Confidentiality and the Niobrara Energy Play
Why do companies keep a tight-lid on information at the start of a new energy play?
This is a common question shared by many who have been involved in a new energy development. In Southeast Wyoming landowners, citizens, organizations, local government and other interested stakeholders have many questions that can’t be readily answered because it’s just plain confidential. It is important to understand why companies have to maintain this strict confidentiality.
Oil and gas companies are in a competitive business environment with other oil and gas companies. Just like a rancher who sells stock and doesn’t tell their neighbor what they sold it for – there is an element of confidentiality that is required to run their business efficiently and successfully.
Its a competitive business
Oil and gas companies are granted a six-month period by the state to keep their information confidential. Production data, assets, lease prices and all operational endeavors are kept quiet to allow the company time to invest in a new energy play.
Oil and gas companies are extremely technical in nature and developing resources requires sophisticated scientific and technical advancements that companies must keep confidential, as they are in competition with other companies.
Rules and regs ensure companies stay quiet
In addition, companies are also bound by a myriad of rules and regulations to ensure their confidentiality. Prematurely releasing scientific or technical information can lead to legal issues and timing setbacks, something companies have to avoid if they want to succeed.
Brokers drive up prices
Oil and gas brokers are another reason to keep a tight lid on information. When an area is thought to be rich in oil and gas reserves, brokers will start buying up leases that are open, substantially driving up the price of leases for the oil and gas companies. This can be very costly to oil and gas companies needing more land to offset a well or to enlarge their production area. In addition to the lease price, the drilling price and all associated costs that come along with development will increase.
Confidentiality helps control costs of doing business, which also will help with end-use prices for the consumer.