In the OK Energy Today news this morning I see that Oklahoma and 22 other states are trying to stop the EPA rule to stop methane gas leaks. As I brought up at the national convention a couple years ago, as royalty owners we own that gas. Why would we not want the oil companies to stop those leaks? That’s gas that we are not getting paid for. Correct? Is NARO speaking up against this?
One issue is the cost burdens on regulatory agencies and operators. State regulatory agencies are already stretched thin on employees. The cost of new equipment will cause many smaller or low performing wells to be uneconomic. In particular, the shallow vertical wells will be shut in, cutting off royalties to mineral owners, field jobs and economic support in smaller communities. If small operators go under, where do new jobs come from. The rules will also hit older pipelines and other facilities. Some may be shut-in at least temporarily for replacement or upgrades. Balance is a problem where federal regulations are enacted with little concern about the economic life and support of those citizens who are adversely affected. Bottom line is that if your royalties come from the big operators with big wells, you will not see much immediate affect. It will be in the long run as production slows and there are fewer smaller companies to take over.
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I understand your point but we are NARO not an area economic support group. Might lose some of the old shallow wells but those are usually the old 1/8 leases that we dislike anyway. We would potentially then have the chance to take new leases AND clean up the surface issues associated with those old wells. Seems like this would be a good point to discuss with our ROCO partners too.
Do you mean that you are an officer or member of NARO and not a mineral owner? I am only familiar with Texas issues and the termination of old 1/8 leases and associated wells may not be advantageous. First, in a lot of areas, there is not deep formation potential. The end of shallow wells will be the end of royalties. Holders of deep rights at 1/8th under these old leases are not drilling now because it would not be economic to do so. So they will not take new 1/4 leases. Second, some of these operators will go under and not be plugging and surface clean up or restoration. So those wells will be added to the orphan plugging list for RRC to pay for. The problem is that RRC allows wells to simply be shut-in, sometimes for decades, until the operators fade away.
Since the article mentioned OK I was referencing OK really. Had not thought about TX. I am a mineral owner, purchased, not inherited. I am a NARO member and was on the Board for several years, that was the original reference I made about the national convention. Its still my gas that they are venting/leaking and these wells need to be cleaned up at some point. Royalty Owners Coalition of Oklahoma, Inc (ROCO) is an association between NARO, Oklahoma Farm Bureau, American Farmers & Ranchers (AFR), Farmers Royalty Company, and Oklahoma Cattleman’s Association. Im also a surface owner where there is heritage production and I do not own minerals there. Washouts, sterilized soils, contaminated grounds and rusted out equipment impacts my lands, cattle and wildlife. Longer we put it off the worse and more expensive the problem will become in my opinion.
I agree that the failure to clean up surface is a serious problem in many states, and certainly here in Texas. Unfortunately, the courts have extended the dominance of minerals to the point where surface owners have almost no protections. And the RRC allows operators to shut-in wells for decades. Even when wells are plugged, the surface is not cleaned up and restored. Equipment and trash are abandoned. None of this will be fixed by the proposed federal methane standards. In Texas, we need legislation to require on-going remediation of surface while a lease is producing and restoration of surface afterwards.