I've been offered a proposal regarding leasing some family property in Karnes County, TX for a Saltwater Disposal Facility. Property is easily accessible from a state highway and has 3 phase power. I would like to know what are the current royalties being offered for a SWD and what pitfalls I should avoid. I am not comfortable with the current offer, internet research indicates an owner in Bowie, Texas contracted for 15% of gross revenue. I look forward to hearing from someone with SWD experience, I'm open to offers.
Salt water disposal is a non profit making situation. When saltwater is made from one area, it is then put down that disposal well. What is the internet research that showed 15% gross revenue? Gross revenue of what?
There are a lot of variables though, did they tell you what all they wanted to put in?
I think SWD can be a very profitable situation, when you charge others to dispose of it down your well. I would rather do my own negotiations or hire someone like Buddy Cotten, rather than let someone else take 85% of the gross to manage a SWD well for me.
Well you are right it can be, it depends on how many loads they are bringing to it. If you own the minerals you COULD do it yourself. However, do you have the money to drill a SWD well on your own and then do you know enough people to find operators to bring water there? Thats why 15% is offered. They are doing the drilling, buying pipe, buying all the other equipment, hiring geologists and others, etc. It adds up.
Thanks for the reply, I have no plans of drilling the well, I was initially offered a low percentage, which I feel is a lowball offer.. The Bandera Saltwater disposal in Bowie is paying the landowner 15% which seems adequate for a tract their size. I'm not greedy, just wanna be treated fairly, not looking to lease to an agent that's licking his chops at a good flip
Matt, I think the vast majority of salt water goes down old wells that no longer produce. As for finding operators, I said I would hire someone to negotiate for me. As for finding operators who might need to dispose of water I have an internet connection and a telephone and I’ve heard of the Tx state RR commission. I wonder what owning the minerals has to do with it? I believe the surface owner generally has the pore space in Tx where XRUN is located. I do know a bit about what it costs to drill a well, I’m under 9 with more on the way. I never said I personally would drill a well. Matt, you may have jumped to some conclusions.
Salt water disposal is a non profit making situation. When saltwater is made from one area, it is then put down that disposal well. What is the internet research that showed 15% gross revenue? Gross revenue of what?
There are a lot of variables though, did they tell you what all they wanted to put in?
Well you are right it can be, it depends on how many loads they are bringing to it. If you own the minerals you COULD do it yourself. However, do you have the money to drill a SWD well on your own and then do you know enough people to find operators to bring water there? Thats why 15% is offered. They are doing the drilling, buying pipe, buying all the other equipment, hiring geologists and others, etc. It adds up.
In Texas, the owner of the surface estate will own the rights to dispose of salt water, not the mineral owner as you mentioned.
On a recent SWD lease that I negotiated for my client, we charged a flat fee of $.30 per bbl. Local disposal agents are charging the operators here between $1,50 and $2.00 per bbl to haul and dispose of salt water. Don't know about Kansas production, but the one well that is disposing right now that my client is involved with is producing 300-350 bbl of salt water per day. Take 300x30=9000 bbl per month, or $2700 per month to my client. One well. Now let's have the salt water hauler bring in 10 wells per day to the disposal site and you are talking about real money.
We don't have to drill SWD wells. We have enough recently depleted wells to convert to SWD wells, its ridiculous. Of course, that is a sad way to get a SWD well for your operations.
You might think that 300 bbl of water a day is a lot. It is. The well is also producing, on average, .3BCF per month and 6000 BO per month, so the water production is high as well. I wish I had a well that would produce 3BCF over a 10 month period.
XRUN, best of luck on your negotiation. You might want to consider the SWD people put in a terminal right at the entrance to your tract, connected by pipelines to the SWD well. That will keep truck traffic to a minimum across your property. I suspect that in Karnes Cty, your roads are caliche and you want to make sure that they water them down so the truck traffic does not stir up too much caliche dust and put it over the forage. If that happens the cattle and deer will not eat the forage.
With all the horizontal wells EOG and other are drilling in Karnes, a good SWD well could be a financial boon to you.
You might want to read the requirements set forth by the Railroad Commission of Texas in regards to Commercial Disposal Wells. These requirements can be found in Statewide Rules. Most operators tend to abide by these rules since field inspectors from the Commission conducts routine checks on these types of facilities. Areas to watch for which become problem areas are required working overflow alarm systems and controlled access to the facility.
All I have to add is that a neighboring landowner in Robertson County leased his land for a SWD. Trucks made deliveries day and night, at all hours, and for a long time. The sad result was that the landowner's drinking water well got contaminated ... and possibly the aquifer. Water is VERY heavy. One gallon of water weighs about 8.5 pounds inside a thin-walled clear plastic water jug.
In Texas, the owner of the surface estate will own the rights to dispose of salt water, not the mineral owner as you mentioned.
On a recent SWD lease that I negotiated for my client, we charged a flat fee of $.30 per bbl. Local disposal agents are charging the operators here between $1,50 and $2.00 per bbl to haul and dispose of salt water. Don't know about Kansas production, but the one well that is disposing right now that my client is involved with is producing 300-350 bbl of salt water per day. Take 300x30=9000 bbl per month, or $2700 per month to my client. One well. Now let's have the salt water hauler bring in 10 wells per day to the disposal site and you are talking about real money.
We don't have to drill SWD wells. We have enough recently depleted wells to convert to SWD wells, its ridiculous. Of course, that is a sad way to get a SWD well for your operations.
You might think that 300 bbl of water a day is a lot. It is. The well is also producing, on average, .3BCF per month and 6000 BO per month, so the water production is high as well. I wish I had a well that would produce 3BCF over a 10 month period.
XRUN, best of luck on your negotiation. You might want to consider the SWD people put in a terminal right at the entrance to your tract, connected by pipelines to the SWD well. That will keep truck traffic to a minimum across your property. I suspect that in Karnes Cty, your roads are caliche and you want to make sure that they water them down so the truck traffic does not stir up too much caliche dust and put it over the forage. If that happens the cattle and deer will not eat the forage.
With all the horizontal wells EOG and other are drilling in Karnes, a good SWD well could be a financial boon to you.
Your reply on the SWD is certainly informative, apparently you have considerable knowledge in this field. I would like your opinion as to what would be a fair royalties pecentage of gross revenue and monthly guarantee for the landowner and operator. I look forward to your reply.