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October

Suggested TMS Rule # 6 and Proposed Response

Posted by bernell on October 2, 2014

The draft document titled, “SUGGESTED TMS POLICIES” is being considered by the Mississippi Oil and Gas Board at its October 15 meeting for an effective date of adoption as of its November meeting date.

There are 7 proposed policies.  I have previously covered the proposed policies 1-5 and my plans are to cover the 5th and 6th proposed policies tonight and # 7 on Sunday evening.

I’m covering these policies in order to better inform you about these proposals, but also in order to get your input into my own public comments on these policy changes.

For those wishing to view the four previous policies I have reviewed, here are the links:

http://tmshorizons.com/index.php/tms-news/2014-news/september/suggested-tms-rule-1-proposed-response/

http://tmshorizons.com/index.php/tms-news/2014-news/september/suggested-tms-rule-2-and-proposed-response/

http://tmshorizons.com/index.php/tms-news/2014-news/september/suggested-tms-rule-3-and-proposed-response/

http://tmshorizons.com/index.php/tms-news/2014-news/october-2014/suggested-tms-rule-4-and-proposed-response/

http://tmshorizons.com/index.php/tms-news/2014-news/october-2014/suggested-tms-rule-5-and-proposed-response/

Now, here is policy #6 and my comments relative to it:

POLICY #6
Each petitioner/applicant for a TMS drilling permit shall submit to the Mississippi State Oil & Gas Board (concurrent with the filing of the permit application) a written Plan of Development which shall state in precise terms the applicant’s future plans for the drilling and development of the proposed drilling and production unit being permitted.  Such Plan of Development shall, at a minimum, include the following:

(1)    The petitioner’s commitment (if any) that an initial unit well will be drilled and completed on the proposed drilling and production unit during the twelve (12) months term of the drilling permit;

(2)    The estimated spud date of the initial unit well;

(3)    The total number of increased density wells sought to be authorized for drilling on the proposed drilling unit; and

(4)    The estimated time expected to elapse between the drilling and completion of the intial unit well and the complement of other increased density wells proposed to be drilled on the drilling unit.

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Insofar as I understand the intent of this policy, I am in full agreement.

It doesn't make sense to allow operators to continue to drill one well on a 2,000 acre unit and then head off to drill and hold another 2,000 acre unit. 

It also doesn't make sense to allow an operator to obtain drilling permits on dozens of units while announced plans for the foreseeable future are to only have 1 rig in the area.

That said, I am wondering about what will be done in the future if operators decide to abandon undeveloped units after only 1 well has been drilled? 

With a unit established by the drilling of a well does an operator hold that acreage in perpetuity even though no intent to drill a well is demonstrated going forward?

Can the board adopt a policy to allow a new operator to drill additional wells should no activity occur in a unit after a “reasonable” period of time?  (5 years, perhaps?)

I understand there is a balance between encouragement of development of the oil and gas resources of the state and protecting the rights of the mineral owners in the state. 

I pray this Board can find that balance.
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