Chapter 11 RESERVOIR DEVELOPMENT: COMPETING RIGHTS OF HORIZONTAL AND VERTICAL DEVELOPERS AND OTHER ODDITIES OF VERTICAL LEGAL PRINCIPLES GONE SIDEWAYS

摘要

The use of horizontal drilling technology in the oil and gas industry continues to expand rapidly. For the second quarter of 2012, nearly 60% of the rotary rigs drilling in the United States were drilling horizontal wells.~ As a result, there has been a steady stream of presentations at past Rocky Mountain Mineral Law Foundation annual and special institutes and short courses on various issues relating to horizontal drilling.2 The visibility of the industry to the general public has increased dramatically as a result of almost daily information and misinformation in the mainstream media relating to hydraulic fracturing, or "fracing," and its impact, or lack of impact, on the environment. The economics of the resource plays currently being actively developed by horizontal drilling in various regions of the United States have led to fundamental changes in the way the upstream oil and gas industry is conducted. Past practices involved painstaking title review, carefully negotiated joint operating agreements (JOA), and operators who were extraordinarily cautious to make sure no interest of any significance was left unaccounted for before a well was drilled. More recently, the time and personnel demands of converting traditional exploration and production activities to a manufacturing process have forced the industry to drill wells without drilling title opinions and negotiated operating agreements, relying instead on the protection of forced pooling and similar concepts.