Mineral Geology for Beginners · Bryan S. Groves Geologist Mineral Geology for Beginners OIL & GAS...

Bryan S. GrovesGeologist

Mineral Geology for BeginnersMineral Geology for Beginners

Bryan S. GrovesGeologist BACKGROUND

Bryan S. Groves, GeologistBACKGROUND

F.Y.I.

• Second generation oil and gas geologist• Over 25 years experience in South Louisiana• Qualified unitization expert witness• Qualified expert witness in court of law• Generate drilling prospects• Interpret 3-D seismic data, computers• Property and cash flow evaluation

Bryan S. GrovesGeologist OVERVIEW

Mineral Geology for BeginnersOUTLINE

• Oil & Gas Geology

• Oil & Gas Mineral Lease

• Oil & Gas Unitization

• Information - Websites

Mineral Geology for BeginnersOIL & GAS GEOLOGY

• Oil & Gas Basins of the United States

• Oil & Gas Producing Trends on Gulf Coast

• Oil & Gas Geology 101

Mineral Geology for BeginnersOIL & GAS BASINS OF THE UNITED STATES

from PennWell maps

Mineral Geology for BeginnersOIL & GAS BASINS OF THE GULF COAST

from PennWell maps

Mineral Geology for BeginnersOIL & GAS BASINS OF THE GULF COAST

from PennWell maps

Mineral Geology for BeginnersOIL & GAS TRENDS OF THE GULF COAST

from PVA

Mineral Geology for BeginnersSTRATIGRAPHIC COLUMN

+/- 62 million years ago

from Geology.com

Bryan S. GrovesGeologist fro

Tuscaloosa

Paluxy

Rodessa

Hosston

Cotton Valley

Haynesville

Smackover

from Geology.com

Bryan S. GrovesGeologist Terminology

Mineral Geology for BeginnersGEOLOGICAL TERMS

• Sand (beach or river)

• Shale (compacted clay)

• Erosion (cutting away rock)

• Deposition (putting down cut-up rock)

• Strata (layers of rock)

• Faults (crack/break in surface)

Mineral Geology for BeginnersEROSION IN MOUNTAINS

Mineral Geology for BeginnersOIL & GAS TRENDS OF THE GULF COAST

Erosion in mountainsCut-up rock carried in river

Sand/clay are deposited

from Lock

Mineral Geology for BeginnersEROSION IN MOUNTAINS

from Lock

Mineral Geology for BeginnersRIVERS CARRYING SEDIMENT

from Lock

Mineral Geology for BeginnersRIVERS CARRYING CUT-UP ROCK

from Lock

Mineral Geology for BeginnersRIVERS CARRYING CUT-UP ROCK

from Geology.com

Louisiana

Mineral Geology for BeginnersCUT-UP ROCK DEPOSITION (IN DELTAS)

from Geology.com

Mineral Geology for BeginnersSAND / CLAY DEPOSITION IN DELTAS

from Lock

sand / clay deposited

from Lock

sand / clay deposited

from Lock

Faults / TrapsStrata / LayersOil and Gas Pools / Reservoirs

Mineral Geology for BeginnersOIL & GAS TERMS

• Sand (beach or river)

• Shale (compacted clay)

• Erosion (cutting away rock)

• Deposition (putting down cut-up rock)

• Strata (layers of rock)

• Faults (crack/break in surface)

Mineral Geology for BeginnersSTRATA / LAYERS

from Lock

Mineral Geology for BeginnersORIGIN OF FAULTS

from Lock

Mineral Geology for BeginnersSTRATA AND FAULTING

CUT-UP ROCK (SEDIMENT)

SHALE OIL

Mineral Geology for BeginnersSTRATA AND FAULTING

Mineral Geology for BeginnersWHERE’S THE OIL ! ? !

Mineral Geology for BeginnersOIL & GAS FLOAT ON WATER

Mineral Geology for BeginnersCONVENTIONAL RESERVOIRS, GULF COAST TRENDS

Mineral Geology for BeginnersUNCONVENTIONAL RESERVOIRS, RESOURCE PLAYS

from Geology.com

after LDNR website

Mineral Geology for BeginnersSEISMIC DATA

Mineral Geology for BeginnersSEISMIC DATA PROFILE (SIDE VIEW)

from Lock

Mineral Geology for BeginnersTHEORY vs. REALITY

from Lock

Mineral Geology for BeginnersSEISMIC DATA, FAULT PICKING

MINERAL RIGHTSOGML

Q: What are mineral rights?

A: The term “mineral rights” generally refers to the right to explore and develop property for the production of oil, gas, and other minerals occurring naturally in liquid or gaseous form and to reduce them to possession and ownership.

Ownership of land does not include ownership of such minerals, but the landowner or owner of a mineral servitude has the exclusive right to explore and develop the property for the production of minerals.”.

Mineral Geology for BeginnersOIL AND GAS MINERAL LEASING

after LDNR website

Q: What might happen if an exploration company is interested in leasing the mineral rights on my property ?

A: Typically, a landman offers a per-acre amount to lease the mineral rights and a percentage of royalties from any production that is realized.

Mineral Geology for BeginnersOIL AND GAS MINERAL LEASING

after LDNR website

Mineral Geology for BeginnersOIL AND GAS MINERAL LEASE FORM

Mr. & Mrs. John Landowner (Lessor)

Oil Company (Lessee)

Legal Description of Land

Example:

North Half of Section 23, T6S-R3W

DON'T FORGET THE TERMS!

Mineral Geology for BeginnersOIL & GAS MINERAL LEASE TERMS

• BONUS (1st year): $ per acre

• RENTAL (2nd & 3rd year): $ per acre

• ROYALTY: 20%, 22.5%, 25%

• Primary Term, 3 years

• Other provisions in optional Exhibit “A”

Mineral Geology for BeginnersOIL & GAS MINERAL LEASE TERMS

• ROYALTY 20%, 22.5%, 25%

Bryan S. GrovesGeologist UNITIZATION

Q: What is unitization of wells?

A: Unitization of oil and gas reservoirs in the state is a critical activity achieved by industry and state government working together. It is important to mineral rights owners because of the economic gain once a well is produced. At the request of an applicant or operator, an oil or gas unit is established for a sand, a zone, or a shale or formation.

Unitization allows maximal recovery of the resource, prevents drilling unnecessary wells, and protects the rights of the mineral owners.

Mineral Geology for BeginnersOIL AND GAS UNITIZATION

after LDNR website

Mineral Geology for BeginnersOIL & GAS UNITIZATION EXAMPLE

40 ACRES

640 ACRES IN SECTION

PROSPECT

BIRD’S EYE VIEW

40 ACRES

UNIT160 ACRES

YELLOW TRACT40 ACRES / 160 ACRES =

25% UNIT PARTICIPATION (per the unit)(based on surface acreage in unit)

PROSPECT

Mineral Geology for BeginnersOIL & GAS MINERAL LEASE TERMS (review)

• ROYALTY: 20%, 22.5%, 25%

Mineral Geology for BeginnersOIL & GAS MINERAL LEASE TERMS (review)

• ROYALTY: 20%, 22.5%, 25%

40 ACRES

160 ACRES

YELLOW TRACT25% UNIT PARTICIPATION (per the unit) X

20% ROYALTY (per the lease) =5% NET INTEREST

Mineral Geology for BeginnersOIL & GAS UNITIZATION PROCESS

Louisiana Department of Natural Resources, Office of Conservation

• Pre-Application Conference Notice Letter

• Pre-Application Conference (informal meeting to discuss proposed unit plans)

• Application Letter (docketed for hearing)

• Hearing (in Baton Rouge, LA)

• Unit Order signed by Commissioner of Conservation

Mineral Geology for BeginnersOIL & GAS UNITIZATION PROCESS

Louisiana Department of Natural Resources, Office of Conservation

• Pre-Application Conference Notice Letter

• Pre-Application Conference (informal meeting to discuss proposed unit plans)

• Application Letter (docketed for hearing)

• Hearing (in Baton Rouge, LA)

• Unit Order signed by Commissioner of Conservation

ENTIRE PROCESS TAKES APPROXIMATELY 90-120 DAYS

Bryan S. GrovesGeologist INFORMATION

Mineral Geology for BeginnersINFORMATION - WEBSITES

• LOUISIANA DEPARTMENT OF NATURAL RESOURCES, SONRIS O & G DATABASEhttp://sonris-www.dnr.state.la.us

• ENERGY INFORMATION ADMINISTRATION, U. S. GOVERNMENT O & G DATAhttp://www.eia.doe.gov

• LOUISIANA OIL AND GAS ASSOCIATION, ISSUES AFFECTING LA. O & G INDUSTRYhttp://www.loga.la

• CNN, OIL AND GAS PRICEShttp://money.cnn.com

• BAKER HUGHES, OIL AND GAS DRILLING RIG COUNT INFORMATIONhttp://gis.bakerhughesdirect.com

after LDNR website

Mineral Geology for BeginnersSUMMARY

• Oil & Gas Geology

• Oil & Gas Mineral Lease

• Oil & Gas Unitization

• Information - Websites

MR. KEITH HAWKINS

WITH THE

DERIDDER, LA

OFFICE OF THE

L. S. U. AgCenter

Mineral Geology for BeginnersACKNOWLEDGEMENTS

For more information, please contact:

Bryan S. Groves, Geologist

Lafayette, Louisiana

Telephone: 337/233-8032

Email: bryangroves@cox-internet.com

For more information, please contact:

Bryan S. Groves, Geologist

Lafayette, Louisiana

Telephone: 337/233-8032

Email: bryangroves@cox-internet.com

Drill here…

…or maybe here…

Bryan S. GrovesGeologist END

Mineral Geology for Beginners · Bryan S. Groves Geologist Mineral Geology for Beginners OIL & GAS...

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