SB 244: "An Act relating to the establishment of oil and gas drilling units, spacing, and patterns."

00 SENATE BILL NO. 244 01 "An Act relating to the establishment of oil and gas drilling units, spacing, and 02 patterns." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 31.05.100(a) is amended to read: 05 (a) For the prevention of waste, to protect and enforce [THE] correlative rights 06 [OF LESSEES IN A POOL], and to avoid the augmenting and accumulation of risks 07 arising from the drilling of an excessive number of wells, or the reduced recovery that 08 [WHICH] might result from too small a number of wells, the commission may 09 [SHALL, AFTER A HEARING,] establish a drilling unit or units for each pool. The 10 establishment of a unit for gas shall be limited to the production of gas. 11 * Sec. 2. AS 31.05.100(b) is amended to read: 12 (b) Each well permitted to be drilled on a drilling unit shall be drilled under 13 the rules and regulations and in accordance with the spacing pattern as the commission 14 prescribes for the pool in which the well is located. Exceptions to the rules and

01 spacing pattern may be granted where it is shown [, AFTER NOTICE AND 02 HEARING,] that the unit is partly outside the pool, or that for some other reason a 03 well [SO] located on the unit would be nonproductive, or topographical conditions 04 [ARE SUCH AS TO] make the drilling at [SUCH] a location unduly burdensome. If 05 an exception is granted, the commission shall take [SUCH] action to [AS WILL] 06 offset any advantage that [WHICH] the person securing the exception may have over 07 other producers because [BY REASON] of the drilling of the well as an exception, 08 and so that drainage from developed units to the tract with respect to which the 09 exception is granted will be prevented or minimized, and the producer of the well 10 drilled as an exception will be allowed to produce not [NO] more than a just and 11 equitable share of the oil and gas in the pool. 12 * Sec. 3. AS 31.05.100 is amended by adding a new subsection to read: 13 (f) The commission may adopt well spacing regulations to protect correlative 14 rights.