45-9-39. Order of board for unit operation of a pool--Terms and conditions--Prescribing plan of operation--Essential elements of plan.

440 words·~2 min read·/sd/title-45/chapter-45-9/45-9-39

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

The order for unit operation shall be upon terms and conditions that are just and reasonable and shall prescribe a plan for unit operations that shall include:

(1)A description of the pool or pools or parts thereof to be so operated, termed the unit area;

(2)A statement of the nature of the operations contemplated;

(3)An allocation to the separately owned tracts in the unit area of the oil and gas that is produced from the unit area and is saved, being the production that is not used in the conduct of operations on the unit area or not unavoidably lost. The allocation shall be in accord with the agreement, if any, of the interested parties. If there is no such agreement, the Board of Minerals and Environment shall determine the relative value, from evidence introduced at the hearing, of the separately owned tracts in the unit area, exclusive of physical equipment, for development of oil and gas by unit operations, and the production allocated to each tract shall be the proportion that the relative values of each tract so determined bears to the relative value of all tracts in the unit area;

(4)A provision for the credits and charges to be made in the adjustment among the owners in the unit area for their respective investments in wells, tanks, pumps, machinery, materials, and equipment contributions to the unit operations;

(5)A provision providing how the costs of unit operations, including capital investments, shall be determined and charged to the separately owned tracts and how said costs shall be paid, including a provision when, how, and by whom the unit production allocated to an owner who does not pay the share of the cost of unit operations charged to such owner, or the interest of such owner, may be sold and the proceeds applied to the payment of such costs;

(6)A provision, if necessary, for carrying or otherwise financing any person who elects to be carried or otherwise financed, allowing a reasonable interest charge for such service payable out of such person's share of the production;

(7)A provision for the supervision and conduct of the unit operations in respect to which each person shall have a vote with a value corresponding to the percentage of the costs of unit operations chargeable against the interest of such person;

(8)The time when the unit operations shall commence, and the manner in which, and the circumstances under which, the unit operations shall terminate; and

(9)Such additional provisions that are found to be appropriate for carrying on the unit operations, and for the protection of correlative rights.