Industry Backed Bill Could Force Mineral Owners to Sell

30 Comments on "Industry Backed Bill Could Force Mineral Owners to Sell"

rockman on Mon, 15th Dec 2014 2:05 pm 



A few of points.

“Forced polling should be part of a larger comprehensive bill that will address both environmental and health issues related to horizontal drilling.” Bullsh*t. The royalty issue has nothing to do with the environmental impact. The state should have already adequately addressed that issue.

“Royalties from missing owners should be turned over to the surface owner of that parcel instead of given to the state as the industry bill proposes.” Bullsh*t…those royalties belong to the minerals owners whether they’ve been found yet or not. In Texas they go into an escrow account and held there for those mineral owners if they are every located. A lot of “missing mineral owners’ show up once a well is drilled.

“Surface owners may not be forced to have a well head located on their property if they refuse. McMahon said this provision is already in the industry bill.” Bullsh*t. I know it might be unpleasant for a well to be poked close to one’s house. But the mineral owner has as much right to capitalize on their asset as the surface owner. There are many instances in Texas where the surface and minerals are owned by two separate parties. If there are no other options other than to drill on a surface owner property the mineral owner has the right to have his minerals developed. Think of it the other way: O own the mineral rights and you own the surface. Do I have the right to prevent you from building a house or farming your property because it might be in the way of me drilling a well there some day. But we do have laws in Texas that limit how close such operations can be conducted to a home.

“Companies should be required to pay mineral owners the fair market value price of the gas and be given access to information about how much their neighbors were paid in the negotiating process”. Half right and half bullsh*t. In Texas the price oil/NG is sold for is transparent to all parties including landowners. In fact, in Texas oil royalties are typically paid directly to the mineral owners by the buyers. I’m not exactly sure which “negotiation process” they are referring to. So should a car dealer be required to tell you what they sold your car for to other buyers? Should you’re building contractor be required to show you what he charged other folks to build their home? Etc., etc. Life is full of negotiations. Deal with it. LOL

Or with respect to drilling units they can do it like we do in Texas: an oil company could have the lease put into a drilling unit to satisfy the regulations but that unleased mineral owner doesn’t get a penny of royalty. The formation of a drilling or production unit has nothing to do with who is leased or not. It has to do with regulatory issues dealing with the effective recovery of hydrocarbons. Secondary is this process protects a land owner from having hydrocarbons drained from under their property. I’ve never seen even one mineral owners refuse to get a check from an oil company. Not having acreage put into a drilling unit doesn’t prevent a well from being drilled close to a land owner.
In Texas, an unleased mineral owner (“UMO”) does not always share in production from a unit well in which the UMO’s tract is pooled. To be clear, a company who owns oil and gas leases surrounding the UMO land can still include that land in a unit – the company does not need a lease to do so. However, just because the UMO is included in the unit does not mean the UMO will share in production from the unit well. Only if the UMO is a drill site tract will he share in production from the well. “Drill site tract” means that all or a part of the wellbore passes underneath the property. If it is a vertical well, the surface location and wellbore are located entirely on and underneath one tract of land. If it is a horizontal well, then there are multiple drill site tracts, as each tract under which the wellbore passes is a drill site tract. If the UMO tract is not a drill site tract, the UMO does not share in any of the revenues from production from the well. The UMO is cut out and possibly subject to being drained by the unit well depending on its proximity to the UMO tract. In this instance, the UMO’s only recourse to seek relief from the Texas Railroad Commission (“RRC”) to drill his own well on his tract, or to be included in the unit under the Mineral Interest Pooling Act (“MIPA”), discussed below. Neither option is desirable to a UMO in Texas.

Or even simpler…do it like they do in La: drilling units don’t have to be nice even squares. They can be drawn any shape to acquire the amount of acreage required to form a unit that satisfies the regulations. If a land owner doesn’t want his acreage in the unit they just don’t include him in the outline of the unit. The well is still going to be drilled offsetting his land. The only difference is he’ll never get a penny of lease bonus or royalty. I doubt the voters in W Virginia will care much for that regulation.

Nony on Mon, 15th Dec 2014 2:29 pm 



Rock, you made a comment on the boards which really surprised me. Was clearly wrong and something that someone following the industry should know:

“BTW the OPEC response in the first quarter of 2009 to oil prices falling from over $100/bbl to less than $40/bbl: they kept producing about the same volume of oil. Just because they didn’t make drastic production cuts 5 years ago in an effort to increase oil prices doesn’t mean they won’t do it this time. But that gets us back into the world of predictions…a world I really don’t care to spend much time in. LOL.”

SA/KUW/UAE had massive cut in production. It was well reported and you can look it up. They certainly did intervene to stabilize price. They did not react as price-takers (the way US individual firms will), but as a coordinated cartel.

http://s574.photobucket.com/user/Darwinian1/media/SaudiArabia-7.jpg.html

That was not a hurricane hitting the Arabian Peninsula in JAN2009. That was market intervention. Widely reported. And coordinate with similar moves by KUW and UAE. Just Google it, man.

rockman on Mon, 15th Dec 2014 4:01 pm 



Nony – According to the EIA OPEXC averaged 31.27 million bopd in 2008 and 29.19 million bopd in 2009. As I said: OPEC made no significant decrease in production after the[price crash in late ’08. So I gather you must consider a 6.65% cut “massive”? Interesting.

Your response might have been a tad more credible if you had used something other then photobucket as a reference. LOL.

Northwest Resident on Mon, 15th Dec 2014 4:14 pm 



rockman — I’m glad to see you’re taking it easy on Nony. Cornies these days have it tough — they have to play the hand they’ve been dealt, and it ain’t nothin to brag about. Heck, that photobucket link is probably Nony’s ace in the hole and it looks like you just called his bluff!

Nony on Mon, 15th Dec 2014 4:19 pm 



Rock:

You took the year averages instead of looking at the massive cut that was done by SA, KUW and UAE. THIS WAS WELL REPORTED.

Honestly, you come across as a dummy with some of this stuff. Like when Rocdoc spanked you for basics on reserves estimation. Or the gasoline comsumption screwup.

https://www.google.com/search?q=opec+production+cut+2009

(read any of the linked reports)

It was a massive move. Very well reported.

“Showing an unusual degree of discipline, members of the Organization of the Petroleum Exporting Countries have slashed their output by more than three million barrels a day in recent months as they sought to put a floor under oil prices, which have fallen by $100 a barrel since last summer. That is about 75 percent of the production cuts pledged by members of the cartel since September.”

-The New York Times 25JAN2009

Nony on Mon, 15th Dec 2014 4:49 pm 



How you can compare that RESPONSE with a NONresponse is just baffling. This isn’t even about peaker versus cornie, but about you being confused and not bothering to check facts. And not having a good memory either. If you can’t recall OPEC intervening to raise price just 5 years ago, how should we trust your 80s memories? Or the Olde Austin Chalk shtick?

Northwest Resident on Mon, 15th Dec 2014 5:00 pm 



Nony — So, let’s say you’re right this time. Chalk up another “gotcha” for Nony. What difference does it make. Your “gotcha” addresses a minor inconsequential detail in a much larger and much more relevant point that rockman was making. I’ve noticed that you and other cornies do that, a lot. You can’t dispute the main point, you’re on the flat out losing side of a very long running and very important debate. Your NG futures are dumping. Your wonderful fracking plays and all that superb technology are disappearing into the holes left by loads of junk bonds falling flat on their faces. So much of what you’ve crowed about and so much of what you’ve predicted has turned out to be wrong. But there you are, always ready to jump and snipe at minor inconsequential errors or perceived errors. TBH, I still seriously doubt that you are right. I’ve seen you argue your “facts” head to head with some serious dudes, and it is clear that you are wrong, but you just never give up. You have your set of facts, reality has its set of facts, and very frequently the two sets of facts do not match.

So, let’s just say your photobucket link is correct this time. What significance does it have in the grand scheme of things. Will it stop the oil price crash? No. Will it repay the piles of trillion$ that the shale business burned through to produce all that wonderful sweet crude that you’ve been crowing about for so long? No. Will it hold off peak oil and the consequences for even one more day. No. It just proves you’re “right”, this one time, maybe, and that’s all it does, maybe.

Nony on Mon, 15th Dec 2014 5:13 pm 



NWR:

I agree. Missing a fact is not the same as an argument over complete positions.

Northwest Resident on Mon, 15th Dec 2014 5:17 pm 



Nony — I’m going to go see the Blazers/Spurs play tonight. And for your response, I promise I’ll have an extra “cold one” just for you!

Go Blazers!

Apneaman on Mon, 15th Dec 2014 5:44 pm 



I use to be a Super Sonics fan back in the day. Down-Town Freddy Brown, the original 3 point sniper, Oh Yeah!

Nony on Mon, 15th Dec 2014 6:17 pm 



Go Bullets, beat Sonics. It ain’t over until the fat lady sings.

http://en.wikipedia.org/wiki/Washington_Wizards#1977.E2.80.9378

Makati1 on Mon, 15th Dec 2014 6:28 pm 



Amazing what happens to freedom and property rights when the going gets tough for Capitalism. Land grabs, not consolidation is the goal here. Or, should I say mineral/money grabs. Greed is killing America and the disease has hit critical stage. Nationalization is next … if the union holds together long enough.

Apneaman on Mon, 15th Dec 2014 6:38 pm 



Slumping oil price undercuts Stephen Harper: Goar
Harper rails at environmental advocates as his oil-centred economic vision runs aground

http://www.thestar.com/opinion/commentary/2014/12/14/slumping_oil_price_undercuts_stephen_harper_goar.html

buddavis on Mon, 15th Dec 2014 7:31 pm 



Makati

Mineral rights are real property and in this country, individuals own minerals. As rock stated, mineral owners have rights to develop their proprty. There are decades and decades of mineral code and law laying this out. Anyone who buys properrty knows this and the mineral ownership is of public record.

This is capitalism, and some bogus article that does not understand mineral law is not an accurate description of what is happening here. But if you want to have an oil and gas industry that looks like Venezuelas and disregards private property rights, nationalization is your ticket.

DMyers on Mon, 15th Dec 2014 8:04 pm 



As this issue has come up about OPEC’s cutting production to support oil prices in the past (Nony v. Rockman), it creates an opportunity to touch upon the supply/demand principle being applied. Whether past or present, the idea of cutting production to hold or increase oil prices assumes a highly correlated relationship (i.e., inverse) between supply and prices in the oil market.

I don’t believe this is the case, nor do I believe that OPEC believes this is the case. There are too many other factors involved when it comes to the price of oil, because that price has a direct impact on other sectors of the market, economy, and society in general. There is, in fact, a notable lack of precision when it comes to how much cut leads to how much price. There is no proven formula. Beside that, a cut in production will lead to an immediate loss of income as well as unknown expenses from the process of cutting back a process of men and machines that is made to run, throttle wide open.

OPEC recognizes that many US and world economic concerns and interests are their own concerns and interests, as well. They weigh the decision to cut by its affect on the wider sphere, recognizing that a production cut made for the purpose of raising prices would have other unintended affects which could lead back to OPEC countries and result in greater detriment than the previous low prices.

For the above reasons, I believe rockman is probably correct about the insignificant response by OPEC to the previous price crash, and this also explains the current failure of OPEC to alter production. I don’t believe OPEC believes it can cut production precisely enough to obtain a certain desired price, without unleashing other forces that will affect prices in unknown ways.

The notion that OPEC producers can simply manipulate oil prices by opening and closing a supply faucet brings a very narrow view to a big and complicated situation. I believe OPEC members see the bigger picture, and, for that, they are not inclined to intervene.

Nony on Mon, 15th Dec 2014 10:08 pm 



“Whether past or present, the idea of cutting production to hold or increase oil prices assumes a highly correlated relationship (i.e., inverse) between supply and prices in the oil market.”

Thus proving you are unaware of the most basic concept in economics.

shallowsand on Mon, 15th Dec 2014 11:09 pm 



I remember 2008-2009 very well. Hopefully more extreme than present. And we were thankful when OPEC cut big time and we went from low 30s to 70 by year end. However, no reason to get up in arms. Have bigger worries IMO.

shallowsand on Mon, 15th Dec 2014 11:15 pm 



Actually our cash price was in 20s for three months. Nony, think there’s going to be carnage in the Bakken? Seems like a lot more people new to the industry out there, from what I read, than in TX. Wonder how many in ND are actually thrilled about $2 gas, not understanding that its a real bummer for them.

Shouldn’t have called ourselves Saudi America unless all in costs were actually comparable to KSA, and not multiples higher.

Perk Earl on Tue, 16th Dec 2014 2:35 am 



Hey, peak oil compatriots, check out these latest oil prices!

http://www.bloomberg.com/energy/

WTI -.92 to 54.99
Brent -1.13 to 59.93

WTI sub 55 and Brent sub 60?!

Makati1 on Tue, 16th Dec 2014 2:50 am 



buddavis, capitalism is what is killing America, and is not a plus anymore, if it ever was. I’m only saying that nationalization in some form is coming to America soon.

Maybe it will be the retirement plans like 401ks or mutual funds that have to be totally invested in government bonds and will be regulated so that they become like SS. You are allotted whatever income the government says you can have per month. Or some other grab by the banks and government. Doesn’t matter what you believe, it is what happens that counts.

I still think this is all being orchestrated to destroy the US middle class. The EU middle class is already toast. Australia is failing. Japan is a dead man walking. There cannot be a one currency world government until we (99%) are ALL on the same level. Doesn’t look like we are many years from that position.

Nony on Tue, 16th Dec 2014 6:06 am 



Shallowsand:

Cry me a river, baby. I want more oil, more competition, lower prices. If that means some high cost producers get hurt, no sweat.

Oh…and let’s open up ANWAR. Open up the GOM. Open up the other coastal waters. And allow the KXL pipeline. We could really crash the price…

Davy on Tue, 16th Dec 2014 6:33 am 



NOo you just totally ignored what DM said. Oil is not your normal widget from econ 101. It has a systematic and dynamic interdependence with the global economy. It is a global commodity that runs everything. Nothing in today’s BAU is left untouched by oil. Like DM said affecting supply adversely affects demand adversely and vice versa. Importers get hurt so do exporters. In the short term there are winners and losers but longer term always losers. There is no substitution for oil or the dynamic economic relationships that oil functions in.

Now that the bumpy plateau of constrained growth is showing signs of descent the functionality of your econ 101 analysis is further skewed due to the general underlying descent instead of growth. I may be jumping the gun on descent but I am not jumping the gun on economic turbulence. Oil is further going through a systematic shift from depletion of quality and quantity of its economic value. This is another aspect of the turbulence.

The twin negative oil and economy symbiosis is raising prices at the same time as this relationship constrains growth. Economic prices rises because depleted production constrains growth along with the higher economic price from lower net energy. Economic price is different than oil price. Economic price is what is removed from productivity central to growth. Pump prices could be high or low depending on the market.

Oil to the economy can be equated to food and water for humans. There is no substitute and there is a required healthy level of it. The economy must be healthy to properly produce something as capital intensive and technologically complex as oil ED. When these conditions are compressed systematic issues pop up throughout the economy and oil sector.

What we have now is both oil and the economy are compressing. This is the worst case scenario. This is actually something that has never occurred that I know of. Oil has never been in the stage of depletion it is today with a population and consumption levels the size of today. This population and consumption level have a required economic energy supply level. The all-important growth function of the economy has a required level of economic oil.

We are in a predicament of bumpy economic descent and an aggregate oil sector in compression from depletion of quality and quantity of the delivery of economic energy. This is a predicament with no advanced energy vector for transition. There is no economic solution to limits of growth in diminishing return with a population in carry capacity overshoot.

In conclusion NOo de corn porn, you are a bright guy that is specialized in the calculations , numbers, and oil sector details but lost with the big picture. You have lambasted the PO crowd and I may say rightly for occasional sloppiness. Yet, the PO reality is taking shape before you and you are struggling to get a grip on what is going on. What do you do but fall back to the text book econ 101.

NOo, get a grip man oil is not widgets. Your econ 101 never dealt with a paradigm shift. Your text book econ that society relies on for answers is no longer valid because the fundamentals are no longer valid. Fundamentals of growth are different than the fundamentals of descent.

Makati1 on Tue, 16th Dec 2014 6:37 am 



Nony, the price is crashing now, and there is nothing the Us can do to stop it. I’m not sure it can be stopped. If the Saudis cut production by 10+%, it might stop it’s decline. But, they are not going to do that so we will have to wait and see.

rockman on Tue, 16th Dec 2014 9:06 am 



NR – You do understand that Nony has confirmed the accuracy of my post, don’t you? Again, according to the IEA, the KSA cut production from 9.5 mmbopd to 7.9 mmbopd for the first two months of 2009 and then increased to 8.2 mmbopd for the rest of the year. So if Nony wants to classify a 17% cut for two months decreasing to a 14% reduction for the balance of 2009 as a “massive cut” that’s fine by me. But I don’t view it as such.

And OPEC production? According to OPEC itself, in its annual report, they averaged 31.9 mmbopd in the 4Q 2008 and 28.5 mmbopd in 1Q 2009. So that’s just an 11% cut. Would you classify that as a “massive cut”? If not then I’m not sure where you detect a “got ya” moment. So again: if Nony wants to classify an 11% cut by OPEC as “massive” that’s fine by me…but I don’t. Again compare my sources (the IEA and the OPEC annual report) to Nony’s NY Times quote. You don’t see a lack of credible support for one of us? Looking at my numbers maybe you’ll understand now about my taking a shot at photobucket support. LOL.

And watch closely: you won’t see anyone posting any documented evidence contradicting any of the stats I’ve posted on this subject. You may also notice that, unlike some, I don’t ask anyone to accept my opinion on much of anything. I just let documented evidence support such conversations. Just saying “Na na, you’re wrong” is just a tad below the quality of conversations we should be having on such a serious topic IMHO. LOL. I probably wouldn’t have responded to his post had I not got a feeling you were buying some of that crap. I gave up trying to save lost causes when I was 18 yo. LOL.

rockman on Tue, 16th Dec 2014 9:27 am 



Mak – “If the Saudis cut production by 10+%, it might stop it’s decline.” By 1986 OPEC had cut production by 50% from their high in the late 70’s. The inflation adjusted price of oil for the rest of the 80’s remained about 30% of the high in 1980. And Saudi Arabia? They cut net exports about 40% from 10 million bopd to 6 million bopd by 1985. And the effect that had on prices: in the next year after they cut exports 40% prices fell from $58/bbl to $31/bbl.

So first, only time will tell if OPEC or the KSA make any significant decrease in exports. And if they do there’s no way to predict how much (or how little) an effect a significant cut will have on prices in the next year or two. Again, folks greatly overestimate how quickly these dynamics can change.

Nony on Tue, 16th Dec 2014 9:28 am 



You are SOOOO full of it, Rock.

You said ” Just because they didn’t make drastic production cuts 5 years ago in an effort to increase oil prices doesn’t mean they won’t do it this time.”

AND THEY DID MAKE DRASTIC CUTS 5 years ago.

You’re just wrong!!! It was reported all OVER THE PLACE. They took DRAMATIC action to prop up the price.

“Oil rises as OPEC cuts production. A recent survey shows near-70% compliance among oil producers with the organization’s 4.2 million barrel-per-day production cut.”

-CNNMoney FEB2009

“OPEC Achieves Cuts in Output, Halting Price Slide

By JAD MOUAWAD

Published: January 25, 2009

After months of gradually closing the oil spigot, members of the OPEC cartel have managed to stop the slide in oil prices — at least for now. Showing an unusual degree of discipline, members of the Organization of the Petroleum Exporting Countries have slashed their output by more than three million barrels a day in recent months as they sought to put a floor under oil prices, which have fallen by $100 a barrel since last summer.”

-NYT JAN2009

ETC. ETC. ETC.

You must be living in another planet to say that OPEC did not do a production cut in 2009. They INTERVENED. They’re not doing that now.

This isn’t even about cornie versus doomer. This is just about you misinforming people.

Northwest Resident on Tue, 16th Dec 2014 9:31 am 



rockman — Read my post again and you’ll see that I was expressing my serious doubt that Nony was right on the point he was trying to make. I took the “even if you are right just this one time” approach to point out how often Nony (and other cornies) snipe at the irrelevant edges of major arguments such as the one you were making, in an effort to show how pointless Nony’s sniping was, and is. It just irks me how often our small group of cornucopian stragglers who post on this forum will never ever take on a major topic because they are on the wrong side of that argument and sure to loose. So, they lurk in the shadows, waiting for a stupid math error or a simple misstatement or some other minor point that they can jump on and chalk up another “gotcha”.

Nony on Tue, 16th Dec 2014 9:40 am 



Oh look, here’s another source contradicting Rock:

“Opec production cuts boost prices – FT.com http://www.ft.com › Markets Financial Times January 6, 2009 11:32 pm. Opec production cuts boost prices … The clearest signal of Opec’s success in cutting production came on Tuesday in a record …”

I can do this all day…

Davy on Tue, 16th Dec 2014 10:16 am 



NOo, give it up son you are looking like a fool. At this point we have bigger fish to fry. Why don’t you give us some alternative corn porn for what is happening right now under our feet. Notice how you are off topic could it be you haven’t a friggen clue?

GregT on Tue, 16th Dec 2014 10:28 am 



“Thus proving you are unaware of the most basic concept in economics.”

You are proving once again Nony, that you are stuck on a failed ideology. Oil is not just any other commodity, it is the key resource that allows economies to grow, and it is finite. Economists have it all wrong, which is the very reason why we find ourselves in a global financial and fiscal crisis.