Suggested TMS Rule #3 and Proposed Response
The Mississippi Oil and Gas Board will consider 7 SUGGESTED TMS POLICIES at their October 15 board meeting.
The public is invited to offer input.
I plan to mail my letter via U. S. Postal Service on Tuesday, October 7, to insure its receipt in time to be read by the members of the Mississippi Oil and Gas Board prior to the October 15, 2014 meeting scheduled for Regional Workforce Center at Southwest Mississippi Community College. I’ll mail my letter to Executive Director, Mississippi Oil and Gas Board, 500 Greymont Avenue – Suite E, Jackson, Mississippi 39202.
I encourage each of you to offer your comments both pro and con on these rules, but, for now, I ask you to give me your input into my thoughts on proposed Policy #3.
In all TMS dockets filed with the Mississippi State Oil & Gas Board, the petitioner shall state in both the Petition and the Landman’s Affidavit the following information:
The approximate percentage of interests in the drilling rights and rights to share in production in the proposed drilling unit which the petitioner owns or controls (through leases, farmuts or other agreements) as of the date of the filing of the docket;
The total number of drilling permits for TMS wells which the petitioner has previously obtained from the Mississippi State Oil & Gas Board;
The total number of TMS wells in the state o Mississippi which the petitioner has actually spudded and drilled to completion pursuant to those drilling permits;
The total number of TMS permits in the State of Mississippi which the petitioner currently holds under which no well(s) are presently being drilled;
The total number of TMS permits which the Mississippi State Oil and Gas Board has previously issued to the petitioner which have expired without a well being spudded pursuant to said permits;
The total number of TMS permits in the State of Mississippi which the petitioner has been forced to renew due to the fact that no well(s) were spudded during the term of such permits
The above information shall be furnished to the Mississippi State Oil & Gas Board in all TMS dockets (whether those dockets are filed pursuant to the 100% or “simple” integration statute [Section 53-3-7(1)] or the alternate risk charges statute [Section 53-3-7(2)].
I fully agree with the proposal.
However, I am concerned about the wells per unit size, also. Some operators appear to be following the original intent of the larger units and drilling 2 wells initially (1 north and 1 south) in these roughly 3 section size or 2,000 acre units, while others are drilling only 1 well per 2,000 acres.
It would appear to me that in consideration of renewed permits, a greater negative consideration should be weighted toward those operators who are abusing the intent of the 2,000 acre units.
Further, I would think operators who have shown an operational intent to drill only 1 well per 2,000 acre unit should be limited to 1,000 acre size units once the intent of their plans are made known.
The argument has been made that by leaving "virgin" portions undrilled future areas could be better developed as technology improves. This seems to have merit, but at the same time there needs to be a study of the acceptable spacing for these wells, which can only be accomplished by drilling wells side by side in the same direction.
Companies wishing to keep "virgin" areas should consider studying the spacing and drilling 2 wells in the same direction rather than only drilling one well. Two birds with one stone, so to speak, can be accomplished by doing so. The units can be drilled at a higher intensity, as was originally planned, and spacing of wells can be more quickly determined.
I believe Rule #3 touches on the problem of issuing too many drilling permits to companies with neither the means nor the intent to develop the acreage. But, the rule doesn't fully address the problem.
The 1 well per 2,000 acres plan of action apparently of Halcon, Sanchez and Comstock is outside the intent of the original plan to move from the 1,000 acre size units to the larger size units.