00                            HOUSE BILL NO. 349                                                                          
01 "An Act relating to the establishment of oil and gas drilling units and patterns."                                      
02 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
03    * Section 1. AS 31.05.100(a) is amended to read:                                                                     
04 (a)  For the prevention of waste, to protect and enforce the correlative rights of                                      
05 lessees in a pool, and to avoid the augmenting and accumulation of risks arising from                                   
06 the drilling of an excessive number of wells, or the reduced recovery that [WHICH]                                    
07 might result from too small a number of wells, the commission may [SHALL, AFTER                                       
08 A HEARING,] establish a drilling unit or units for each pool. The establishment of a                                    
09       unit for gas shall be limited to the production of gas.                                                           
10    * Sec. 2. AS 31.05.100(b) is amended to read:                                                                        
11 (b)  Each well permitted to be drilled on a drilling unit shall be drilled under                                        
12 the rules and regulations and in accordance with the spacing pattern as the commission                                  
13 prescribes for the pool in which the well is located. Exceptions to the rules and                                       
14 spacing pattern may be granted where it is shown [, AFTER NOTICE AND                                                    
15 HEARING,] that the unit is partly outside the pool, or that for some other reason a                                   

01 well [SO] located on the unit would be nonproductive, or topographical conditions                                       
02 [ARE SUCH AS TO] make the drilling at [SUCH] a location unduly burdensome. If                                           
03 an exception is granted, the commission shall take [SUCH] action to [AS WILL]                                         
04 offset any advantage that [WHICH] the person securing the exception may have over                                     
05 other producers because [BY REASON] of the drilling of the well as an exception,                                      
06 and so that drainage from developed units to the tract with respect to which the                                        
07 exception is granted will be prevented or minimized, and the producer of the well                                       
08 drilled as an exception will be allowed to produce not [NO] more than a just and                                      
09       equitable share of the oil and gas in the pool.