§ 522. Drilling units

(a) The Board shall regulate the spacing and location of oil and gas wells by the establishment of drilling units whenever reasonably necessary to prevent waste and protect correlative rights.

(b) The Board may establish an exploratory unit whenever a well is to be drilled to test for the occurrence of a reservoir. The order establishing the exploratory drilling unit shall specify the size and shape of the exploratory unit.

(1) To the extent that available geological and engineering information permit such a determination to be made, the exploratory unit shall be no smaller than the area expected to be drained by the exploratory well and shall be no larger than the expected total area of the reservoir.

(2) If insufficient information is available, the Board may establish a temporary unit to ensure orderly development of the reservoir pending the availability of additional information.

(c) The Board may establish the size and shape of development drilling units in known reservoirs based upon available geological and engineering data.

(1) The size of a development drilling unit shall be the area that can be efficiently and economically drained by one well. If insufficient information is available to permit such a determination to be made, the Board may establish a temporary development unit pending the availability of the necessary information. In order that all owners are accorded substantially equal treatment, development units shall be of approximately uniform size if consistent with available geological and engineering information.

(2) A well shall be located on a development drilling unit in accordance with a reasonably uniform field-wide spacing pattern, except for wells drilled or being drilled at the time a notice of hearing was issued. If the Board finds that a well drilled in a uniform spacing pattern would not be likely to produce in economic quantities, or that surface conditions would substantially add to the burden or hazard of drilling the well, or for other good cause, the well may be drilled at another location.

(3) An order establishing development drilling units for a reservoir shall cover all lands believed to be underlain by that reservoir, and may be modified by the Board from time to time based on additional geological and engineering information. The Board may grant exceptions to the size and shape of any development unit or units, or may change the size or shape of any development unit or units, or may permit the drilling of additional wells if such actions are reasonably necessary to prevent waste or protect correlative rights.

(4) After the date of the notice of hearing called to establish development units in a reservoir, unless expressly authorized by the Board, no well shall be commenced into that reservoir until an order establishing development drilling units has been adopted. (Added 1981, No. 240 (Adj. Sess.), § 2, eff. April 28, 1982.)