Drilling and Production Process
Step 1: Gathering seismic information
The potential existence of oil and natural gas may be determined by observing sound wave recordings in a process called 3-D seismic. Vibrations are sent underground and reflected back to a listening device on the surface. Different zones and formations below the earth reflect these vibrations at different speeds, allowing operators to generate a picture or cross section of the potential zones and structures located beneath the surface.
Step 2: Signing the leasing agreement
Chesapeake’s talented employees spend weeks and months researching the mineral ownership records for each tract in the unit in which it plans to drill. Standard oil and natural gas lease forms establish a partnership between the mineral owner and Chesapeake for the drilling and production of oil and natural gas. The mineral owner bears no risk, but in return receives regular royalty payments based on the well’s production revenue. The operator incurs all risks and costs associated with drilling and producing the well.
Step 3: Preparing the drillsite
After a lease agreement is signed, Chesapeake evaluates its geological information combined with its leasehold position in the area before selecting a spot to drill. Chesapeake begins construction of a drillsite (or padsite if used to drill more than one well) before commencing drilling operations. Chesapeake builds drillsites utilizing as small an area as possible that will safely accommodate the drilling rig and associated equipment. Once drilling is completed, the drillsite is typically downsized to a minimum area for the surface production equipment.
Step 4: Drilling
Once the drilling rig and other necessary equipment are in place, the drilling process begins. The depths of Chesapeake’s wells vary greatly depending on the formation and play. An industry leader in horizontal drilling techniques, some Chesapeake wells begin with vertical hole before drilling horizontally into the potential productive zone to recover the maximum reserves.
Step 5: Completing
As a well reaches the completion phase, the original drilling rig is removed and a smaller completion rig is moved in to perforate and treat the potentially productive zones. These high-technology “fracing” completion processes stimulate production by pressuring completion fluids and materials into the zone and creating cracks for the gas to flow up into the wellbore.
Step 6: Producing
A wellhead or “Christmas tree” is placed on top of the existing wellsite to control and regulate the flow of gas into a pipeline in order for the gas to be transported to market through a regional pipeline system.
Step 7: Receiving royalty payment
Mineral rights owners can expect to begin to receive monthly royalty payments approximately 90 days after initial production begins on a well. The three-month period is required to confirm the title history on each tract (from courthouse records) and have a title attorney authenticate royalty ownership for all tracts in the unit.
Note:
The duration of drilling time and amount of production will vary from well to well, depending on drilling depth, location, formation and numerous other variables associated with the risks of exploration and production.