North Dakota Amendment to Oil and Gas Lease to Add Shut-In Provision For Oil Wells In the dynamic landscape of the oil and gas industry, the state of North Dakota recognizes the need to adapt and optimize lease agreements to ensure sustainable extraction practices. To address this, North Dakota introduces an Amendment to Oil and Gas Lease, specifically targeting the addition of a Shut-In Provision for Oil Wells. This amendment aims to provide flexibility to leaseholders and safeguard against economic and environmental challenges. Keywords: North Dakota, Amendment, Oil and Gas Lease, Shut-In Provision, Oil Wells, lease agreements, sustainable extraction practices, leaseholders, economic challenges, environmental challenges The North Dakota Amendment to Oil and Gas Lease to Add Shut-In Provision For Oil Wells offers leaseholders the opportunity to modify their existing lease agreements in order to include this important clause. The Shut-In Provision allows leaseholders to temporarily suspend production from oil wells during specific situations, thereby providing a cushion against economic downturns or unforeseen circumstances. By adding the Shut-In Provision to their lease agreements, oil and gas operators have the ability to cease production temporarily at an oil well without forfeiting the lease. This provision applies when market prices drop below a certain threshold, making continued production economically unviable. Additionally, it can be invoked in cases of equipment failure or maintenance requirements, ensuring the integrity and longevity of the wells. By incorporating this provision, North Dakota acknowledges the various factors that can affect the profitability of oil well operations, which in turn impacts the state's economy. This proactive approach allows leaseholders to operate their wells more efficiently and responsibly in the face of market fluctuations and unforeseen challenges, ensuring the long-term sustainability of the industry. Different types of North Dakota Amendment to Oil and Gas Lease to Add Shut-In Provision For Oil Wells include: 1. Temporary Shut-In Provision: This type of amendment allows leaseholders to temporarily halt production from an oil well for a predetermined period, typically in response to low oil prices or equipment-related issues. This provision ensures that operators can regroup and resume production when conditions improve. 2. Extended Shut-In Provision: Leaseholders may opt for this type of amendment if they anticipate a longer period of production suspension. This provision accommodates situations such as significant market downturns or major equipment repairs. It provides leaseholders with the necessary flexibility to protect their investment until profitability can be restored. 3. Emergency Shut-In Provision: This type of amendment addresses unforeseen circumstances that require immediate cessation of production. It enables leaseholders to shut down operations in response to emergencies, such as natural disasters or equipment failures that pose an immediate threat to worker safety or environmental integrity. Incorporating a Shut-In Provision into oil and gas lease agreements in North Dakota helps strike a balance between maximizing resource extraction and preserving the long-term viability of the state's oil and gas industry. By providing flexibility to leaseholders and promoting responsible practices, this amendment supports a sustainable and resilient future for North Dakota's energy sector.
North Dakota Amendment to Oil and Gas Lease to Add Shut-In Provision For Oil Wells
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FAQ
What is the granting clause? The granting clause is the clause under which the owner of the oil and gas rights leases the oil and gas rights to the oil and gas company along with the right to develop the oil and gas on a specifically described piece of real estate.
By way of background, a ?free use? clause is a provision in an oil/gas lease which gives the lessee the right to use gas produced from the leasehold.
in clause (or shutin royalty clause) traditionally allows the lessee to maintain the lease by making shutin payments on a well capable of producing oil or gas in paying quantities where the oil or gas cannot be marketed, whether due to a lack of pipeline connection or otherwise.
In the petroleum industry, shutting-in is the implementation of a production cap set lower than the available output of a specific site. This may be part of an attempt to constrict the oil supply or a necessary precaution when crews are evacuated ahead of a natural disaster.
What is the granting clause? The granting clause is the clause under which the owner of the oil and gas rights leases the oil and gas rights to the oil and gas company along with the right to develop the oil and gas on a specifically described piece of real estate.
A Pugh Clause is enforced to ensure that a lessee can be prevented from declaring all lands under an oil and gas lease as being held by production. This remains true even when production only takes place on a fraction of the property.
Surrender Clause A clause commonly found in an oil and gas lease authorizing a lessee to release its rights to all or any portion of the leased premises at any time and be relieved of further obligations relating to the acreage surrendered.