Ohio

Drilling and Producing

Articles in this section pertain to gas and oil issues that arise after a lease has already been signed, but before royalties are paid. These articles touch on a range of topics, from explaining how wells are drilled, to how existing wells affect a landowner’s gas and oil rights. Information about well units and permitting procedures can also be found here.

Oil and Gas Lease Ownership Challenges – Seminar Materials

Below are the materials the National Business Institute asked me to prepare for a seminar on Oil and Gas law.

LEASE / OWNERSHIP CHALLENGES, DISPUTES AND NEGOTIATIONS

A.  Recent case law and litigation trends

Though Ohio was one of the earliest states to have commercial production of oil and gas, surprisingly, it has not developed much of a body of case law in the field of oil and gas.  Frequently, the laws of other states must be reviewed to find cases on point – Texas, Oklahoma and Louisiana seem to have the most published opinions concerning oil and gas.

The advent of the Utica shale has changed things. …


Nils Peter Johnson
Written by
about Drilling and Producing + Leases
on June 11, 2014

Free Gas Issues

Many oil and gas leases provide the lessor with free gas.  This provision was fairly common in older leases, but has disappeared to a large extent for newer leases tailored to shale gas wells.  Here is a list of frequently asked questions and concerns about landowners exercising their right to free gas under an oil and gas lease:

Who is entitled to free gas?

You may be entitled to free gas if the oil and gas lease affecting your land contains a free gas clause, and if no other houses already use it.  Read your lease carefully, and look for free gas language. …


Eric Johnson
Written by
about Drilling and Producing
on March 17, 2014

Forced Pooling – Trends, Benefits and Detriments

Recently I wrote about Ohio’s mechanisms for forcing unleased mineral owners into a drilling unit.  Oil and gas producers have increasingly started to rely on these mechanisms to drill  horizontal wells to the Utica / Point Pleasant shale formation in eastern Ohio.  These same laws require transparency for these procedures, and as part of a public records request, I obtained several recent orders approving the forced unitization of unleased mineral owners in various parts of Ohio.   I was hoping that I could gain some insight on the issue of whether a landowner is better off signing a proposed lease or being forced into a drilling unit under the applicable statute. …


Eric Johnson
Written by
about Drilling and Producing + Leases + Royalties
on December 13, 2013

Forced Pooling – Overview

Before drilling an oil and gas well in the state of Ohio, a driller must first apply for a permit from the Ohio Department of Natural Resources (ODNR).  Part of the driller’s permit application includes a map indicating the leased lands the driller wants to include in the drilling unit.  Several considerations dictate the size this drilling unit can be.  The underlying oil and gas lease, for example, might specify a maximum unit size.  Ohio law also speaks to minimum well unit sizes. Generally speaking, the deeper the well, the larger the unit size must be.   A vertical well drilled deeper than 4,000 feet requires 40 acres of unitized land. …


Eric Johnson
Written by
about Drilling and Producing + Leases
on October 28, 2013

Notes from the Utica – October 2013

We have been quite busy since our last update.  Most -if not all- of the most valuable lands have already been leased, and energy companies have essentially staked out their positions.  An incredible 169 wells are currently producing from the Utica shale in eastern Ohio.  Chesapeake Energy is far and away the biggest producer in the region, as they operate 114 of these 169 wells.  The lion’s share of these producing wells are in Carroll county.  Carroll saw such a boom due to its underlying geology, but also because it had never seen significant oil and gas development.  As a result, energy companies like Chesapeake did not need to navigate around already existing wells and older leases: it had a relatively blank canvas with which to operate.…


Eric Johnson
Written by
about Drilling and Producing
on December 10, 2012

Notes from the Utica – December 2012

Since my last update in July, I have perceived a trend of a southward movement of the Utica play. There
is presently a good deal of leasing activity in Belmont, Harrison, Noble and Guernsey Counties. Word
is that some of the best wells to date have been drilled in that area. Certainly, Carroll County and
Columbiana Counties are seeing large numbers of wells drilled, but leasing there is not as active as it
once was; companies are primarily focused on filling in planned drilling units and not much interested in
taking random leases. The basic attitude seems to be – ‘don’t call us, we’ll call you if we need you.’ In
areas where there is a single company with a dominant lease position, lease prices are actually trending
downward as there is little competition for leasing.…


Eric Johnson
Written by
about Drilling and Producing + Leases
on August 13, 2012

“Held by Production”

Landowners who are “held by production” (HBP) by an operating well are actually still stuck under an old oil and gas lease. Generally speaking, as long as you are receiving a royalty that lease is still in effect. Many factors determine whether or not you are able to get out of an old lease. Sometimes it’s possible, but more often than not, it is not possible.

While that lease is in effect on your property, it’s up to the company that owns the lease to decide what to do with it. They can drill a Utica well themselves, or they can sell that Utica portion of the lease to a major company and let them drill.…