580 likes | 685 Vues
Explore unitization laws in oil and gas development, covering rules of capture, correlative rights, regulatory structures, and spacing laws in states like Oklahoma, Kansas, Louisiana, and Texas. Learn about drilling units, location exceptions, and field-wide poolings.
E N D
OIL & GAS DEVELOPMENT AND UNITIZATION LAWS IN VARIOUS STATES MARCH 2010
INTRODUCTION RULE OF CAPTURE VS CORRELATIVE RIGHTS
RULE OF CAPTURE • LANDOWNER MAY PRODUCE OIL & GAS UNDER HIS PROPERTY WITHOUT REGARD WHETHER HE DRAINS HIS NEIGHBOR’S PROPERTY AS WELL • NO LEGAL LIABILITY UNLESS WASTE RESOURCE OR DAMAGE RESERVOIR
CORRELATIVE RIGHTS • EACH OWNER IN A COMMON OIL AND GAS POOL IS AFFORDED AN OPPORTUNITY TO RECOVER HIS JUST & EQUITABLE SHARE OF RESERVES • GOAL IS TO LIMIT UNCOMPENSATED DRAINAGE, BUT NOT AN ABSOLUTE RIGHT – MUST EXERCISE RIGHT TO DRILL TO CLAIM CORRELATIVE RIGHT
PETROLEUM TRAP ELEMENTS • PETROLEUM SOURCE ROCK • MIGRATIONAL PATHWAY • POROUS FORMATION ROCK • SEALING IMPERMEABLE CAPROCK OR BED
JURISDICTION OF CONSERVATION AGENCIES TO REGULATE OIL AND GAS DEVELOPMENT
COMMON OIL AND GAS REGULATORY TERMS • MEANING OF “POOL” FOR REGULATORY PURPOSES Underground reservoir containing an interconnected common accumulation of crude oil and/or natural gas in pressure communication
COMMON OIL AND GAS REGULATORY TERMS • CONCEPT OF A “DRILLING UNIT” Maximum area from which one well can efficiently and economically drain the recoverable oil and gas reserves in a given reservoir
EFFECT OF UNITIZATION ON MINERAL RIGHTS • CREATES A LEGAL FICTION THAT OPERATIONS OR PRODUCTION ANYWHERE ON THE UNIT IS AS IF ON EACH AND EVERY LEASE IN THE UNIT • NOT A CROSS ASSIGNMENT – EACH LESSEE STILL OWNS AND REMAINS RESPONSIBLE TO HIS OWN LESSOR • MUST BE UNIT OPER’NS OR PROD’N
COMPARISON OF OIL AND GAS DEVELOPMENT REGULATORY STRUCTURES IN FIVE STATES
OKLAHOMA WELL SPACING AND POOLING LAW • CREATE DRILLING & SPACING UNITS • LOCATION EXCEPTIONS • INCREASED DENSITY WELLS • FORCED POOLINGS
OKLAHOMA WELL SPACING GENERAL STATEWIDE RULE
OKLAHOMA WELL SPACING DRILLING AND SPACING UNITS
DRILLING & SPACING UNIT GENERAL REQUIREMENTS • APPROXIMATELY SQUARE OR RECTANGULAR AND USUALLY OF UNIFORM SIZE ACROSS SAME POOL • COMBINATION RESERVOIRS MAY HAVE NON-UNIFORM SIZE UNITS • < 40 ACRES FOR OIL WELLS < 4,000’ • < 80 ACRES FOR OIL WELLS BETWEEN 4,000’ AND 9,990’
OKLAHOMA OFF-CENTER SETBACK / ACREAGE SIZE RULE FOR SPACING UNITS
DRILLING & SPACING UNIT GENERAL REQUIREMENTS • > 160 ACRE UNIT HOLDS LEASE ACREAGE OUTSIDE OF UNIT FOR ONLY 90 DAYS AFTER END OF TERM • TOTAL UNIT ACRES LIMITED TO 640 ACRES WITH 10% TOLERANCE • NO REQUIREMENT UNIT BE SHOWN UNDERLAIN ENTIRELY BY PAY FOR FULL ALLOWABLE
OKLAHOMA LOCATION EXCEPTION
OKLAHOMA INCREASED DENSITY WELL
OKLAHOMA FORCED POOLING IN DRILLING AND SPACING UNITS
OKLAHOMA FIELD-WIDE POOLING
KANSAS WELL SPACING AND FIELD-WIDE POOLING LAW • General Spacing and Oil Unit Rules • Well Spacing and Basic Proration Orders –UNIT ACREAGE TO BE SHOWN REASONABLY PRODUCTIVE • Location Exceptions -- YES • NO General Compulsory Pooling Law • Field-wide Pooling - YES
LOCATION EXCEPTIONS METHODS • STANDARD ADMINISTRATIVE APPLICATION • BPO “SLIDING SCALE” WITHOUT APPLICATION BPO STANDARD GAS WELL SETBACK -> 1250’ WELL LOCATION TO W/IN 330’ OF UNIT LINE DIVIDE DISTANCE FROM LINE BY 1250’, THEN MULTIPLY QUOTIENT BY INITIAL RATE TO DETERMINE PENALTY ON PRODUCTION SUBJECT TO STATEWIDE OVERAGE RULE
ALTERNATE TRACT UNITS • Novel feature of large gas field BPOs in Kansas - ATUs • Combine adjoining tracts from existing units to form new 640-acre ATU – either 4 X 160 acres or 2 X 320 acres • One ATU well drilled as near center of ATU as practical • Existing units contributing tracts share in ATU production • Does not affect allocation from unit wells in existing units • Effort to drill in “corners” and along boundary lines not drained by existing production • Fairer to competing interests than standard location exceptions
LOUISIANA WELL SPACING AND POOLING LAW • Unitization – Drilling and Production Units • Field-wide “(Reservoirwide”) Units • Unitization and Equity among Unit Interests • Well Spacing • Limited Location Exceptions • Replacement (“Substitute Unit”) Wells • Increased Density (“Alternate Unit”) Wells
TEXAS WELL SPACING AND POOLING LAW • Well Spacing and Density (Acreage Requirement) • Compulsory Pooling in Texas -- Rare • Voluntary Field-wide Unitization Statute w/o Compulsory Pooling Provision by Vote or Otherwise