Houston oil and gas on a slippery slope

[hgb]

Just a heads up to anyone with non producing surface leases with Houston Oil and Gas, as they are now with holding making payments on non producing well sites. I was in contact with them today over a couple of late surface lease payments, and was told this move was made to try and keep their head above the water. I was told this policy came into effect a month or so ago, so I will be joining the line up submitting paper work to the SRB. More paper work lovely!!

[furrowtickler]

Ahhh , them poor oil companies and the poor destitute farmers with oil wells .. what are they to do , lol .
All kidding aside , if you have wells , I would imagine it’s a concern .
And I know , nothings free , one has to farm around those free money wagons and pump kicks but still ..
Oil companies are not much different than any government agency, take every nickel you don’t have as soon as things don’t go their way .
90% of us don’t get that free money btw..
just imagine if one had to Farm without that free money , let alone any other free money from any source , pencil it out , the rest of us have too.
Sorry for the rant but when I hear farmers in oil country get distraught over something like this .. it’s ... 🙄.
Hopefully your paperwork is worth your effort at the end of the day .... and be glad you have too ... in a way .

[woodland]

Furrow we currently have three leases that are two years behind on rent and it isn’t free money. Pipelines are a royal pain when you run waterline and have to cross them at your extra time and expense. Leases are great till they cut up your field, bring in weeds and not control them, and leave gates open and thanksgiving supper gets a delay as you chase 300 yearlings out of the neighbors barley crop.

How much $$ would you like for three acres in the middle of a field to allow some faceless company dig it up with the promise that you will likely get paid and that it gets reclaimed the way it should be?

Some companies are better than others. We got some winners and real losers here

[RD414]

Are you allowed to write in your own clauses when doing initial contracts, after 2 years of no payment, I would want to at least own the site if I'm going to have to clean it up. Would also stipulate penalties for not keeping lease clean while in operation.

[chuckChuck]

ABANDONMENT & RECLAMATION
​Houston Oil & Gas Ltd. is steadfast in the management of its end-of-life liabilities. The company invests on a monthly basis, addressing the down hole abandonment of wells, decommissioning of facilities, infrastructure and reclamation of wells that are non-productive. We manage our inactive wells with a proactive approach to mitigate risks, maintain compliance with regulatory requirements and optimize economics.

A lot of hot air from their website. Unfortunately those suspended leases could end up abandoned with tax payers and landowners paying for the cleanup. The cost can run into the hundreds of thousands per well. So the total lease payments over the life of the well, in many cases wont even pay the cost of cleaning up and decommissioning abandoned leases.

Why do we let fly by night oil companies extract the profit and then disappear when the cleanup bills arrive? More of their profits need to be set aside to pay for cleanup. The orphan well fund wont keep up with the number of orphan wells.

[GDR]

Are you allowed to write in your own clauses when doing initial contracts, after 2 years of no payment, I would want to at least own the site if I'm going to have to clean it up. Would also stipulate penalties for not keeping lease clean while in operation.

They will negotiate a lot on initial contract if they really want the lease. Your suggestion would be perfect for the oil company, stop paying then give you the cleanup costs!

Woodland is right, it is not all roses, money is better than the acres would ever make but the wells are a pain. They can limit a lot of what you can do on your land with setbacks etc. Some are really good to work with others are cheap and difficult and will fight tooth and nail for what they want to do. And oil revenue is a factor in our purchase price of land, so you pay for the chance of getting the lease money and then they quit paying is a huge possibility.

[beaverdam]

RD414,,,you NEVER want an abandoned lease turned over to you NEVER !!!

I seldom agree with chucky, but he has pointed out to you that you'll then, be stuck with the costs of the cleanup,,,,which could be in the hundred thousand dollar area. If you think you'll be able to produce the well just cause you have the surface portion,,,you're dreaming. If you think your going to use the well in another fashion ie geo thermal, you'll still have to decommission the well according to government standards, and when it comes to the government and environment, their view will be,,,no cost for you will be too high.

I see Horse has some company, in the envious farmer department. Feel better Horse, that someone else has revealed their real thoughts about other neighbouring farmers? jeese, really furrow!

[Horse]

Beaverdam/dambeaver how the he'll did I end up in this discussion, is it that I don't believe the gov should be paying people to raise cows ???? Collect money from leases on crown land, they don't have to worry about clean up, they are like the oil cos ,they collect all they can and the mess is still on the taxpayers shoulders.
Do you have some of those welfare cows??

[oneoff]

There's a lot of evidence ofdining off someone else's cake and expecting it to remain an endless supply.

The comment about never wanting to assume an oil company liability is the only way to approach someone else's potentially bottomless cleanup bill.
Now one knows how long or how extensive the cleanup can be.

It's also disingenuous to lap up all the gravy and near the end to complain about what is left. Remember you don't know whom the oil company asset owner will be tomorrow; and you certainly have no input into whom that might be.

Infrastructure is a necessity to any development. Those necessary gathering lines and well heads and processing plants are essential as long as everyone remains dependent on fossil fuel based transportation; steel and material production; power for refining and processing and people movement at all stages of an industrial based economy.

So be careful when taking the advice of hypocritical commentors who couldn't function without the existence of the fuel sources that they disparage.

...and of course promote some alternative that would currently immerse society in a shocking crisis if they practiced their proposals and required other more significant producers to change their ways immediately.

[AlbertaFarmer5]

A big part of the problem is the standards of reclamation. If the ultimate purpose of reclamation is preserving the environment, then perhaps we need to balance the environmental footprint of burning copious amounts of diesel fuel to dig up entire wellsite, haul out and in dirt, blend, amend, air out, mix, stir and put it all back together again, with the results of achieve basically the same productivity as before, if that. The entire reclamation industry motto is dilution is the solution to pollution. So the net effect is that a massive amount of non renewable energy gets burned to spread the contaminants over a larger volume of soil. How is that good for the environment?

Humans don't seem to be capable of doing accurate/honest life cycle analysis of so many of their actions, including recycling as mentioned in the other thread.

Like most things, follow the money, the reclamation industry has a vested interest in maintaining the status quo.

[grassfarmer]

Sure glad to have left the shady dealings of the oil patch behind. That was always the nightmare waiting to happen - contaminated water, contaminated land - oil companies benefit and farmers pay the cost. Clearing up wellheads is one thing but they were never going to remove the pipes underground. Thousands of miles of pipe that will corrode in time and once water gets into them, runs through them and reappears on your neighbours land YOU are liable for the contamination caused. Maybe some of the gung-ho oil industry supporters should think about this when they champion oil and write of alternate power sources as uneconomic? Doesn't make oil look so cheap when you consider it is produced with little (if any) royalty paid on it and the cost of cleanup may exceed the value of production and that cost will be borne by the tax payer.

[checking]

I getting tired of why should the taxpayer be on the hook for clean up of the energy industries messes?

The answer is that ruling governments put in office by those same taxpayers enact legislation that creates impediments to land protection through Boards of Arbitration to settle disputes between landholders and the energy industry. This allows no real negotiation to happen, like pipeline removal, like immediate suspended well reclamation, like a host of ugly things such as off site spills that all they want to do is pay crop loss on, until they don't, and if you attempt to really protect your land, said mineral developer will take you to that low ball government board that won't protect your land like you could protect your land, if they got to hell out of the way.

You bet the taxpayer should be on the hook since it is their government that hasn't the fortitude to upfront all the costs from cradle to grave for those mineral extractions. Someone needs to be kicked into a furrow, and covered over.

[hgb]

Well chuck, maybe Houston should be steadfast about living up to contracts,
I only posted the facts as I was told by head office Calgary, that the payments are being with held on all non-producing gas wells. Trying to keep head above water was the offices exact words.
They are not the first or will they be the last gas company to have financial troubles. If they are just using the tight economic time to ditch old wells leaving it for the government to take care of, cheeses me off.
I would be happy if my Houston wells were reclaimed, they are eye sores I do the complete maintainace around these wells, inactive for over 15 years. You may be correct that reclamation and accountability is a strong point of theirs, so much so they just haven't had time to the ones on my land.
I neither slammed them or made accusations on my original post, I only posted so other land owners would take notice and act if they are in a none payment situation with abyone as filling out a section 36 form is an important step to have completed if a company is headed to bankruptcy.
Enough said just the facts.

[grassfarmer]

I guess by the same token there shouldn't have been any public outcry over the Khadr and the earlier Arar payouts by Canadian Governments? The people elect the Government so it's their fault.

[oneoff]

Like I said; don't be so hasty at the beginning of the deal...when there are some opportunities to potentially advance the cause of a reasonable, well thought out long term deal. That begins with seeking others previous experience and attempting to build upon that foundation.

It isn't and won't be all cake and/or gravy.