Arizona Laws 27-504. Drilling units; rules and regulations; exceptions
A. For the prevention of waste, to protect and enforce the correlative rights of owners in a pool, and to avoid augmentation and accumulation of risks arising from drilling an excessive number of wells, or reduced recovery which might result from too small a number of wells, the commission shall, after a hearing, establish a drilling unit or units for each pool. The establishment of a unit for gas shall be limited to the production of gas.
Terms Used In Arizona Laws 27-504
- Action: includes any matter or proceeding in a court, civil or criminal. See Arizona Laws 1-215
- drilling unit: means the maximum area in a pool which may be drained efficiently by one well to produce the reasonable maximum amount of recoverable oil or gas in the area. See Arizona Laws 27-501
- Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
- Gas: means natural gas, casinghead gas, all other hydrocarbons not defined as oil, carbon dioxide and helium or other substances of a gaseous nature. See Arizona Laws 27-501
- Oil: means crude petroleum oil and all other hydrocarbons, regardless of gravity, which are produced at a well in liquid form by ordinary production methods and which are not the result of condensation of gas. See Arizona Laws 27-501
- Person: includes a corporation, association, partnership, receiver, trustee, guardian, executor, administrator, fiduciary or representative or any group acting as a unit and includes any department, agency or instrumentality of the state or any of its governmental subdivisions. See Arizona Laws 27-501
- Pool: means an underground reservoir containing a common accumulation of oil or gas, or both, and includes each zone of a general structure completely separated from any other zone in the structure. See Arizona Laws 27-501
- Producer: means the owner of a well capable of producing oil or gas. See Arizona Laws 27-501
- Waste: includes :
(a) Physical waste, as that term is generally understood in the oil and gas industry. See Arizona Laws 27-501
- Well: includes any hole drilled or spudded in for the purpose, with the intention or under the representation of penetrating oil or gas bearing strata or of penetrating any strata in search of stratigraphic data pertinent to the location of oil or gas bearing strata, whether or not in either case oil or gas is actually discovered, any hole used in connection with the underground storage of hydrocarbon substances, whether liquid or gaseous, any hole used in connection with a process to inject any substance for purposes of disposal or to increase recovery, any hole used for the purpose of secondary or tertiary recovery and any hole used for the purpose of pressure maintenance. See Arizona Laws 27-501
B. Each well permitted to be drilled on a drilling unit shall be drilled under the applicable rules and regulations and in accordance with the applicable spacing pattern prescribed by the commission. Exceptions to the rules and spacing pattern may be granted where it is shown, after notice and hearing, that the unit is partly outside the pool or, for some other reason, a well so located on the unit would be non-productive. Exceptions permitting a proposed well to be drilled on an unorthodox location may be granted on the basis of topography or terrain without notice or hearing.
C. If an exception is granted, the commission shall take action which will offset any advantage which the person securing the exception may have over other producers by reason of drilling the well as an exception, and so that drainage from developed units to the tract with respect to which the exception is granted will be prevented or minimized, and the producer of the well drilled as an exception will be allowed to produce no more than a just and equitable share of the oil and gas in the pool.