PROBLEM SOLVED – Salt Water Disposal Well

Problem: My company worked on a customer’s Salt Water Disposal well. Can I file a Mineral Lien Claim against the SWD? Will it help me get paid?

Solution: Yes, and it just might be your very best strategy to get paid!

Story: Our law firm recently filed a mineral lien against a SWD in Montgomery County, Texas for unpaid invoices. After exhausting all normal negotiation efforts, we were forced to file a suit to foreclose on the well. Certainly, we know that most service providers really don’t want to own a well and want to avoid any possible environmental problems. The threat to foreclose and take over the well, and the possibility of a new owner initiating charges of $1.00 a barrel for the 600 barrels of water per day being disposed in order to continue oil production operations, got the results we needed. Our research included the names of all the operators in a 10-mile radius who might  show up to buy the SWD well at a foreclosure sale. That was enough to get our oilfield services client paid, and no actual foreclosure sale was needed.

 

 

 

 

 

 

 

 

Analysis: In Texas, Property Code § 56.001 defines the type of work that can be part of a mineral lien claim. "Mineral activities" means digging, drilling, torpedoing, operating, completing, maintaining, or repairing an oil, gas, or water well, an oil or gas pipeline, or a mine or quarry. A water injection well, water disposal well, or water source well would all meet these criteria. The hot button is whether an operator would have a concern that a lien was placed on his SWD. You should know that this is an effective strategy in every state except North Dakota.

There are two common uses of a disposal well. For on-lease produced water, the SWD is often the economic bottleneck of the oil production on that lease. If there is no way to dispose of the produced salt water, the operator would be faced with paying exorbitant per barrel costs to dispose of this water in a commercial SWD, potentially causing the lease to become uneconomic. For a SWD that is permitted to dispose of off-site produced water, the economic risk can be even greater. That operator may have multiple wells in an area, all relying upon the same SWD. A mineral lien filed against that SWD, coupled with the risk of foreclosure, might just be enough to force payment of those outstanding invoices.

Conclusion:  Legal counsel with actual oilfield experience can often find ‘out of the box’ solutions to help your company collect for its work without a long and expensive lawsuit. Doré Rothberg McKay represents more oilfield service companies nationwide than any other law firm.

Conclusion:  Legal counsel with actual oilfield experience can often find ‘out of the box’ solutions to help your company collect for its work without a long and expensive lawsuit. Doré Rothberg McKay represents more oilfield service companies nationwide than any other law firm.

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