an old fashioned trait that is hard to come by today. **
Robert Would they just not lease and force pool you if they wanted to drill ?
Ron, Devon will probably choke on my new lease, so they will be sure to pool my section.
Virginia, Devon is not the only company that can drill my section and this is not my 1st rodeo, but I do know what you mean.
Martha, all of which goes back to my question is it possible that fracing can actually re-direct our minerals out of our sections and into another mineral owners section, thus giving them “ownership” of what has been “mine,” for a few million years or so. I would think it is not only possible, but it has happened many times, and also that an earthquake as far away as Yokashita Japan can move our minerals from one location and into another. It certainly appears to be a very fluid situation allah the time.
I believe I have read something to the effect that water being much heavier than crude, there are underground rivers flowing atop of crude deposit areas, and suddenly an earthquake comes along and fractures the earth bedrock etc, allosing for the river or lake if you will, of water to cave onto the very top of crude deposits, the water then sinks by nature of this quirk of nature, and the c rude pools can actually move as much as a hundred or more feet closer to the surface of the Earth. What was not there one day, may be a significant source just a few feet below our feet a few days later. It should not take a scientist or even a geologist to realize that the Earth is constantly changing anyway, what goes on 20 miles dow is still pretty much of a mystery to even our brightest and most dedicated. Understanding it all only comes when the stuff actually flows out of the well head, and even then we just have to scratch our heads, mumbling something to the effect of “…what in the hell’s going on here???..it was not supposed to do this…”"
Logan: Devon Energy Production Co. LP; Crossfield 21-19N-3W No. 1MH Well; NW1/4 SE1/4 SE1/4 SE1/4 (SL) of 21-19N-03W; 670 barrels oil per day, 491,000 cu-ft gas per day; TD 10,304.
Devon Energy Production Co. LP; Crossfield 28-19N-3W No. 1WH Well; NW1/4 SE1/4 SE1/4 SE1/4 (SL) of 21-19N-03W; 731,000 cu-ft gas per day, 619 barrels oil per day; TD 11,329.
Sundance Energy Oklahoma LLC dba SEO LLC; Branson 17-4-22 No. 1 HW Well; SE1/4 SE1/4 SW1/4 SE1/4 (SL) of 22-17N-04W; 517,000 cu-ft gas per day, 369 barrels oil per day; TD 9,812.
Chad, thank you and I would greatly appreciate a copy of your clause addressing dedicated oil/water tanks per well. NARO should have seen this coming and I believe they did, but I have not seen a NARO version of this much needed lease clause, so if anyone has it please post.
Debbie,
Devon has several rigs running just east and NE of Perry and some of the west side of Noble co by the Garfield co line. I just hate to see that everything has to be foreign owned nowadays. China has all our money, now they have our oil and land.
Robert,
I am sorry that OCC can not enforce any rules. I had this same problem with them years ago when a salt water line broke on my property. Wasn’t until I threaten to sue them and the oil company that they got a back bone and did anything. They knew that I wasn’t kidding anymore.
Seems they are an agency that has no enforcement power. They are just paper pushers with no back bone. I keep thinking they are bought off by big oil companies.
Thanks for letting us know what you found out and keep us informed to what happens.
Robert, Martha and my old buddy Virginia: I’ve been reading your discourse regarding metering, and very much appreciate all your efforts. Thanks again for all your work regarding this subject. In my next lease I am going to include a section regarding dedicated oil/water tanks per well, thanks to you three!
Virginia,
If I could do my lease over again, I would include the following:
The oil production of each well will be determined by gauging from dedicated oil tanks. The produced water from each well will be separated from the oil in dedicated produced water tanks. The gas from each well will be metered with no more than 1.5% error allowed per 30 day period. No commingling of oil will be permitted before sales. Complete and total access by the mineral owner / land owner to the production facilities, and production data will be afforded with all safety precautions. The production facilities will be maintained according to the SP001 standard. I would put of course the gross production clause also. That would protect you whether they wanted to meter the oil at the separator or not. Devon is only metering the oil at the separator to meet allocation requirements for each well per OCC regs for the size of the unit. I would not allow any units over 640 acres either.
Robert,
Thank you. I am so sorry that they are treating you that way. We may all become millionaire, but we will spent 2 millionaire on attorney’s and court cost.
I just found out that Devon spaced some of my land on a multi unit for 1280, but at least it’s suppose to be 50% to 50%. It’s scary to think the mineral owners don’t have any rights anymore. But, if we would look at what Chesapeake did out in Woods and Woodward Co, we can see what the foreign countries are doing to us.
Ron,
I am sure that with more clauses in our lease, they won’t want it. But I did get an electric line to go across the road instead on my meadow because of clauses. I wouldn’t want to be force pooled as you don’t have any control over what will be in your lease at that point. Since I am a surface owner on lots of my minerals, I do want clauses regarding that at least. I just hate it when only one company like Devon buys everyone out and then they can give you whatever they want for leases, etc. And whatever is in your lease, foreign countries really don’t care as they only go by there rules.
Martha,
Are you going to take a chance on OCC pooling you? I wouldn’t. So, we have to write our addendum so they will still buy it if we want to lease.