Why would a company lease the mineral rights from me , and hit oil ……but cap the well?

I have a interest in a oil lease that my dad had reserved the mineral rights on. A company came to me in 1986 to lease and drill the well. They hit oil!….and capped the well and mailed us a check for .60…..why are they not pumping the well?

One Response to “Why would a company lease the mineral rights from me , and hit oil ……but cap the well?”

  1. open4one Says:

    You have to understand that there are a lot of limitations in the whole process of going from Well to Gas Pump.

    One is transportation from Well to Refinery, another is Refinery Capacity, and then there’s Distribution. Our main bottleneck in the US is Refinery Capacity, so if they pulled it out of the ground, they would have to either hold it someplace in storage, or ship it to foreign refineries, whose capacity is also limited. They’d prefer to store it where it is and save money.

    There are a lot of such wells all across the US. They aren’t going to divide the refining capacity among all the possible proven wells in the US, as to do so would increase their extraction and transportation costs. They will fill the refinery capacity from as few wells as possible. They may get around to yours "soon" or "never".

    What would change that, especially in today’s prices, is if we had more domestic refineries. If you want to know why we don’t, ask your Congressman. There’s a good chance that your Congressman is part of the reason we haven’t built any new refineries in decades.