Oil and Gas at Your Door? (2005 Edition) - Earthworks

Oil and Gas Development and Impacts
1. Negotiate and sign a lease and take the offered bonus and royalty interest.
2. Decide to not sign and likely be force pooled under terms established by the state.
3. Elect to participate in the well and pay their proportionate share of the drilling and completion
costs in order to receive their pro rata payout as a working interest owner.
It is important to look into the pooling laws in the state where your property is located, or talk
with a lawyer, in order to evaluate which of these options works best for you.
For more resources on force pooling, see references to East of Huajatolla Citizens Alliance information
sheets in Chapter V. And for landowner experiences with force pooling, refer to Chapter
IV stories: “Threats and Intimidation—This is Called Negotiation? Force Pooling an Affront”;
“State Could Force Property Owners to Allow Drilling”; and Terry Fitzgerald’s story.
Unitization
Unitization is the process of bringing together a group of drilling units (see pooling above) to
form a large operating area. Typically, there are several operators in the operating area.
Unitization takes place through an order from a state agency, and participation by operators
may occur either voluntarily or involuntarily. Unitization orders may specify things such as well
spacing or extraction rates in order ensure that all operators are working together to efficiently
and effectively remove the oil or gas from the operating area. Unitization often occurs when an
older field's production has begun to decline and it is necessary to utilize secondary recovery
practices such as water or CO 2 flooding techniques to stimulate more production. As a result of
a compulsory unitization statute for oil and gas reservoirs, Louisiana's oil and gas wells are, on
average, one-third more productive than those in Texas, which does not require unitization. 81
For more information on spacing, pooling and unitization (including federal units), visit the
OGAP website (www.ogap.org).
3. PRODUCTION
The first step in production is to complete the well and start the well fluids flowing to the surface.
Stimulation techniques may be used to enhance the flow of fluids during well completion.
Once the fluid begins flowing, it must be separated into its components of oil, gas, and water.
Finally, the oil and gas are treated, measured, and tested before being transported to the refinery.
In addition to extracting and transporting the oil and gas, other tasks carried out during the
production stage include: production enhancement, which uses techniques similar to those
used to stimulate wells; well servicing, which includes routine maintenance operations such
replacing worn or malfunctioning equipment; and well workover, which is more extensive equipment
repair.
Well Completion
To begin completing a well, casing material (usually steel pipe) is inserted into the well bore. As
with the casing used during the drilling stage, the casing material is supposed to prevent the oil
or gas from contaminating groundwater, and stop the walls of the hole from collapsing. Cement
is pumped down the casing to fill the space between the casing and the walls of the drilled hole.
This is done to protect the casing and to further decrease movement of oil, gas or other fluids
into ground water or rock formations.
When cementing of the casing is completed, the drilling rig and other associated equipment are
removed from the site, and a smaller rig (a workover or completion rig) is moved over the well
bore to finish the well completion. This rig is used to puncture or perforate the casing at specific
locations where the casing comes in contact with the formations that contain oil or gas.
The oil and gas can then enter the well through these perforations.
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