Maybe you're curious about leasing your property for oil or gas exploration, or a professional landman representing Fireborn Energy has approached you about the possibility. There is a lot of information to consider before making the decision. Our friends at the Kentucky Geological Survey have compiled a list of questions that provides excellent information. We've shared some of them below. Please view the full list for more detail.
Do I have oil (or gas) on my property?
This question is related to several others:
- I inherited property and it has some old wells on it. What can I find out about the wells?
- Can I get a map of the gas wells near my property?
- Who is drilling wells near my property?
The only way to be certain is to drill a well. Even if hydrocarbons are present, whether or not recovering that oil or gas can be profitable is dependent on many factors. If you live in an area of known oil or gas production and have producing wells on surrounding tracts of land, the probability of having oil or gas increases. However, even with nearby producing wells, there is always an element of risk in exploration and development of petroleum resources.
Charts for oil or gas production data by county, region, or statewide are available here.
Is the well on my neighbor's property being used to steal my oil (or gas)?
Short answer: Oil and gas are migratory in the same way as a wild animal ("mineral ferae naturae"); they do not necessarily respect property lines. Your neighbor owns all oil or gas produced from their well so long as it was drilled legally.
In Kentucky, the ownership of oil and gas is established by what is known as the "Law of Capture." which recognizes the mineral ferae naturae of oil and gas. The ownership of oil and gas is actually an exclusive right to remove oil and gas or control their removal through the exercise of a deed or lease. The ownership of oil and gas is considered to be a severable right, a mineral interest with an agreed value that may be sold or traded separately from the ownership of the surface tract of land.
In addition to the law of capture, Kentucky recognizes correlative rights. It is on the basis of those correlative rights that spacing regulations were adopted to establish guidelines for siting new wells by specifying minimum distances to property lines and producing wells. When those guidelines can’t be met (for a variety of reasons), regulations establish guidelines for pooling interests in wells so that adjacent owners both receive proportions of the royalty income. It is by complying with those spacing regulations that a well is drilled legally (for the purpose of oil and gas ownership questions).
What does a consulting geologist do?
The consulting geologist performs services for a fee. In the petroleum industry, the geologist compiles information about the rocks that underlie an area. They find and interpret appropriate data from available drilled wells. Utilizing this information and a variety of map, photographic, and experimental data, the geologist then evaluates the probability of the occurrence of oil or gas and tries to estimate its value.
What are the requirements for drilling an oil or gas well in Kentucky?
The Division of Oil and Gas is the Kentucky agency responsible for regulating oil and gas drilling. All questions on statutory requirements should be addressed to the Division.
In general, a permit is required for drilling, re-opening, or deepening:
- An oil or gas well
- Any well drilled to support the recovery of hydrocarbon resources
- Secondary or enhanced-recovery wells
- Monitor or observation wells
- Gas storage
- Exploratory wells to establish stratigraphic control (stratigraphic tests)
An application for a permit must be submitted to the Division. It must be accompanied by a permit application fee, copies of a surveyed well location plat, and a performance bond to ensure proper plugging and abandonment of the well. Contact the Division for details on spacing regulations, bonding requirements, or casing requirements. After a well has been drilled, a well log and completion report must be submitted along with copies of any electrical, nuclear, mechanical, or geophysical surveys run. When a well has been abandoned, an affidavit showing the time and manner of plugging the well must also be submitted. Additional permits may be required from other agencies to operate the well. For example, injection wells are regulated by the federal Environmental Protection Agency, Region 4 office, Atlanta, Georgia.
During the 2004 Legislative session, House Bill 577 was adopted and signed into law by Governor Fletcher. This bill creates a new section of the Kentucky Revised Statutes to implement statutes to regulate drilling and production of coalbed methane. A copy of the bill as passed is available in the 2004 Legislative Record, see HB 577.