Arizona Laws 27-666. Pooling
A. When two or more separately owned tracts of land are embraced within an established drilling unit, persons owning the drilling rights therein and the right to share in the production therefrom may agree to pool their interests and develop their lands as a drilling unit. If the persons do not agree to pool their interests, the commission may, upon application of one or more owners within the drilling unit in question and for prevention of waste, for protection of correlative rights, or to avoid drilling of unnecessary wells, enter an order pooling and integrating their interests for the development of their lands as a drilling unit. Orders effectuating such pooling shall be made after notice and hearing, and shall be upon terms and conditions which will afford the owner of each tract the opportunity to recover or receive his just and equitable share of the geothermal resources in the pool without unnecessary expense. Operations incident to drilling a well upon any portion of a unit covered by a pooling order shall be deemed for all purposes to be the conduct of such operations upon each separately owned tract in the unit by the several owners thereof. The portion of the production allocated to the owner of each tract included in a drilling unit formed by a pooling order shall, when produced, be considered as if it had been produced from the tract by a well drilled thereon. If such pooling is effectuated, the cost of development and operation of the pooled unit chargeable by the operator to other interested owners shall be limited to the actual and reasonable expenditures required for that purpose, including a reasonable charge for supervision. As to owners who refuse to agree upon pooling, the order shall provide for reimbursement for costs chargeable to each such owner out of, and only out of, production from the unit belonging to such owner. In event of dispute relative to such costs, the commission shall, upon notice to all interested parties and hearing thereon, determine the proper costs. Appeals may be taken from the determination as from any other order of the commission. If one or more of the owners drills and operates, or pays the expense of drilling and operating the well for the benefit of others, then, in addition to any other rights conferred by the pooling order, the owner or owners so drilling or operating shall have a lien on the share of production from the unit accruing to the interest of each of the other owners for the payment of his proportionate share of the expenses. All the geothermal production subject to the lien, or so much thereof as necessary, shall be marketed and sold by the creditor and the proceeds applied in payment of the expenses secured by the lien, with the balance if any payable to the debtor.
Terms Used In Arizona Laws 27-666
- Commission: means the oil and gas conservation commission. See Arizona Laws 27-651
- 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
- Geothermal resources: means :
(a) All products of geothermal processes embracing indigenous steam, hot water and hot brines. See Arizona Laws 27-651
- including: means not limited to and is not a term of exclusion. See Arizona Laws 1-215
- Lien: A claim against real or personal property in satisfaction of a debt.
- Operator: means any person drilling, maintaining, operating, pumping or in control of any well, and includes the owner, when any well is or has been or is about to be operated or under the direction of the owner. See Arizona Laws 27-651
- Owner: means and includes the operator when any well is operated or has been operated or is about to be operated by any person other than the owner. See Arizona Laws 27-651
- Waste: means any physical waste including, but not limited to, underground waste resulting from the inefficient, excessive or improper use or dissipation of reservoir energy or resulting from the location, spacing, drilling, equipping, operation or production of a geothermal resources well in such a manner that reduces or tends to reduce the ultimate economic recovery of the geothermal resources within a reservoir, and surface waste resulting from the inefficient storage or utilization of geothermal resources and the location, spacing, drilling, equipping, operation or production of a geothermal resources well in such a manner that causes or tends to cause the unnecessary or excessive surface loss or destruction of geothermal resources obtained or released from the reservoir. See Arizona Laws 27-651
- Well: means any well drilled in search of geothermal resources or any development well on lands in areas proved to be underlain by one or more formations containing geothermal resources or reasonably presumed to contain geothermal resources or any well drilled for information purposes, or any producing well or reentered abandoned well used for the injection of fluids into the geothermal formation or disposition of fluids into nongeothermal formations, or any well drilled for the purpose of stimulating the heat of a formation or for the creation of heat in a formation by nuclear or any other form of energy. See Arizona Laws 27-651
B. The commission shall, in all instances where a unit has been formed from lands or areas of more than one ownership, require the operator, upon request of an owner, but subject to the right of the operator to market production and collect the proceeds with respect to an owner in default, as provided in subsection A.
C. If the persons owning and drilling or exercising other rights in separate tracts embraced within a drilling unit fail to agree upon the pooling of the tracts and drilling of a well on the unit, and if the commission is without authority to require pooling as provided by this section, then, subject to all other applicable provisions of this article, the owner of each tract embraced within the drilling unit may drill on his tract, but the allowable production from the tract shall be the proportion of the allowable production for the full drilling unit as the area of such separately owned tract bears to the full drilling unit.