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What’s Really Happening With Gasoline Demand?

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Demand destruction and continued inflation…

Hundreds Of Vertical Oil Wells Damaged By Horizontal Fracking

At least 450 conventional vertical wells in Oklahoma’s Kingfisher County have been damaged by horizontal fracturing, the Oklahoma Energy Producers Alliance (OEPA) said in a study, The Oklahoman reports.

OEPA, a group of Oklahoma oil and gas companies concerned with protecting their rights as conventional vertical producers and royalty owners, says that “hundreds if not thousands of wells are being destroyed by horizontal frac jobs.” All these wells paid 7 percent gross production tax (GPT) and are being replaced by wells paying 2 percent GPT, the alliance says, asking lawmakers to eliminate the “special 2 percent tax rate on new wells to the historical level of 7 percent that all other producers of existing wells pay.”

“I believe nearly every vertical well in Kingfisher County will be negatively impacted by horizontal frack jobs at some point,” OEPA founder Mike Cantrell told The Oklahoman. “We’re just trying to get people to get fair value for their property up front before the damage is done,” he added.

Matt Skinner, spokesman of the Oklahoma Corporation Commission, told The Oklahoman that the commission had investigated and verified 20 cases of damaged vertical wells due to horizontal drilling nearby, with most of the damaged wells showing environmental damage. Another 55 wells await inspection or are already under review.

“We have a well-established vertical world, and we have a new horizontal world. The issue is how can these two worlds live together,” Skinner said.

“Wells are obviously being damaged. We know this is happening. It is a problem that needs to be addressed, and to address it we need more data,” the spokesman told The Oklahoman.

A few weeks ago, a federal jury in Oklahoma City awarded US$220,000 in to two Oklahoma oil firms—H&S Equipment Inc and Mark Holloway Inc— damages incurred by a “well-bashing” incident two years ago by Felix Energy, which was later acquired by Devon Energy Corp.

By Tsvetana Paraskova for Oilprice.com

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