Re directional drilling - how does that work if someone drills under someone else's property? Is...
I happen to be experiencing that at this minute as I live in the metro area of DFW. Last year I least my mineral rights to a drilling company along with hundreds of others in the neighborhoods around me. In order for directional drilling to work, you must have to right soil makeup. This area has a lot of shale which holds its formation when it is drillled. Thus once a hole is drilled through it, it does not cave in as the drill is extracted. The drilling company picks a sit that is accessible to the geography of the leases and then begins drilling a precisely planned drilling pattern which penetrates the undersurface of the entire area which they have leased. When the drill plan is completed, the gas head fixtures are put into place and a connection is made to a pipeline access to get the gas to market. The leases are looked at as a collective account in terms of the money produced by the drilling. Once revenue is produced, each homeowner received a proportional share of the set royalty amount which in my case is 26%. So if I have five acres of land and the entire lease is 1,000 acres, I get a royalty based on 5/1000 * (.26 X Total Royalty Dollars). If you use imaginery figures to calculate the example, it would work out 5/1000 = .005 X (.26 X $10,000 net proceeds) = .005 x $2600 = $13.00. The more land you have, the greater your share. That's the simple model of how it works. WB
Before any oil or gas well is drilled an extensive permitting process us undergone. Owners of mineral rights under a parcel of land must be compensated for anything that is taken by a horizontal well. Of course there are probably some abuses of the law, but that is rare with today's permitting and surveying procedures.
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