Application for Authorization of Unitization for Enhanced Recovery

PURPOSE: This rule sets forth a procedure for small- to large-scale cooperative development and operation projects that are designed to maximize ultimate recovery of oil and gas from the entirety of a single pool or particular portion thereof through the use of enhanced recovery projects within production units. Similar to the pooling process for primary production, unitization of production units for enhanced recovery involves contractual agreements between different owners and/or operators of existing producing wells, and a decision as to which one (1) of the operators will operate the production unit as a whole. (1) The council, upon the written request of an applicant and upon receipt of the information specified in section (2) of this rule and after notice and hearing, may approve the implementation of a production unit of a specified size and shape, and a well configuration of a certain nature of operation, for the purpose of a cooperative development and operation project designed to maximize the ultimate recovery of oil or gas or both from the entirety of a single pool or particular portion thereof. All operators and owners in the proposed production unit shall enter into contractual agreement such that one (1) party is designated the operator of the production unit as a whole, and every owner pays his or her mutually agreed fair share of the drilling and operating costs and receives his or her fair share of the oil, gas, or both produced from the unit, or the profits derived from such production. Contractual agreement is achieved by way of the unitization process, which is either voluntary or involuntary as defined as follows: (A) A voluntary unitization occurs when all operators and owners in the proposed production unit area are able to enter into a private contractual agreement willingly and of their own accord; and (B) An involuntary unitization occurs when one (1) or more operators or owners are not able to enter into a private contractual agreement willingly and of their own accord, and the council, upon application by any person or party representing the voluntarily agreed production unit proponents that collectively hold at least seventy-five percent (75%) of the right to drill into and to produce oil and gas from the pool and at least seventy-five percent (75%) of all mineral interest and after notice and hearing, may approve the implementation of the production unit and issue a unitization order that serves as a binding contractual agreement for all parties and that, if necessary, designates the operator of the production unit as a whole. (2) Any applicant for a production unit for the purpose of a cooperative development and operation project for enhanced recovery shall provide the following information to the council thirty (30) calendar days prior to the date of hearing: (A) A description of the proposed production unit area, as specified in 10 CSR 503.020(2); (B) A detailed description of the exact nature of the proposed unit operations; and (C) Conformed copies of the applicable agreements, which may be composites of the executed counterparts. AUTHORITY: sections 259.110 and 259.120, RSMo 2000.* Original rule filed Sept. 15, 2015, effective March 30, 2016. *Original authority: 259.110, RSMo 1965 and 259.120, RSMo 1965, amended 1972. Agreements for Oil and Gas Pools