Boyd Nelson, Land Manager at True Oil LLC based out of Casper, WY spoke to a gathering of students about the role petroleum landmen play in the exploration, production and transportation of natural resources.
A petroleum landman generally falls into three categories: exploration, exploitation, and surface landmen.
The positions involve the logistical, financial and real estate aspect of procuring natural resources. Most of what landmen do specifically pertains to buying leases on land that is suitable for drilling.
The leases are procured through federal auctions that take place in states where oil and gas leases go up for sale to the public. An auction is commencing on February 11 in Cheyenne. Nelson urged students to attend this event, as he stressed that auctions such as these are a basic component of oil and gas land work. The auctions take place every quarter.
Land is also bought by seeking out the holders on leases and purchasing directly from them. This can be done through federal landowners, such as the Bureau of Land Management, or private landowners, which in Wyoming are generally ranchers.
When purchasing from private landowners, the process can be somewhat complicated.
“Not everyone is happy to hand over their lease to an oil or gas company,” Nelson said. “Sometimes people really can’t stop the process, only delay, because not everyone owns the mineral rights on their land.”
While prices for a single acre of desirable drilling land used to sell for relatively cheap, sometimes as little as ten dollars per acre, the current advance of technology has driven up the fiscal worth of these land plots considerably.
“The world has changed on us. We have a resource play going on,” Nelson said. “We’re looking at much, much larger recoveries now.”
The advancements in drilling technologies have inevitably led to a price increase of the land being procured by oil and gas interests. Some acreage plots are selling for $5,000, Nelson cited.
Some question whether the advent of new technology is always a positive force in this regard. With raising prices on land plots, certain companies cannot compete with larger players in the industry.
Nelson does not see this to be an issue however, claiming that technological advancements are good for everyone involved.
“For the industry as a whole these technologies are a good thing,” Nelson said. “For example on a certain plot of land, say there are sixteen pads of land that we want to drill, with these new technologies we’d only need to put up two or three wells, instead of the full sixteen. That’s good for everybody.”
