- Alaska Statutes.
- Title 31. Oil and Gas
- Chapter 5. Alaska Oil and Gas Conservation Act
- Section 100. Establishment of Drilling Units For Pools.
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. Waste Prohibited.
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. Unitization and Unitized Operation of Pools and Integration of Interests By Agreement.
AS 31.05.100. Establishment of Drilling Units For Pools.
- (a) For the prevention of waste, to protect and enforce the correlative rights of lessees in a pool, and to avoid the
augmenting and accumulation of risks arising from the drilling of an excessive number of wells, or the reduced recovery
which might result from too small a number of wells, the commission shall, after a hearing, establish a drilling unit
or units for each pool. The establishment of a unit for gas shall be limited to the production of gas.
- (b) Each well permitted to be drilled on a drilling unit shall be drilled under the rules and regulations and in
accordance with the spacing pattern as the commission prescribes for the pool in which the well is located. Exceptions
to the rules and spacing pattern may be granted where it is shown, after notice and hearing, that the unit is partly
outside the pool, or for some other reason a well so located on the unit would be nonproductive, or topographical
conditions are such as to make the drilling at such a location unduly burdensome. If an exception is granted, the
commission shall take such action as will offset any advantage which the person securing the exception may have over
other producers by reason of the drilling of the well as an exception, and so that drainage from developed units to the
tract with respect to which the exception is granted will be prevented or minimized, and the producer of the well
drilled as an exception will be allowed to produce no more than a just and equitable share of the oil and gas in the
- (c) When two or more separately owned tracts of land are embraced within an established drilling unit, persons owning the
drilling rights in it and the right to share in the production from it 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 enter an order
pooling and integrating their interests for the development of their lands as a drilling unit for the prevention of
waste, for the protection of correlative rights, or to avoid the drilling of unnecessary wells. Orders effectuating
such pooling shall be made after notice and hearing, and shall be upon terms and conditions which will afford to the
owner of each tract the opportunity to recover or receive the owner's just and equitable share of the oil and gas in
the pool without unnecessary expense. Operations incident to the drilling of a well upon a portion of a unit covered by
a pooling order shall be considered for all purposes to be the conduct of the operation upon each separately owned
tract in the unit by the several lessees of it. The portion of the production allocated to the lessee 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 on it. If pooling is effectuated, the cost of development and operation of the pooled
unit chargeable by the operator to the other interested lessee is limited to the actual and reasonable expenditures for
this purpose, including a reasonable charge for supervision. As to lessees who refuse to agree upon pooling, the order
shall provide for reimbursement for costs chargeable to each lessee out of, and only out of, production from the unit
belonging to such lessee. In the event of a dispute relative to the costs, the commission shall determine the proper
costs upon notice to all interested parties and hearing. Appeals may be taken from the determination as from any other
order of the commission. If a lessee drills and operates, or pays the expense of drilling and operating the well for
the benefit of others, then in addition to any other right conferred by the pooling order, the lessee drilling or
operating has a lien on the share of production from the unit accruing to the interest of each of the other lessees for
the payment of the proportionate share of such expenses. All the oil and gas subject to the lien, or so much of the
oil and gas subject to the lien as is 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.
- (d) The commission shall, in all instances where a unit has been formed out of lands or areas of more than one ownership,
require the operator, upon request of a lessee, but subject to the right of the operator to market production and
collect the proceeds with respect to a lessee in default, as provided in (c) of this section, to deliver to the lessee
or assigns the lessee's proportionate share of the production from the well common to the drilling unit. The lessee
receiving a share shall provide at the lessee's own expense proper receptacles for the receipt and storage of it.
- (e) If persons owning the drilling or other rights in separate tracts embraced within a drilling unit fail to agree upon
the pooling of the tracts and the drilling of the 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 chapter, the
lessee of each tract embraced within the drilling unit may drill on the lessee's 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 the
separately owned tract bears to the full drilling unit.
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