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  • Glossary of Terms

    When a surface owner enters a discussion with an oil and gas company, a number of questions come to mind and many unfamiliar terms must be considered. The following glossary of terms is summarized from a Q & A document for the Surface Owner Information Center as published by the North Dakota Petroleum Council.View the Surface Owner Information Center.

    Access road: Not required on every well. Depending on location, an access road is built to allow vehicles and equipment onto the wellsite. Generally, they are placed to provide the shortest, most direct and safest route to the site, but alternatives can be discussed.
    Acreage needed for drilling: Sufficient for safe operation of the drill rig, completion equipment and other development activities. A site for a typical Bakken single horizontal well is between 4 to 6 acres; multiple-well pad is between 5 to 7 acres.
    Acreage needed for production: Less than for development, it is sufficient for safe operation of routine production and follows the interim reclamation of well site; typically, it is about 25 percent less acreage than for drilling and completion.
    Completion: After drilling, the well bore is lined and sealed to prevent contact with its surroundings. Equipment is set up to pump fluids into the formation under enough pressure to fracture the rock and allow oil and gas to flow. A period of well flow-back and clean-out follows. After installation of pumps and tanks, the well goes into production.
    Correlative rights: For mineral owners, it is the right to their share of the field’s mineral resources and to be protected from wasteful practices by others in the field.
    Dominant estate: Underground minerals are considered dominant over the surface estate since the minerals cannot be produced without reasonable access to the surface.
    Fair compensation for surface damages: In the past, common law did not require mineral owners to compensate the surface owner for access, however now, many areas in the US and elsewhere require some form of payment for damages to the surface.
    Horizontal well: Most Bakken wells are drilled vertically for several thousand feet. The drill bit is then diverted until it is moving horizontally within the upper and lower boundaries of the Bakken formation and continued for several thousand feet. The total length drilled can be as much as 3 to 4 miles.
    Land value estimates: Valuation data can be obtained through two generally available statewide reports (see: ND Farm Business Management Report, and USDA ND Annual Report) and through local real estate brokers and appraisers.
    North Dakota One Call: ND law requires all excavators notify the state before the start of all digging projects, with a few exceptions. Notification and free line-location services for buried pipes and utilities are available at: 800-795-0555, or 811.
    North Dakota surface owner compensation: The ND Oil and Gas Production Damages Act requires the company pay the surface owner for damages and disruption, but it does not provide a specific formula for that payment.
    Notice of drilling operations: The company must provide the surface owner with a notice of drilling at least 20 days prior to commencement of operations. The notice of drilling describes the company’s plan of work and operations in enough detail for the surface owner to evaluate the effect on the property and its use.
    Notice to surface owners form: ND law requires companies, at the time they provide a notice of intent to drill, also provide the surface owner with a copy of the state’s notice form describing surface owners right of compensation.
    Notice of seismic operations: A seismic or other geophysical operator must provide the surface owner with notice at least seven days before conducting operations. The operator also is required to notify neighbors or land operators within one-half mile of the land where the operations is to take place.
    Offer of settlement: The company is required to provide a written offer to the surface owner at the same time as it provides the notice of drilling. The surface owner is free to accept or reject the offer or choose to defer a decision until later.
    Pipelines and gathering systems: Gathering systems collect natural gas and gas liquids from several wellsites for delivery into larger pipelines. After compression for natural gas or pumping for oil or gas liquids, the materials are delivered to a larger trunk line. Pipelines can be located along existing roadway or other corridors, but safety and line integrity override other factors in selection of a pipeline right-of-way.
    Production: Regular operation of a well during production involves routine visits by company personnel for measurements and maintenance. Productive life of a well varies greatly from well to well, even in the same field, but most are expected to produce for between 15 and 40 years.
    Reclamation: Reserve pits, used during drilling for the temporary retention of drilling fluids, water and waste, must be properly reclaimed not longer than one year after well completion. Once the well is placed into production, the wellsite undergoes interim reclamation, reducing its overall footprint. After a well is plugged and abandoned, the wellsite gets final reclamation and is returned to its original contours and vegetation.
    Rejecting an offer: If the company’s offer is rejected and an agreement cannot be reached, the matter may go to court. If the court decides the company’s payment offer is too low, the company is to pay the surface owner’s legal fees and court costs.
    Safety issues: All producing oil and gas wells must be designed and operated to manage the possibility of explosion or fire. Only authorized personnel should enter a wellsite. Other safety risks include possible injury around pumping units, burns or injury near gas flare pits, electric shock hazards and injury from heavy machinery or vehicles.
    Split estate and severed minerals: This describes a situation where ownership of underground mineral estate, including oil and natural gas, is separate from ownership of the surface estate.
    Staking: A proposed well pad is staked by the company to show its dimensions on the surface, location of the wellhead and access roads if needed. The location of the staked well pad is presented to the surface owner for review and approval.
    Surface use agreement: Result of private discussions between company and surface owner, it describes a company’s development plan for a well or facility and an offer of compensation to the surface owner.
    Well location: Chosen to prevent resource drainage of adjoining lands and to protect correlative rights, the well location must be a minimum distance from spacing unit boundaries, must be at least 500 feet from an occupied building and, if practical, on suitable topography.