00                       CS FOR HOUSE BILL NO. 349(CRA)                                                                    
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                                       
05 [OF LESSEES IN A POOL], and to avoid the augmenting and accumulation of risks                                           
06 arising from the drilling of an excessive number of wells, or the reduced recovery that                               
07 [WHICH] might result from too small a number of wells, the commission may                                             
08 [SHALL, AFTER A HEARING,] establish a drilling unit or units for each pool. The                                         
09       establishment of a 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.                                                                   
10    * Sec. 3. AS 31.05.100 is amended by adding a new subsection to read:                                                
11            (f)  The commission may adopt well spacing regulations to protect correlative                                
12       rights in a pool without a drilling unit or units established under this section.