Where are Oil and Gas Found?
Oil and natural
gas have been discovered in most areas of the world. However,
the oil and gas must be in sufficient quantity and reasonably
accessible to be commercially viable. In Ohio, most of the oil
and gas has been found in the eastern half of the state. At
one time, Ohio was the largest producer of oil in the world.
The most frequent production zone in Ohio is the Clinton
How are Oil and Gas
The origins of oil and gas are believed to
be the remains of organic material from millions of years ago
that have been buried and subjected to intense heat and
pressure. About 500 million years ago, a large inland sea
covered most of Ohio. It was filled with marine vegetation and
small marine creatures. As they died and fell to the ocean
floor, they created a bed of organic material hundreds and
thousands of feet thick in some areas.
Over eons of time the inland sea dried up and was filled
with sand and gravel washed westward from the erosion of the
Appalachian Mountains. These sands were later buried by mud
and were compressed into sandstone—the Clinton Sandstone
The organic matter continued to decompose as it was subject
to even greater pressure and heat. The lighter oils and gasses
migrated into the pores of the overlying sandstone. In some
areas, the sandstone is thick and porous; in other areas, it
is thin and not very porous. The oil and gas was trapped in
the sandstone by less porous shale formations
that prevented the oil and gas from migrating further upward.
In Ohio, these trapping rocks are often shale
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How are Oil and Gas
Oil and gas is extracted by drilling oil
and gas wells. The well bore provides a path for the oil and
gas to escape the formation they are trapped in. Most oil and
gas wells in Ohio are between 2,000’ and 5,000’ deep. The
overlying rocks exert strong pressure on the producing
formation; this pressure can be used to drive oil and gas up
and into the surface production facilitates. If the natural
pressure is not sufficient, oil and gas may be pumped from the
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Will a Well Discover Oil or
Most wells produce both oil and natural gas as
well as brine which is a by-product of oil and gas production.
All three products come up the well bore and into a piece of
equipment called a separator. The separator uses gravity to
separate the heavier fluids (crude oil and brine) from the
much lighter natural gas. The gas is moved to market by a
pipeline to a nearby utility. The crude oil and brine flow
together into a holding tank. Crude oil is lighter than brine
and tends to float to the top. Again, gravity is used to
separate crude oil from brine into separate tanks. Crude oil
is sold to oil refineries, and brine is hauled away and
re-injected into a state-authorized and regulated injection
The ratio between crude oil, natural gas and brine is
unknown until actual production begins. However, most wells
tend to produce similarly to other wells in the vicinity that
were drilled to the same target formation. Just as gravity
sorts oil, gas and brine in the surface facilities, it also
does so to the oil, gas and brine that remain in the producing
formations. Consequently, a well that drills into a high point
of a formation may produce mostly gas, and a well drilled into
a low point may encounter mostly brine. Oil lies somewhere in
between. GonzOil employs professional geologists to identify
and target well locations that are most likely to be strong
producers of oil or gas.
Who Owns the Oil and
Under English law, a property owner owns from
the surface to the center of the earth; this is called “fee
simple” title. However, landowners are allowed to sell or
lease their property, including “mineral rights” below the
surface of the earth. An oil and gas lease assigns ownership
of the oil and gas underlying a property to an oil and gas
producing company that is willing to invest in developing the
oil and gas potential.
Why Would a
Property Owner Sign
The property owner wants to
convert the oil and gas that may lie under their property into
cash, but doesn’t have the expertise or the capital to drill
their own well. By executing an oil and gas lease, the
property owner enables an oil and gas company that does have
the expertise and capital to explore for oil and gas. If the
well is successful, the property owner will receive a royalty,
typically a proportional share of one eighth (12.5%) of the revenue from the well
and does not have to bear the costs of drilling or operating
the well. In the event that the well is on the landowner’s
property, then that property owner is usually entitled to free
gas from the well.
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What Happens at the end of the Well?
can produce for up to thirty years. As long as the well can be
operated profitably, it will continue to produce oil and/or
gas. The current prices for oil and natural gas have a strong
influence on well profitability.
Production of oil and gas reduces or depletes the amount of
oil and gas remaining in the formation. Consequently, over
time the amount of oil and/or gas diminishes. Eventually, the
well cannot produce enough oil and gas to be profitable and
becomes a candidate for plugging.
When a well is plugged, all surface equipment is removed
and the site is restored. As much pipe as possible is removed
from the well (pipe that is not cemented in place) and the
well bore is cemented. A State Oil and Gas Inspector is
involved when the actual plugging takes place. Usually, after
the well is plugged the oil and gas lease expires.
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How Long Does a Well
Good wells last a long time; bad wells do
not. Clinton Sandstone wells have a typical life of 15 to 20
years. However, there are some Clinton wells in Ohio that are
more than 50 years old. Because oil and gas production is a
business, it continues as long as the well is profitable.
After a well has been drilled and placed in production,
profitability is mostly determined by the amount of oil and
gas produced and the prices received for crude oil and natural
gas. Today’s high prices have extended the life times of many
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How are Oil and Gas Regulated in
The Ohio Department of Natural Resources,
Division of Oil and Gas Resources Management, is the exclusive
regulator of oil and gas in Ohio. They are headquartered in
Columbus and maintain field offices throughout Ohio. The
Division of Oil and Gas Resources Management approves drilling permits
and establishes special permit conditions to assure the safe
and efficient production of oil and gas. The Division has Oil
and Gas Inspectors who monitor and approve the drilling of new
wells, the operation of existing wells, and the plugging and
abandonment of old wells. The Division also employs geologists
and hydrologists to protect potable water from oil and gas
The Division of Oil and Gas Resources Management has developed
Best Practices for Oil and Gas Well Site Construction
(23 pages). GonzOil believes and adheres to those best
practices. In the event a company fails to follow those Best
Practices, the Division of Oil and Gas Resources Management steps
in to enforce Ohio’s rules and regulations. Most companies
respond quickly when notified of a potential problem by an
Ohio Oil and Gas Inspector. However, if necessary, the
Division of Oil and Gas Resources Management has legal means to
How Many Acres Does It
Take for a Well?
The Ohio Department of Natural
Resources, Division of Oil and Gas Resources Management, requires
that wells deeper than 4,000 feet contain at least 40 acres of
surface land. If the well will be greater than 2,000’ but less
than 4,000’, Ohio requires at least 20 acres.
The drilling of a traditional well requires about 0.5 to 0.75 acres of
land during drilling and completion of the well. Afterwards,
the well will take about one-half acre of land.
Newer horizontal shale wells have a large footprint (4-6 acres), but less than 200 were drilled in Ohio in 2012.
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How Closely Spaced Are Wells Allowed to
The minimum spacing of wells is determined by
the Ohio Department of Natural Resources, Division of Oil and Gas Resources Management. Wells that target the same producing
formation must be at least 1,000’ from each other if they are
more than 4,000’ deep. If the wells are between 2,000’ and
4,000’ deep, they must be at least 600’ apart. However, most
oil and gas companies believe in greater spacing than the
state minimum. GonzOil tries to stay at least 1,750’ from
existing gas wells and 1,250’ from existing oil wells.
The Division of Oil and Gas Resources Management also regulates
the spacing of wells from the property lines around the well.
The wellhead cannot be closer than 300’ from a property that
is not part of the drilling unit acreage if the well is
between 2,000’ and 4,000’ deep. In the case of a directional
well, the wellhead must be at least 150' from a property not
in the drilling unit. For wells deeper than 4,000’, the
setback from the property line must be at least 500’. Surface
equipment and wellheads must also be at least 50' from the
traveled portion of any road or railroad.
The Division requires that wells and tank batteries be at
least 100’ from any existing, inhabitated dwelling. However,
once a well has been drilled, there is no requirement (other
than common sense) that prohibits new construction from being
built right next to a pre-existing well.
A well plat,
signed by a registered surveyor, must be submitted with the
drilling permit application.