How to Drill an Oil Well on Your Land
Oil is a valuable commodity. If you find oil on your property, you must drill for it. Unfortunately, oil is not found just below the surface, but far below---often 10,000 feet or deeper. Reaching it requires the use of a drilling rig, a 15-story-tall derrick housing a high-powered motor that turns the drilling pipe. The cost alone for drilling mud (used to cool the drill bit and reduce friction) can easily run from $40,000 to $250,000. Drilling is an expensive business. In Arizona, for example, you will spend an initial $10,000 to $25,000 just for a well bond. Overall, drilling costs can be expected to run from $400,000 to $1,000,000. Does this Spark an idea?
Other People Are Reading
Things You'll Need
- Mineral rights, notably oil rights
- Geological assessment team
- Drilling permit
- Well bond
- Drilling contractor
- Attorney
Instructions
-
Drilling for Oil
-
1
Investigate your property's mineral rights to determine what minerals, if any, you own. Owning land does not automatically mean you own mineral rights. Mineral rights includes all valuable minerals--precious metals, precious stones, coal, gas and oil. Therefore, it is possible you only own some (or none) of the land's mineral rights. For example: Gold found on your property might belong to you, but not the oil. Make sure you own the oil rights before investigating into drilling.
-
2
Hire a geologic team of scientists to assess your property. They will use all available information on your property, including regional surveys and surface geology reports. Further, they will produce, using a seismograph, a geophysical survey---a contoured map of your property's subsurface. They may also take a core sample for study. With all this, the team evaluates your property's chances of producing oil. They also determine the best place for drilling.
-
-
3
File an Application for Permit to Drill (usually with the state's Oil and Gas Board). The application may require information such as the proposed drilling depth, the length of surface casing, the number of acres in the drilling unit, along with basic topographical information on the property---longitude, latitude and elevation. Your state's Oil and Gas Board will tell you what is required (see Tips).
-
4
Pay any state required Well Bond. The bond's fee (expect this in the ten's of thousands) may be dependent on the expected depth required to drill. Again, check with your Oil and Gas Board for all required paperwork and fees associated with drilling.
-
5
Hire a drilling contractor. Even oil companies generally contract out to independent drillers. The contractor will be responsible for providing the rig and the team to run it. And, if there is oil, they will fit all necessary equipment for pumping and collecting the oil. Otherwise, if the well is "dry," they will collect core samples to determine if there might be oil elsewhere in the area.
-
6
Hire an attorney specializing in mineral rights to set up a leasing contract for you with an oil company to buy your oil. Know that your well may only produce for a couple of years. This is common.
-
1
Tips & Warnings
If you suspect there is oil on your property, contact a mineral rights attorney. He will set up the legal arrangements with an oil company; let the oil company handle the rest. However, it is possible the oil company will require geological data supporting your suspicions before they will act upon any sort of agreement. Finding the correct authority is as simple as doing a web search on Your State Name Oil and Gas Board. For example: Mississippi Oil and Gas Board. You can also search with Drilling Permit. For example: Alabama Drilling Permits (see References).
Be aware that the odds of finding oil are low. It is not uncommon for nine out of 10 holes to fail (to be dry) in newly explored areas. Working on drilling rigs (or around any large and high-powered equipment) is dangerous, with injuries potentially resulting in death. As such, drilling should only be done by professional drilling contractors.
