This lease rider form may be used when you are involved in a lease transaction, and have made the decision to utilize the form of Oil and Gas Lease presented to you by the Lessee, and you want to include additional provisions to that Lease form to address specific concerns you may have, or place limitations on the rights granted the Lessee in the “standard” lease form.
Michigan Offset Well Protection and Payment of Compensatory Royalty are two essential components of the oil and gas industry in the state of Michigan. These measures are put in place to uphold the rights of both landowners and operators when it comes to drilling wells and extracting natural resources. Offset Well Protection refers to the regulations and practices aimed at safeguarding nearby wells and their production from the potential negative impacts caused by drilling a new well in proximity. The objective is to prevent interference or damage to existing wells. This protection ensures that operators take necessary precautions to avoid any negative effects on neighboring wells during drilling, completion, and production phases. Payment of Compensatory Royalty is a form of financial compensation provided to landowners who have neighboring wells affected by the drilling of a new well. It ensures that landowners receive monetary compensation for any adverse impact caused by newly drilled wells, which could include reduced production or other interferences. The compensatory royalty paid is typically a percentage of the value of the oil or gas extracted, which helps to mitigate any losses or damages experienced by the affected landowner. In Michigan, specific types of Offset Well Protection and Payment of Compensatory Royalty include: 1. Surface Casing Protection: Operators are required to install surface casings to protect fresh groundwater sources and prevent contamination during the drilling and completion process. This measure ensures that neighboring wells and water sources remain unaffected. 2. Hydraulic Fracturing Disclosure: Michigan mandates operators to provide detailed information about hydraulic fracturing activities to the public and regulatory authorities. This disclosure is crucial in assessing any potential risks and implementing appropriate Offset Well Protection measures. 3. Well Spacing Regulations: Michigan has specific regulations that determine the minimum distances between wells to prevent overlapping and interference. These regulations help ensure efficient extraction while safeguarding the integrity and productivity of existing nearby wells. 4. Statewide Drilling Regulations: Michigan's Department of Environment, Great Lakes, and Energy (EAGLE) has established comprehensive drilling regulations that cover various aspects, including well design, drilling practices, and well stimulation techniques. These rules aim to protect neighboring wells, the environment, and public health. 5. Compensatory Royalty Agreements: When a new well infringes on the production capabilities of an existing well, landowners and operators can negotiate compensatory royalty agreements. These agreements outline the terms and conditions for compensating the affected landowner, which could involve a percentage of the extracted mineral value or other mutually agreed-upon compensatory measures. In summary, Michigan Offset Well Protection and Payment of Compensatory Royalty are critical aspects of ensuring responsible and sustainable oil and gas operations in the state. These regulations and compensatory measures help avoid adverse impacts on neighboring wells and address any potential losses incurred by landowners due to new drilling activities.
