(A) The department may, upon application or on its own motion and after a hearing, establish spacing units for each pool.

(B) An order establishing spacing units shall specify the size and shape 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. The size of the spacing units shall not be smaller than the maximum area that can be efficiently and economically drained by one well; provided, that 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 well, the department may 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 ultimate spacing should be.

(C) Except where circumstances 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 or shape of any spacing unit or units or may change the size or shape of one or more existing spacing units. Where spacing units of different sizes or shapes exist in a pool, the department shall, if necessary, make such adjustment of the allowable production from the well or wells drilled thereon so that each person entitled thereto in each spacing unit will have a reasonable opportunity to produce or receive his just and equitable share of the production.

(D) An order establishing spacing units 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 notice of the hearing to consider spacing. 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. In so doing, the department shall, if necessary, make such an adjustment of the allowable production from the well drilled thereon so that each person entitled thereto in such spacing unit shall not produce or receive more than his just and equitable share of the production.

(E) An order establishing spacing units for a pool shall cover all lands determined or believed to be underlain by such pool, and may be modified by the department from time to time to include additional lands determined to be underlain by such pool or to exclude lands determined not to be underlain by such pool.

(F) An order establishing spacing units may be modified by the department to change the size and shape of one or more spacing units, or to permit the drilling of additional wells on a reasonably uniform pattern.

(G) After the date of the notice for a hearing called 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: 1977 Act No. 179, Part 1, Section 6; 1993 Act No. 181, Section 1236.