Oil & Gas Land Services

A drill site is the specific location where drilling operations for oil and gas wells take place. It's the physical area that has been prepared and equipped for the purpose of drilling a well into the subsurface to explore for or produce hydrocarbons (oil and natural gas).

A drill site title opinion or sometimes simply a title opinion, is a legal document prepared by an attorney that examines the title to the mineral rights of a specific tract of land proposed for oil and gas drilling. Its primary purpose is to opine on the ownership of those mineral rights and identify any potential legal issues or encumbrances that could affect the validity of an oil and gas lease or the right to drill and produce.

• Drilling Rig: The large, complex machinery used to bore the well into the earth. This includes the derrick, drawworks, rotary table (or top drive), pumps, and other essential equipment.
• Bit: The cutting tool used to penetrate strata and rock formations.
• Wellhead: The assembly of valves, fittings, and pressure gauges at the surface of the well, used to control the flow of fluids.
• Casing: Steel pipe used to line the wellbore and prevent it from collapsing.
• Perforation: Creating holes in the casing to allow oil and gas to flow into the wellbore.
• Mud Pits or Tanks: Storage areas for drilling mud, a specialized fluid used to lubricate the drill bit, carry cuttings to the surface, and control well pressure.
• Storage Areas: Areas for storing drilling pipes, casing, cement, chemicals, and other supplies.
• Power Generation: Generators to provide electricity for the rig and other equipment.
• Water Supply: A source of water for drilling operations.
• Waste Management Areas: Designated areas for handling and disposing of drilling waste.
• Crew Accommodation (sometimes): Depending on the location and duration of the drilling, temporary housing or trailers for the drilling crew might be present.
• Access Roads: Roads built to transport equipment, personnel, and supplies to and from the site.
• Safety Equipment: Fire extinguishers, first aid stations, and other safety measures.
• Environmental Controls: Measures to prevent spills, control emissions, and minimize the environmental impact.

The drilling process involves several steps:

• Site preparation: Surveying, clearing and leveling the land, building access roads, excavating mud pits, installing tanks, setting up water supply, installing erosion and sediment controls.
• Rig Mobilization and Setup: Transporting the rig, moving the derrick, substructure, power units, pumps, etc., rigging up and setting up support equipment.
• Drilling the Wellbore: Spudding, setting conductor casing, drilling surface hole, cementing surface casing, installing blowout preventor, drilling intermediate holes, cementing intermediate casing, reaching target depth (TD), logging while drilling.
• Well Completion: Running and cementing production casing, perforating the casing, well stimulation, installing wellhead equipment, installing production tubing, installing artificial lift (if necessary).
• Production and Ongoing Operations: Connecting to gathering systems, monitoring/maintaining the well
• Well Plugging and Abandonment: At the end of the well's production life, plugging, wellhead removal, site reclamation

The steps to drill for oil and gas can vary depending on local regulations and the specific circumstances. However, the general process includes:

• Determine Mineral Ownership: Research title records, negotiate Oil and Gas lease(s), hire a Landman!
• Geological Assessment: Consult a Petroleum Geologist and conduct seismic surveys
• Legal and Regulatory Compliance: Consult and O&G Attorney, secure necessary permits, comply with local ordinances
• Develop a Drilling Plan and Proposal: Consult with a Drilling Engineer and draft a drilling proposal
• Secure Financing: Secure significant capital for all stages of the project, from geological surveys to drilling and completion
• Hire Contractors and Staff: Hire drilling contractors, service companies and operational staff
• Site Preparation and Drilling: See above, "what is involved in the drilling process"
• Well Completion and Production: Proceed with well completion activities to enable the flow of oil and gas, install necessary production equipment
• Ongoing Operations and Maintenance: Continuously monitor and maintain well and production facilities
• Plugging and Abandonment: Properly plug and abandon according to regulatory requirements when the well reaches end of it's productive life, complete reclamation

It's important to consult with an attorney and/or a qualified oil and gas professional to understand the specific requirements and implications of drilling for oil and gas.

• Conveyance: The mineral owner (lessor) conveys a right to an oil company (lessee) to explore for and produce oil & gas
• Contract: The oil company (lessee) accepts the right to explore and produce burdened by certain express and implied promises.
• Business Transaction: It is a business transaction between the mineral owner (lessor) and another party, usually an oil company (lessee)

• Consideration: Usually the bonus paid to lessor, but may be a commitment to drill or other performance
• Royalty: The share of production paid to the Lessor, free of all costs of exploration, development or drilling, etc.
• Primary Term: The period of time, in months or years, during which a lease may be maintained even though there is no production in paying quantities. Almost always a fixed term, in months or years.
• Secondary Term: The period subsequent to the expiration of the primary term during which the lease is continued in force by operations or production.
• Delay Rental: The sum of money payable to the lessor by the lessee for the privilege of deferring the commencement of drilling. Most leases no longer provide for a rental payment and instead are "paid up", with no annual rental required.
• Parties: Lessor and lessee, both must be named in O&G Lease
• Lease Conditions: Obligations of the lessee that must be fulfilled or the lease will terminate

Lease covenants are promises made by the lessee and can be express or implied. Express covenants include the payment of royalty, the burial of pipeline, the restoration of cultivated fields, the lessee's right to remove casing and equipment, etc.

Implied covenants are unwritten promises that impose duties on the lessee and protect the lessor. The courts usually state that these obligations are implied by fact, from the intent of the parties.

A drilling unit is the area prescribed by well spacing regulations for the granting of a drilling permit. It refers to the pooling of working interests within an area likely to become a proration or spacing unit.

Pooling commonly refers to combining royalty interests from two or more tracts in a proration unit, the spacing of which is usually set by governmental authority. Pooling of working interests is generally accomplished by a joint operating agreement (JOA).

Unitization describes larger operations and involves combining working and royalty interests over the productive limits of an entire field.

Communitization generally describes pooling of BLM, State or BIA leases with other leases to form proration units.

Under federal regulations, federal leases and other interests may be combined into large units for the purpose of exploring and producing hydrocarbons from an area, often 15,000 acres or more. Both royalty and working interests are pooled under a federal unit agreement.

A Pugh clause is a type of lease termination clause that provides that drilling operations or production from a pooled unit or units shall maintain the lease in force only as to lands (and sometimes geological formations) included within such unit or units.