47-318. WELL SPACING. (1) The department shall promptly establish spacing units for each pool except in those pools that have been developed to such an extent that it would be impracticable or unreasonable to establish spacing units at the existing stage of development.

(2) An order establishing spacing units shall specify the size, shape and location of the units, which shall be such as will, in the opinion of the department, result in the efficient and economical development of the pool as a whole. Any unit established by the department shall be geographic. The geographic boundaries of the unit shall be described in accordance with the public land survey system. Except where circumstances, geologic or otherwise, affecting the orderly development of a pool reasonably require, or as provided in paragraph (b) of this subsection, the size of the spacing units shall not be smaller than the maximum area that can be efficiently and economically drained by one (1) well; provided:

(a) If, at the time of a hearing to establish spacing units, there is not sufficient evidence from which to determine the area that can be efficiently and economically drained by one (1) well, the department shall make an order establishing temporary spacing units for the orderly development of the pool, pending the obtaining of the information required to determine what the permanent spacing should be.

(b) Where the federal agency administering federal minerals that would otherwise be included in a spacing unit has not leased or has failed to offer such federal minerals for lease auction for at least six (6) months, such federal minerals may be excluded from the unit upon application or upon the department’s own determination.

(3) Except where circumstances, geologic or otherwise, affecting the orderly development of a pool reasonably require, spacing units shall be of approximately uniform size and shape for the entire pool. The department may establish spacing units of different sizes or shapes for different parts of a pool or may grant exceptions to the size, shape or location of any spacing unit or units or may change the sizes or shape of one (1) or more existing spacing units.

(4) An order establishing spacing units shall direct that no more than one (1) well shall be drilled to and produced from the common source of supply on any unit, and shall specify the location for the drilling of a well thereon, in accordance with a reasonably uniform spacing pattern, with necessary exceptions for wells drilled or drilling at the time of the filing of the application. If the department finds that a well drilled at the prescribed location would not be likely to produce in paying quantities, or that surface conditions would substantially add to the burden or hazard of drilling such well, or for other good cause shown, the department is authorized to make an order permitting the well to be drilled at a location other than that prescribed by such spacing order. Application for an exception shall be filed with the department and may be granted where it is shown that good cause for such exception exists and that consent to such exception has been given by the operators of all drilling units directly or diagonally offsetting the drilling unit for which an exception is requested, and, as to the lands upon which drilling units have not been established, by the majority of mineral interest owners of those lands which would be included in directly or diagonally offsetting drilling units under said order, if said order were extended to include such additional lands.

(5) An order establishing spacing units for a pool shall cover all lands determined or believed to be underlaid by such pool, and may be modified by the department from time to time to include additional lands determined to be underlaid by such pool or to exclude lands determined not to be underlaid by such pool. A pool may be divided into zones and a spacing unit for each zone may be established if necessary to prevent or assist in preventing waste of oil and gas, to avoid drilling unnecessary wells, to protect correlative rights or to facilitate production through the use of innovative drilling and completion methods. The spacing units within the zone may differ in size and shape from spacing units in any other zone but may not be smaller than the maximum area that can be efficiently and economically drained by one (1) well.

(6) An order establishing spacing units may be modified by the department to change the size, shape or location of one (1) or more spacing units, or to permit the drilling of additional wells on a reasonably uniform pattern. An operator may apply for changes to the size, shape or location of spacing units. The department will review applications to change the size, shape or location of spacing units.

(7) Upon the filing of an application to establish spacing units, no additional well shall be commenced for production from the pool until the order establishing spacing units has been made, unless the commencement of the well is authorized by order of the department.

History:

[(47-318) 47-321, added 1963, ch. 148, sec. 7, p. 433; am. 1974, ch. 17, sec. 32, p. 308; am. 2013, ch. 189, sec. 3, p. 470; am. 2015, ch. 94, sec. 1, p. 229; am. 2016, ch. 48, sec. 4, p. 133; am. and redesig. 2017, ch. 271, sec. 11, p. 688.]