Shut-in wells and shut-in royalties in North Dakota

What “shut in” means

A shut-in well is one that can produce oil or gas but isn't being produced. Montana State University Extension's leasing guide defines it as a well capable of producing that the operator chooses not to produce, and notes it may or may not be produced in the future.^[1] Operators shut wells in for all kinds of reasons, from a missing pipeline connection to low prices to work on a nearby well.

For a royalty owner the effect is simple: no sales means no royalty on that well for those months. The same extension guide points out that a low-producing well may be shut in rather than produced, which leaves the mineral owner without a royalty payment.^[1]

How a shut-in clause keeps a lease alive

Most leases end after the primary term unless there's production. A shut-in clause is the exception. The NDSU Extension leasing bulletin, which the Department of Mineral Resources hosts, explains that a shut-in clause lets the lease stay in effect, sometimes in both the primary and secondary terms, when oil or gas from a producing well isn't being sold or used. If the lease treats the shut-in well as a producing well, the lease doesn't terminate. In exchange, a shut-in royalty or some other stated sum, often close to the delay rental, is supposed to be paid each year to keep the lease going.^[2]

So a shut-in payment, when there is one, is usually a small fixed amount set by the lease. It isn't a share of production, and it won't look like your normal royalty check.

What to look for in your lease

The wording is what matters, and leases differ a lot. The NDSU bulletin lists terms owners may want when they negotiate a shut-in clause:^[2]

• Shut-in royalties required in both the primary and secondary terms, with the lease ending automatically if they aren't paid.
• A cap on how long the clause can hold the lease, for example no more than three years, or three years past the primary term.
• A shut-in payment that goes up for each year the well stays shut in.
• After a set period, the shut-in holds only the acres right around the well, and the rest goes back to the owner.
• The reasons a shut-in is allowed, such as no market, no pipeline or government restrictions.
• The clause ends once a well in a neighboring spacing unit, in the same reservoir, starts selling oil or gas.

Montana State's guide asks similar questions: is there a shut-in payment so the owner gets paid until there's real production, and is there a limit on how long a dry hole or a shut-in well can hold the lease?^[1] If you're already leased, look for these points in your existing lease. Our lease bonus and royalty guide covers the other clauses.

The state's one-year rule

North Dakota doesn't let a well sit idle forever. Under the Industrial Commission's rules, failing to produce oil or gas for one year counts as abandonment of the well, and the removal of production equipment does too. An abandoned well has to be plugged and its site reclaimed.^[3]

There's a way to keep an idle well. The director can give it temporarily abandoned status for one year for good cause, and can extend that status up to a year at a time, with a $100 fee for each extension application. The well has to be sealed and its casing tested, and the status is only for wells that will be used for oil and gas production purposes within the next seven years. A surface owner can ask for a hearing to review a well that's been temporarily abandoned for at least seven years.^[3]

The statute behind the rule adds a deadline. A well in abandoned-well status has to be returned to production in paying quantities, approved for temporarily abandoned or enhanced oil recovery potential status, or plugged and reclaimed within six months. If none of that happens, the Commission can require a single-well bond covering the cost of plugging and reclaiming it, and after a year in abandoned-well status the well's equipment, salable oil at the site and the bond can be forfeited.^[4]

Those rules are about the well itself. Whether your lease survives a long shut-in is a separate question that turns on the lease wording.

Checking a well's status

You can look up wells by section, township and range in the Department of Mineral Resources' Find My Well search.^[5] If a well near you has gone quiet, the operator's owner relations group can usually tell you why and whether it's expected back on. Our operator contacts page lists how to reach the main Bakken operators, and our daily Industrial Commission summaries follow permits, hearings and status changes.

If the lease has ended

If a lease does terminate, say because the shut-in payments weren't made or the clause ran out, North Dakota law puts the paperwork on the lessee. Within 15 days after a lease terminates or is forfeited, the lessee has to record a written surrender in the county where the land is, at no cost to the owner.^[6] If that doesn't happen, the owner can serve a notice and, after 20 days, file a satisfaction of lease with the county recorder, unless the lessee tells the recorder within those 20 days that it still claims the lease.^[6] An owner who has to sue for the release can recover $100 in damages, costs and a reasonable attorney's fee, plus any other damages the evidence supports.^[6]

Whether a lease has actually ended is often disputed, so talk to a North Dakota oil and gas attorney before you sign a new lease on the same acres.

Questions?

Shut-in wells come up a lot when owners call us, especially on older wells. Questions? Email Jim at jim@fortunionminerals.com. If you'd like to know what we'd pay for an interest, shut in or producing, the offer page is the place to start.

A note on our interest

Fort Union buys minerals and royalty interests, so we have a commercial interest in this subject. Nothing in this guide depends on selling to us, and each statement comes from a public source listed below. Our editorial standards explain how we source and review our pages. If you ever want to know what we'd pay for your interest, the offer page is the way to reach us.

Sources

These are the sources behind this guide, in the order we first cite them. We read the parts of each one that this guide relies on, on October 27, 2026.

1. Oil and Gas Leasing, MontGuide MT201209AG (reviewed January 2017) — Montana State University Extension, read October 25, 2026.
2. North Dakota Oil and Gas Leasing Considerations, Extension Bulletin 29 (revised October 2006) — North Dakota State University Extension, hosted by the North Dakota Department of Mineral Resources, read October 25, 2026.
3. N.D.A.C. chapter 43-02-03, Oil and Gas Conservation (section 43-02-03-55, abandonment of wells) — North Dakota Legislative Branch (Administrative Code), read October 27, 2026.
4. N.D.C.C. section 38-08-04, subsection 1, paragraph 12 (abandoned-well status) — North Dakota Legislative Branch, Century Code chapter 38-08, read October 27, 2026.
5. Find My Well — North Dakota Department of Mineral Resources, Oil and Gas Division, viewed October 25, 2026.
6. N.D.C.C. chapter 47-16, Leases (sections 47-16-36 to 47-16-40) — North Dakota Legislative Branch, Century Code, read October 25, 2026.