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Repeal of boundary law would boost production and taxes, Harold Hamm says

Continental Resources Inc. CEO Harold Hamm said an old state law that prevents lateral drilling across section lines is reducing production, and therefore state taxes. He’d like to see that changed.
by Adam Wilmoth Modified: May 5, 2014 at 10:00 am •  Published: May 4, 2014

One two-mile lateral, however, would drill through the buffer zone, adding at least 500 feet to the well that would not otherwise be produced.

“It would be better for the landowner. Their bonus would be greater,” Hamm said. “It would be great for everybody if we did it.”

Some smaller oil and natural gas operators, however, have objected to similar proposals, saying the longer horizontal segments could dilute their holdings. The Corporation Commission last month tabled a proposal that would have changed spacing requirements for vertical and horizontal wells in the same area.

David Baston, of Blackrock Holdings, has a working interest in many vertical wells throughout the state. Baston, in March, spoke at a Corporation Commission hearing, where he said he fears he could lose control of undeveloped resources under his existing vertical well.

“Those become commandeered with these big horizontal units,” he said. “These are reserves I thought I owned. I’m put in a position of having to defend at my expense over and over production I thought I already owned.”

by Adam Wilmoth
Energy Editor
Adam Wilmoth returned to The Oklahoman as energy editor in 2012 after working for four years in public relations. He previously spent seven years as a business reporter at The Oklahoman, including five years covering the state's energy sector....
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A 40-year-old state law limits most horizontal well lengths to one 640-acre section. Continental Resources CEO Harold Hamm has asked legislators to allow oil and natural gas producers to more easily drill wells across two sections. Most of the expense of drilling a well is from the vertical and early horizontal portion of the process. Extending a horizontal section across a second 640-acre section more than doubles the production while requiring only 30 percent of the cost, Hamm said. A single, two-mile lateral also would allow the company to produce from the area surrounding the section line, which is usually off limits to oil and natural gas companies.

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