Senior Assistant Attorney General Eric Easton spoke on the permitting demands that the Wyoming Oil and Gas Conservation Commission (WOGCC) is presently managing and what may be on the horizon for the oil and gas industry during a recent Wyoming Association of Petroleum Landmen  (WAPL) meeting in Casper.  Easton did note that these were his opinions and not those of the Wyoming Attorney General's Office or the Wyoming Oil and Gas Conservation Commission

Easton pointed out that presently there are over 30,000 applications to drill (APDs) that have been submitted to the WOGCC.  He believes that this phenomenon was related to several factors.  The first was an operatorship issues.   Operatorship in its most basic sense is the right of a party to drill, complete, and operate the oil and gas wells located in a particular tract or parcel.  Having operatorship gives a party control over well quality, expenditures, valuation and timing making it a very important position to be in.   

Another factor pointed out by Easton that has changed the permitting landscape is technology.  Moving from vertical wells drilled in uniform patterns to horizontal wells with up to three mile laterals have required larger drilling and spacing units (DSU) that run through several sections.  Presently, about 99 percent of the wells being drilled in Wyoming are horizontal wells with 1280 acre drilling units.  “With these larger DSUs, the chances are quite high that there will be multiple mineral owners involved that want operatorship,” he said.  

Easton went on to state that the first filed APD that controls operatorship in a DSU, and the WOGCC will only accept the number of APDs for the number of approved wells in a DSU.   With this in mind, to be in control, the Operator will file to establish a DSU.  He will then file an application for additional wells and then the corresponding APDs.  This, Easton noted, can cause quite a bit of jockeying for position.  “If another mineral owner in the DSU wants to be the operator, they will try to disrupt that process by protesting the DSU, protesting the APDs, or filing for additional wells in the same DSU, of which the original operator will protest. This results has been a huge increase in contested cases."

To compare how significantly things have evolved, Easton pointed out that in 2014 the agency had a total of about 4,000 APDs for the entire year compared to the 4,482 applications the month of March 2019. 

This has had an impact on the WOGCC staff he said and noted that over the last four years, thirteen policies have been introduced by the WOGCC for clarification of rules as well as managing influx of drilling permits and spacing applications. 

Easton went on to say that this conflict has an impact on mineral owners.  Are mineral owners getting full value for their mineral rights?  Are mineral owners getting any value at all or is this jockeying for Operatorship denying wells from being drilled? 

Easton wrapped up his talk by discussing how these issues being addressed.  Mark Watson, the Supervisor for the WOGCC was recently quoted that the main goal of the state agency is to see these wells drilled and the minerals developed in an orderly fashion. Leadership from the Minerals, Business and Economic Development Committee agrees and will be looking at all of these issues during the interim.  Collaborating with the WOGCC, the Governor’s office, and the Petroleum Association of Wyoming, the committee will work on updating the state’s oil and gas rules for a more efficient system that meets the needs of present-day drilling practices.