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What role do the “operators” play in drilling a gas well?

This slide show has not talked much about the operators.  We have talked mostly in terms of the mineral owners.  But the mineral owners are not usually really in charge.  They are not in the business of drilling gas wells.  It is the operators, the entities who have leased the right to drill for oil and gas from the mineral owners, who are really in charge.

It is the operators who have the power under the leases they have obtained from mineral owners to decide when and where a well is drilled, and where the access road goes.  It is the operator who finances or arranges the financing of the well,  and who rents the drilling rig and other equipment, or hires a contractor with a drilling rig and the contractor’s employees to drill the well. It is the operator who decides whether or not to “voluntarily” use well spacing and royalty sharing – or not.

The mineral owner usually does not put up any money to finance the drilling of the well, so they only get 1/8th of what the gas is sold for – called a 1/8 royalty.  It is the operator who gets the other 7/8's of the value of the gas sold from a well.  The operator uses that 7/8's to pay back the loan or other financing obtained to pay the cost of drilling the well; to pay the costs of the gathering pipeline and the refining of the gas etc. necessary for getting the gas to market; to pay the cost of occasional maintenance of the well; and of course to give operator’s business a profit.

If the operators of all of the mineral interests included in the unit being drained by a single well can get together and agree how to share the costs of drilling the well, this is called "pooling" in the statutes.  That is confusing because there can be many "units" in a "pool" of gas-- using the word "pool" in a different sense.