An exhibit to our lease which overrules conflicting language in the lease states, in part:
The term "oil, gas and minerals" as used herein shall refer to liquid or gaseous hydrocarbons only and then only such hydrocarbons that may be produced through conventional oil and gas drilling and production methods."
this was not standard clause. It was added as part of the addendum by an attorney. Ostensibly clauses like this exclude hard mineral mining (and perhaps mined oil shale)and the first part of the sentence would have accomplished that. And a following sentence specifically excludes hard minerals. So what is the purpose of the second part of the sentence "and then only such hydrocarbons that may be produced through conventional oil and gas drilling and production methods"? Just overkill?
MY QUESTION IS:
Is the drilling and production of shale formations (e.g., horizontal drilling and other techniques for drilling and producing from shale) considered conventional oil and gas drilling and production methods? Or would this provision exclude shale production?
I did find a definition from a USDOE site:
Conventional oil and natural gas production: Crude oil and natural gas that is produced by a well drilled into a geologic formation in which the reservoir and fluid characteristics permit the oil and natural gas to readily flow to the wellbore.
Also, the MyOilPro site says:
"Haynesville shale oil and gas production is "unconventional." Conventional production is that produced from sandstone, limestone or dolomite reservoir rock, typically from a vertical wellbore. Unconventional oil plays include oil shale, the Canadian tar sands and Venezuela's super-heavy oil. None of these are pumped to the surface; other techniques, such as mining and heating are required to extract the oil. With the Haynesville shale, getting the gas out in commercial quantities will require horizontal drilling, a very expensive process. Wells cost in excess of $8 million each!"
Pretty much every site on the 'net refers to gas shale as "unconventional gas".
Do you think our lease excludes "unconventional production" including shale gas production?
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