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Regular Session, 2012
HOUSE BILL NO. 504
BY REPRESENTATIVE DOVE
ENERGY/DRILLING UNITS: Provides relative to pooling of ultra deep drilling structures
AN ACT1
To amend and reenact R.S. 30:5.1, relative to pooling of oil and gas wells; to provide for2
authority of the commissioner of conservation to create such pools; to provide for3
applications, allocation of costs, and rules and regulations; and to provide for related4
matters.5
Be it enacted by the Legislature of Louisiana:6
Section 1. R.S. 30:5.1 is hereby amended and reenacted to read as follows:7
ยง5.1. Deep pool order; ultra deep structure units; application; procedure; allocation8
of costs; rules and regulations9
A. The following shall be applicable to deep pool units:10
(1) In order to prevent waste and to avoid the drilling of unnecessary wells,11
and to encourage the development of deep oil and gas pools in Louisiana, the12
commissioner of conservation is authorized, as provided in this Section Subsection,13
to establish a single unit to be served by one or more wells for a deep pool and to14
adopt a development plan for such deep unit.15
B. (2) Without in any way modifying the authority granted to the16
commissioner in R.S. 30:9(B) to establish a drilling unit or units for a pool and in17
addition to the authority conferred in R.S. 30:5, the commissioner upon the18
application of any interested party may enter an order requiring the unit operation of19 HLS 12RS-189 ENGROSSED
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any deep pool when such unit operation will promote the development of such deep1
pools, prevent waste, and avoid the drilling of unnecessary wells.2
C. (3) In connection with such order, the commissioner shall have the right3
to establish a unit for a deep pool and to unitize, force pool, and consolidate all4
separately owned tracts and other property ownerships within such unit. Any order5
creating a unit for a deep pool shall be issued only after notice and public hearing6
and shall be based on findings that:7
(1) (a) The order is reasonably necessary to promote the development of a8
deep pool and for the prevention of waste and the drilling of unnecessary wells.9
(2) (b) The proposed unit operation is economically feasible.10
(3) (c) The geologic top of the deep pool was encountered in the initial well11
for the pool at a depth in excess of fifteen thousand feet true vertical depth but less12
than twenty-two thousand feet true vertical depth.13
(4) (d) Sufficient evidence exists to reasonably establish the limits of the deep14
pool.15
(5) (e) The plan of development for the unit is reasonable. The plan shall be16
revised only if approved by the commissioner after notice and public hearing.17
D. (4) The order shall provide for the initial allocation of unit production on18
a surface acreage basis to each separately owned tract within the unit.19
E. (5) No order shall be issued by the commissioner unless interested parties20
have been provided a reasonable opportunity to review and evaluate all data submitted21
by the applicant to the commissioner to establish the limits of the deep pool, including22
seismic data.23
F. (6) The order creating the unit shall designate a unit operator and shall also24
make provision for the proportionate allocation to the owners (lessees or owners of25
unleased interests) of the costs and expenses of the unit operation, which allocation26
shall be in the same proportion that the separately owned tracts share in unit27
production. The cost of capital investment in wells and physical equipment and28
intangible drilling costs, in the absence of voluntary agreement among the owners to29 HLS 12RS-189 ENGROSSED
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the contrary, shall be shared in like proportion. However, no such owner who has not1
consented to the unitization shall be required to contribute to the costs or expenses of2
the unit operation or to the cost of capital investment in wells and physical equipment3
and intangible drilling costs except out of the proceeds of production accruing to the4
interest of such owner out of production from such unit operation. In the event of a5
dispute relative to the calculation of unit well costs or depreciated unit well costs, the6
commissioner shall determine the proper costs after notice to all interested owners7
and public hearing thereon.8
G. (7) Upon application and after notice and public hearing and consideration9
of all new available geological and engineering evidence, the commissioner, to the10
extent required by such evidence, may create, revise, or dissolve any unit provided11
for under this Section Subsection or modify any provision of any order issued12
hereunder. Any such order shall provide for the allocation of unit production on a just13
and equitable basis to each separately owned tract within the unit.14
H. (8) The commissioner shall prescribe, issue, amend, and rescind such15
orders, rules, and regulations as he may find necessary or appropriate to carry out the16
provisions of this Section Subsection.17
I. (9) While this Section Subsection authorizes the initial creation of a single18
unit to be served by one or more wells, nothing herein shall be construed as limiting19
the authority of the commissioner to approve the drilling of alternate unit wells on20
drilling units established pursuant to R.S. 30:9(B).21
B. The following shall be applicable to ultra deep structure units:22
(1) In order to prevent waste and to avoid the drilling of unnecessary wells,23
and to encourage the development of ultra deep oil and gas structures in Louisiana,24
the commissioner of conservation is authorized, as provided in this Subsection, to25
establish a single unit to be served by one or more wells for an ultra deep structure26
and to adopt a development plan for such ultra deep structure unit. For purposes of27
this statute, a "structure" is defined as a unique geologic feature that potentially traps28
hydrocarbons in one or more pools or zones.29 HLS 12RS-189 ENGROSSED
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(2) Without in any way modifying the authority granted to the commissioner1
by R.S. 30:9(B) to establish a drilling unit or units for a pool and in addition to the2
authority conferred by R.S. 30:5 and 5.2, the commissioner, upon the application of3
any interested party, may enter an order requiring the unit operation of any ultra deep4
structure when such unit operation will promote the development of such ultra deep5
structure, prevent waste, and avoid the drilling of unnecessary wells.6
(3) In connection with such order, the commissioner shall have the right to7
establish a unit no greater than nine thousand acres for an ultra deep structure and to8
unitize, force pool, and consolidate all separately owned tracts and other property9
ownerships within such unit. Any order creating a unit for an ultra deep structure10
shall be issued only after notice and public hearing and shall be based on findings11
that:12
(a) The order is reasonably necessary to promote the development of an ultra13
deep structure and to prevent waste and the drilling of unnecessary wells.14
(b) The proposed unit operation appears economically feasible.15
(c) The stratigraphic top of the ultra deep structure unit is encountered or16
anticipated to be encountered in the initial well for the structure at a depth in excess17
of twenty-two thousand feet true vertical depth.18
(d) Sufficient evidence exists to reasonably establish the limits of the ultra19
deep structure.20
(e)(i) The plan of development for the unit is reasonable and includes the21
following:22
(aa) The applicant's estimate of the number of wells planned to be drilled in23
the unit.24
(bb) The applicant's time table for drilling and completing unit wells.25
(cc) The applicant's target depth for each such well.26
(ii) There shall be a presumption that the plan of development shall include27
one well for each three thousand acres contained in the unit.28 HLS 12RS-189 ENGROSSED
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(4) The plan of development may be subsequently revised by the1
commissioner after notice and public hearing.2
(5) The order shall provide for the initial allocation of unit production on a3
surface acreage basis to each separately owned tract within the unit. The order shall4
also specify the stratigraphic intervals to which the unit shall be limited.5
(6) No order shall be issued by the commissioner unless interested parties6
have been provided a reasonable opportunity to review and evaluate all data,7
including seismic data, submitted by the applicant to the commissioner to establish8
the limits of the deep structure.9
(7) The order creating the unit shall make provision for the proportionate10
allocation to the owners (lessees or owners of unleased interests) of the costs and11
expenses of the unit operation, which allocation shall be in the same proportion that12
the separately owned tracts share in unit production. The cost of capital investment13
in wells and physical equipment and intangible drilling costs, in the absence of14
voluntary agreement among the owners to the contrary, shall be shared in like15
proportion. The initial well and each subsequent well proposed or drilled pursuant16
to the plan of development shall be deemed a unit well. The provisions of R.S.17
30:10(A)(2) shall be applicable to ultra deep structure units, including the applicable18
risk charge. In the event of a dispute relative to the calculation of unit well costs or19
depreciated unit well costs, the commissioner shall determine the proper costs after20
notice to all interested owners and public hearing thereon.21
(8) Upon application, or at the commissioner's discretion, and after notice and22
public hearing and consideration of available geological, engineering, and other23
relevant evidence, including new evidence, the commissioner, to the extent required24
by such evidence, may create, revise, confirm, or dissolve any unit provided for under25
this Subsection or modify any provision of any order issued hereunder. Any such26
order shall provide for the allocation of unit production on a just and equitable basis27
to each separately owned tract within the unit.28 HLS 12RS-189 ENGROSSED
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(9) The provisions of Subsection A of this Section shall not be applicable to1
any unit well drilled in a unit established pursuant to this Subsection.2
(10) The commissioner shall prescribe, issue, amend, and rescind such orders,3
rules, and regulations as he may find necessary or appropriate to carry out the4
provisions of this Subsection.5
(11) While the provisions of this Subsection authorize the initial creation of6
a single unit to be served by one or more wells, nothing herein shall be construed as7
limiting the authority of the commissioner to approve the drilling of alternate unit8
wells on drilling units established pursuant to R.S. 30:9(B).9
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Dove HB No. 504
Abstract: Authorizes unitization of ultra deep (22,000 feet or more) oil and gas structures.
Present law authorizes unitization of deep oil and gas wells and pools. Provides such
authorization applies to pools where the initial well is more than 15,000 feet true vertical
depth. Limits units to 9,000 acres.
Proposed law authorizes the commissioner of conservation to unitize wells for an ultra deep
structure (where true vertical depth is more than 22,000 feet) and to adopt a development plan
for such ultra deep structure unit. Authorizes the commissioner to unitize, force pool, and
consolidate all separately owned tracts and other property ownerships within the unit based
on the following findings:
(1)That the order is reasonably necessary to promote the development of the structure.
(2)That the unit operation appears economically feasible.
(3)That the top of the structure is at a true vertical depth of more than 22,000 feet.
(4)That sufficient evidence exists to reasonably establish the limits of the structure.
(5)That the plan of development is reasonable and includes information as to the number
of wells planned, the drilling time table, the target depth for each well, and a
presumption that the plan includes one well for each 3,000 acres in the unit.
Requires that the initial allocation of unit production be based on the surface acreage
separately owned within the unit. Requires opportunity for public review of an order
establishing a unit. Requires that the order specify a stratigraphic interval limit.
Requires that the order establishing the unit provide for proportionate allocation to the lessees
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investment in wells and equipment. Requires that the initial well drilled is a unit well.
Provides that the commissioner shall determine the proper costs in the event of a dispute.
Authorizes the commissioner to dissolve or modify a unit based on technical information.
Provides that the law relative to deep pools is not applicable to ultra deep structures and
requires the commissioner to promulgate rules necessary for this law to take effect.
(Amends R.S. 30:5.1)
Summary of Amendments Adopted by House
Committee Amendments Proposed by House Committee on Natural Resources and
Environment to the original bill.
1. Limited units to 9,000 acres.
2. Required the plan of development to include information as to the number of
wells planned, the drilling time table, the target depth for each well, and a
presumption that the plan includes one well for each 3,000 acres in the unit.
3. Required that the unit order specify a stratigraphic interval limit for the wells.