2007 Oregon Code - Chapter 520 :: Chapter 520 - Conservation of Gas and Oil
Chapter 520 —
Conservation of Gas and Oil
2007 EDITION
CONSERVATION OF GAS AND OIL
MINERAL RESOURCES
GENERAL PROVISIONS
520.005Â Â Â Â Definitions
520.017Â Â Â Â Fees;
rules; disposition of fees
520.025Â Â Â Â Permit
for drilling well or using well; extension; annual report; grounds for granting
or denying permit
520.027Â Â Â Â Information
holes; holes drilled as part of seismic program; trade secrets
520.035Â Â Â Â Waste
of oil or gas prohibited
520.045Â Â Â Â Determination
of waste of oil or gas
520.055Â Â Â Â General
jurisdiction and authority of board; tidal lands; rules
520.095Â Â Â Â Rules
and orders; bond
520.097Â Â Â Â Abandonment
or completion of well; well logs and records; trade secrets
520.125Â Â Â Â Authority
of board to summon witnesses and require production of evidence
520.145Â Â Â Â Judicial
review of board or department actions
520.155Â Â Â Â Records,
accounts, reports and writings not to be falsified, altered, destroyed or
removed from state
520.165Â Â Â Â Aiding
or abetting in violation of chapter prohibited
520.175Â Â Â Â Injunctions
to restrain violation or threatened violation of chapter
SPACING UNITS
520.210Â Â Â Â Establishment
of spacing units for pool or field; purpose; scope; effect
520.220Â Â Â Â Integrating
interests or tracts within spacing unit
UNIT OPERATIONS
520.230Â Â Â Â Approved
agreement for cooperative or unit development of pool not to be construed as
violating certain regulatory laws
520.240Â Â Â Â Voluntary
unitization of operations by lessees of tidal or submersible lands; Department
of State LandsÂ’ function
520.260Â Â Â Â Hearing
to determine need for unitization of operations; required findings; order
520.270Â Â Â Â Plan
for unit operations
520.280Â Â Â Â Allocation
of production under plan; ownership
520.290Â Â Â Â When
unitization order to become effective; supplemental hearings
520.300Â Â Â Â Amending
unitization order
520.310Â Â Â Â Unitization
of area including area previously unitized; partial unitization of pool
520.320Â Â Â Â Unitization
order does not terminate prior agreements or affect oil and gas rights;
acquisition of property during unit operations
520.330Â Â Â Â Effect
of operations in unit area
UNDERGROUND RESERVOIRS
520.340Â Â Â Â Legislative
findings
520.350Â Â Â Â Property
rights in underground reservoirs for natural gas storage
PENALTIES
520.991Â Â Â Â Penalties
GENERAL PROVISIONS
     520.005
Definitions. As used in this
chapter, unless the context requires otherwise:
     (1) “Condensate” means liquid hydrocarbons
that were originally in the gaseous phase in the reservoir.
     (2) “Field” means the general area
underlaid by one or more pools.
     (3) “Gas” means all natural gas and all
other fluid hydrocarbons not defined as oil in subsection (5) of this section,
including condensate originally in the gaseous phase in the reservoir.
     (4) “Information hole” means a hole
drilled for information purposes only, including but not limited to core holes,
stratigraphic holes or other test holes.
     (5) “Oil” means crude petroleum oil and
all other hydrocarbons, regardless of gravity, that are produced in liquid form
by ordinary production methods, but does not include liquid hydrocarbons that
were originally in a gaseous phase in the reservoir.
     (6) “Person” means any natural person,
partnership, corporation, association, receiver, trustee, guardian, fiduciary,
executor, administrator, representative of any kind, or the State of
     (7) “Pool” means an underground reservoir
containing a common accumulation of oil and natural gas. A zone of a structure
that is completely separated from any other zone in the same structure is a
pool.
     (8) “Owner” means a person who has the
right to drill into and to produce from any pool and to appropriate the oil or
gas produced therefrom either for others, for the person or for the person and
others.
     (9) “Protect correlative rights” means
that the action or regulation by the board affords a reasonable opportunity to
each person entitled thereto to recover or receive the oil or gas in the tract
or tracts of the person or the equivalent thereof, without being required to
drill unnecessary wells or to incur other unnecessary expense to recover or
receive such oil or gas or its equivalent.
     (10) “Seismic program” means the
collection of seismic exploration data through a continuous field operation.
     (11) “Sidetrack” means to reenter a well
from the wellÂ’s surface location with drilling equipment for the purpose of
deviating from the existing well bore to achieve production from an alternate
zone or bottom hole location, or to remedy an engineering problem encountered
in the existing well bore.
     (12) “Unit area” means one or more pools
or parts thereof under unit operation pursuant to ORS 520.260 to 520.330 and
520.230 (2).
     (13) “Underground reservoir” means any
subsurface sand, strata, formation, aquifer, cavern or void whether natural or
artificially created, suitable for the injection and storage of natural gas
therein and the withdrawal of natural gas therefrom, but excluding a pool.
     (14) “Underground storage” means the
process of injecting and storing natural gas within and withdrawing natural gas
from an underground reservoir.
     (15) “Waste of oil or gas” means:
     (a) The inefficient, excessive or improper
use or dissipation of reservoir energy of any pool, or the locating, spacing,
drilling, equipping, operating or producing of any oil well or gas well in a
manner that results or may result in reducing the quantity of oil or gas
ultimately recoverable from any pool; or
     (b) The inefficient storing of oil and the
locating, spacing, drilling, equipping, operating or producing of oil wells or
gas wells in a manner that causes or may cause unnecessary or excessive surface
loss or destruction of oil or gas.
     (16)(a) “Well” means a well drilled for
the purpose of producing or storing oil or gas or other gaseous substances,
reservoir pressure maintenance, disposal of produced fluids, and injection of
water as part of a water flood.
     (b) “Well” includes a well drilled in
search of a new or undiscovered pool, or with the intent of extending the
limits of a developed pool.
     (c) “Well” does not include an information
hole or a hole drilled as part of a seismic program. [1953 c.667 §1; 1961 c.671
§15; 1973 c.276 §1; 1977 c.296 §1; 2007 c.672 §1]
     520.010 [Repealed by 1953 c.667 §21]
     520.015 [1953 c.667 §2; 1999 c.59 §164; repealed by
2007 c.672 §24]
     520.017
Fees; rules; disposition of fees. (1) The following fees are established under this chapter:
     (a) The application fee for a permit to
drill a well, $2,000.
     (b) The fee for a request to extend the
period for completion of drilling, $500.
     (c) The fee to modify operations at a
well, $1,500.
     (d) The fee to sidetrack a well, $500.
     (e) The fee to plug and abandon a well,
$1,000.
     (f) The annual renewal fee for operation
and maintenance of a well, $1,500 the first renewal year and $500 for each
subsequent year.
     (g) The application fee for a permit to
drill an information hole is to be determined by the State Department of
Geology and Mineral Industries based on the estimated cost of review and
approval, and the number and location of holes to be drilled. The fee may not
exceed $1,000 per information hole.
     (h) The fee for approval of a seismic
program shall be determined by the department based on the estimated cost of
review and approval, but may not exceed $1,000.
     (2) The governing board of the State
Department of Geology and Mineral Industries by rule may specify a schedule of
fees for costs incurred by the department for activities related to field
designation for purposes of this section.
     (3) All moneys received by the State
Department of Geology and Mineral Industries under this section shall be paid
into the State Treasury and deposited in the General Fund to the credit of the
Geology and Mineral Industries Account established in ORS 516.070. [2007 c.672 §3]
     520.020 [Repealed by 1953 c.667 §21]
     520.025
Permit for drilling well or using well; extension; annual report; grounds for granting
or denying permit. (1) A
person may not drill or use a well without first obtaining a permit from the
State Department of Geology and Mineral Industries and posting any bond that
may be required pursuant to ORS 520.095 (1). Drilling must be completed within
one year from the date the permit is issued unless an extension is granted
under subsection (2) of this section. When drilling has been completed, the
well must be maintained under a permit until it is properly plugged and the
site is reclaimed.
     (2) An unused permit may be extended by
the department for a reasonable period upon receipt of a written request from
the permittee before the expiration date of the permit. The request shall be
accompanied by a nonrefundable fee established under ORS 520.017.
     (3) A permittee maintaining or operating a
well shall provide the department with an annual report on a form provided by
the department. Subject to the determinations in subsection (4) of this
section, a permittee shall renew the permit for a well by paying the fee
established under ORS 520.017.
     (4)(a) If upon receipt of the application
the department determines that the method and equipment to be used by the
applicant in drilling or operating the well comply with applicable laws and
rules, the department shall issue the permit.
     (b) The department may refuse to issue,
refuse to renew or revoke a permit issued pursuant to this section if the
department determines that methods or equipment to be used or being used in
drilling or operating the well do not comply with applicable laws or rules, or
that the well will not be operated and maintained or is not being operated or
maintained in compliance with the permit and applicable laws or rules. [1953
c.667 §5; 1973 c.276 §2; 1977 c.296 §3; 1981 c.146 §1; 1991 c.526 §1; 2007
c.672 §4]
     520.027
Information holes; holes drilled as part of seismic program; trade secrets. (1) A person may not drill an information
hole or a hole drilled as part of a seismic program without first applying for approval
from the State Department of Geology and Mineral Industries and paying the fee
established in ORS 520.017. The application must be submitted on a form
provided by the department and must include all information requested by the
department.
     (2) A person issued an approval under this
section shall comply with all terms of the departmentÂ’s approval and any other
applicable law or rule. The department may not require the person receiving
approval under this section to provide information from seismic programs. The
department may require the submittal of information from information holes, but
the information is a trade secret under ORS 192.501 and is not subject to
public disclosure under ORS 192.410 to 192.505. [2007 c.672 §6]
     520.030 [Repealed by 1953 c.667 §21]
     520.035
Waste of oil or gas prohibited.
The waste of oil or gas, as defined in ORS 520.005, is prohibited. [1953 c.667 §3;
2007 c.672 §7]
     520.040 [Repealed by 1953 c.667 §21]
     520.045
Determination of waste of oil or gas. The State Department of Geology and Mineral Industries may determine
whether waste of oil or gas over which it has jurisdiction exists or is
imminent. In the exercise of such power the department may:
     (1) Collect data.
     (2) Make investigations and inspections.
     (3) Examine properties, leases, papers,
books and records, including drilling records and logs.
     (4) Examine, check, test and gauge oil and
gas wells and tanks.
     (5) Hold hearings.
     (6) Provide for the keeping of records and
the making of reports.
     (7) Take such action as may be reasonably
necessary to enforce this chapter. [1953 c.667 §6; 2007 c.672 §8]
     520.050 [Repealed by 1953 c.667 §21]
     520.055
General jurisdiction and authority of board; tidal lands; rules. (1) The governing board of the State
Department of Geology and Mineral Industries has jurisdiction and authority
over all persons and property, including tidal submerged and submersible lands
of this state under ORS 274.705 to 274.860, necessary to enforce effectively
this chapter and all other laws relating to the conservation of oil and gas.
     (2) In addition to and not in lieu of any
other powers granted under this chapter, the board may adopt rules and issue
orders necessary to regulate geological, geophysical and seismic surveys on,
and operations to remove sulfur from, the tidal submerged and submersible lands
of this state under ORS 274.705 to 274.860. [1953 c.667 §4; subsection (2)
enacted as 1961 c.619 §40; 1969 c.594 §57; 2007 c.672 §9]
     520.060 [Repealed by 1953 c.667 §21]
     520.065 [1953 c.667 §8; renumbered 520.210]
     520.070 [Repealed by 1953 c.667 §21]
     520.075 [1953 c.667 §9; 1961 c.671 §16; renumbered
520.220]
     520.080 [Repealed by 1953 c.667 §21]
     520.085 [1953 c.667 §10; 1961 c.671 §17; renumbered
520.230]
     520.090 [Repealed by 1953 c.667 §21]
     520.095
Rules and orders; bond. The
governing board of the State Department of Geology and Mineral Industries may
adopt rules and issue orders, and the department may issue orders, as may be
necessary in the proper administration and enforcement of this chapter,
including but not limited to rules and orders for the following purposes:
     (1) To require the drilling, casing and
plugging of wells to be done in such a manner as to prevent the escape of oil
or gas out of one stratum to another; to prevent the intrusion of water into
oil or gas strata; to prevent the pollution of fresh water supplies by oil, gas
or salt water; and to require reasonable bond conditioned upon compliance with
applicable laws and rules and upon the performance of the duty to plug each dry
or abandoned well.
     (2) To compel the filing of logs from
wells, including electrical logs, if any are taken, drilling records, typical
drill cuttings or cores, if cores are taken, with the office of the State
Geologist.
     (3) To prevent wells from being drilled,
operated and produced in such a manner as to cause injury to neighboring leases
or property.
     (4) To prevent the drowning by water of
any stratum or part thereof capable of producing oil or gas in paying
quantities, and to prevent the premature and irregular encroachment of water
that reduces, or tends to reduce, the total ultimate recovery of oil or gas
from any pool.
     (5) To require the operation of wells with
efficient gas-oil ratios, and to fix ratios.
     (6) To prevent blowouts, caving and
seepage in the same sense that conditions indicated by such terms are generally
understood in the oil and gas business.
     (7) To prevent fires.
     (8) To identify the ownership of all oil
and gas wells, producing leases, tanks, plants, structures and all storage
equipment and facilities.
     (9) To regulate the stimulation and
chemical treatment of wells.
     (10) To regulate secondary recovery
methods, including the introduction of gas, air, water or other substance into
producing formations.
     (11) To require the filing currently of
information as to the volume of oil and gas, or either of them, produced and
saved from the respective properties.
     (12) To require the protection of ground
water.
     (13) To require the disposal of salt water
and oil field waste so as not to damage land or property unnecessarily.
     (14) To require that wells drilled for oil
or gas be logged adequately enough to identify the geologic formations
penetrated by the wells.
     (15) To regulate the underground storage
of natural gas and the drilling and operation of any wells required therefor.
     (16) To require the mitigation of off-site
impacts of drilling and to require reclamation for subsequent beneficial use of
drill sites and adjacent areas adversely affected by drilling or use of the
well and the filling of sumps.
     (17) To require performance bonds or other
forms of financial security for compliance with the requirements of this
chapter and rules adopted or orders issued under this chapter.
     (18) To regulate exploratory wells,
including stratigraphic wells and seismic program test wells, subject to the
limitations in ORS 520.027.
     (19) To regulate geological, geophysical
and seismic surveys on, and operations to remove oil, gas and sulfur from, the
tidal submerged and submersible lands of this state under ORS 274.705 to
274.860. [1953 c.667 §7; 1961 c.671 §18; 1973 c.276 §3; 1977 c.296 §2; 1981
c.146 §2; 1989 c.365 §1; 2007 c.672 §10]
     520.097
Abandonment or completion of well; well logs and records; trade secrets. (1) For a period of two years from the date
of abandonment or completion of a well, all well logs and records and well
reports submitted to the State Department of Geology and Mineral Industries are
trade secrets under ORS 192.501 and are not subject to public disclosure under
ORS 192.410 to 192.505, and all drill cuttings and cores may not be disclosed
to the public unless such protection is waived by the permittee or disclosure
is required by a court order.
     (2) The department may extend the period
under subsection (1) of this section up to an additional five years on the
request of the permittee or the permittee’s successor in interest. [2007 c.672 §12]
     520.100 [Repealed by 1953 c.667 §21]
     520.105 [1953 c.667 §11; 1961 c.671 §19; repealed by
2007 c.672 §24]
     520.110 [Repealed by 1953 c.667 §21]
     520.115 [1953 c.667 §12; repealed by 2007 c.672 §24]
     520.120 [Repealed by 1953 c.667 §21]
     520.125
Authority of board to summon witnesses and require production of evidence. (1) The governing board of the State
Department of Geology and Mineral Industries may summon witnesses, administer
oaths and require the production of records, books and documents for
examination at any hearing or investigation conducted before the board.
     (2) In case of failure or refusal on the
part of any person to comply with the subpoena issued by the board or in the
case of the refusal of any witness to testify as to any matter regarding which
the witness may lawfully be interrogated it shall be the duty of the circuit
court of any county or any judge thereof, upon application of the board, to
issue an order to show cause why such person should not be held for contempt as
in the case of disobedience of the requirements of a subpoena issued from such
court or a refusal to testify therein.
     (3) The board may, in any matter before
the board, cause the depositions of witnesses residing within or without the
state to be taken in the manner prescribed by law for like depositions in civil
suits in the circuit courts of this state. [1953 c.667 §13; 2005 c.22 §374;
2007 c.672 §13]
     520.130 [Repealed by 1953 c.667 §21]
     520.135 [1953 c.667 §14; repealed by 2007 c.672 §24]
     520.145
Judicial review of board or department actions. Any person adversely affected by any rule
adopted by the governing board of the State Department of Geology and Mineral
Industries under this chapter or any order issued by the board or the State
Department of Geology and Mineral Industries under this chapter may obtain
judicial review thereof pursuant to ORS chapter 183. [1953 c.667 §15; 1961
c.671 §20; 1979 c.562 §15; 1981 c.146 §3; 2007 c.672 §14]
     520.155
Records, accounts, reports and writings not to be falsified, altered, destroyed
or removed from state. A
person may not, for the purpose of evading the provisions of this chapter or any
rule adopted or order issued under this chapter, make or cause to be made any
false entry or statement in a report required by this chapter or by any rule or
order under this chapter, make or cause to be made any false entry in any
record, account or other writing required by this chapter or by any rule or
order under this chapter, omit or cause to be omitted from any such record,
account or writing full, true and correct entries as required by this chapter
or any rule or order under this chapter, or remove from this state or destroy,
mutilate, alter or falsify any such record, account or writing. [1953 c.667 §16;
2007 c.672 §15]
     520.165
Aiding or abetting in violation of chapter prohibited. A person may not knowingly aid or abet any
other person in the violation of any provision of this chapter or any rule
adopted or order issued under this chapter. [1953 c.667 §17; 2007 c.672 §16]
     520.175
Injunctions to restrain violation or threatened violation of chapter. (1) Whenever it appears that any person is
violating or threatening to violate any provision of this chapter or any rule
adopted or order issued under this chapter, the governing board of the State
Department of Geology and Mineral Industries may bring an action against such
person in the circuit court of any county where the violation occurs or is
threatened, to restrain such person from continuing such violation. In any such
action, the court shall have jurisdiction to grant to the board, without bond
or other undertaking, such temporary restraining orders or final prohibitory
and mandatory injunctions as the facts may warrant, including any such orders
restraining the movement or disposition of oil or gas.
     (2) If the board fails to bring an action
to enjoin a violation or threatened violation of any provision of this chapter
or any rule adopted or order issued under this chapter, within 60 days after
receipt of a written request to do so by any person who is or will be adversely
affected by such violation, then the person making such request may bring an
action to restrain such violation or threatened violation in any court in which
the board might have brought such action. The board shall be made a party
defendant in such action in addition to the person or persons bringing the
action and the action shall proceed and injunctive relief may be granted
without bond in the same manner as if the action had been brought by the board.
[1953 c.667 §18; 1979 c.284 §162; 2007 c.672 §17]
SPACING UNITS
     520.210
Establishment of spacing units for pool or field; purpose; scope; effect. (1) When necessary to prevent waste of oil
or gas, to avoid the drilling of unnecessary wells or to protect correlative
rights, the governing board of the State Department of Geology and Mineral
Industries shall establish spacing units for a pool or field. Spacing units
when established shall be of uniform size and shape for the entire pool or
field, except that when found to be necessary for any of the above purposes the
board is authorized to divide any pool or field into zones and establish
spacing units for each zone, which units may differ in size and shape from
those established in any other zone. The board may not establish spacing units
for injection wells, withdrawal wells or monitoring wells drilled for the
purpose of storing gas or other gaseous substances, or wells drilled for the
underground disposal of fluids.
     (2) The size and shape of spacing units
shall be such as will result in efficient and economical development of the
pool or field as a whole and the size thereof may not be smaller than the
maximum area that can be efficiently drained by one well.
     (3) An order establishing spacing units
for a pool or field shall specify the size and shape of each unit and the
location of each permitted well thereon in accordance with a reasonably uniform
spacing plan. If an owner finds that a well drilled at the prescribed location
would not produce in paying quantities or that surface conditions would
substantially add to the burden or hazard of drilling such well, then the owner
may apply to the department for permission to drill a well at a location other
than that prescribed by such spacing order. The department shall notify
adjacent mineral owners of such application and any such owner may request a
hearing by the board to consider the application. If no request for a hearing
is made in writing within 20 days, the department may issue an order approving
the drilling site. Any order by the board or department under this section
shall include in the order suitable provisions to prevent the production from
the spacing unit of more than its just and equitable share of the oil and gas
in the pool.
     (4) An order establishing spacing units
for a pool or field shall cover all lands determined or believed to be
underlaid by such pool or field and may be modified by the board from time to
time to include additional areas determined to be underlaid by such pool or
field. When necessary to prevent waste of oil or gas, to protect correlative
rights or to provide for more efficient drainage, an order establishing spacing
units in a pool or field may be modified by the board to increase the size of
spacing units for future wells in a pool or field or any zone thereof or to
permit the drilling of additional wells on a reasonably uniform plan in such
pool, field or zone. [Formerly 520.065; 1981 c.146 §4; 2007 c.672 §18]
     520.220
Integrating interests or tracts within spacing unit. (1) When two or more separately owned tracts
are embraced within a spacing unit or when there are separately owned interests
in all or a part of such spacing unit, then the interested persons may
integrate their tracts or interests for the development and operation of the
spacing unit.
     (2) In the absence of voluntary
integration, the governing board of the State Department of Geology and Mineral
Industries, upon the application of any interested person, shall make an order
integrating all tracts or interests in the spacing unit for the development and
operation thereof and for the sharing of production therefrom. The board, as a
part of the order establishing one or more spacing units, may prescribe the
terms and conditions upon which the royalty interests in the units shall, in
the absence of voluntary agreement, be deemed to be integrated without the
necessity of a subsequent order integrating royalty interests. Each such
integration order shall be upon terms and conditions that are just and
reasonable. [Formerly 520.075]
UNIT
OPERATIONS
     520.230
Approved agreement for cooperative or unit development of pool not to be
construed as violating certain regulatory laws. (1) An agreement for the unit or cooperative
development and operation of a field or pool in connection with the conduct of
repressuring or pressure maintenance operations, cycling or recycling
operations, including the extraction and separation of liquid hydrocarbons from
natural gas in connection therewith, or any other method of operation,
including water floods, is authorized and may be performed and shall not be
held or construed to violate ORS 59.005 to 59.451, 59.710 to 59.830, 59.991 and
59.995 or any of the statutes of this state relative to trusts, monopolies or
contracts and combinations in restraint of trade, if such agreement is approved
by the governing board of the State Department of Geology and Mineral
Industries as being in the public interest, for the protection of correlative
rights and reasonably necessary to increase ultimate recovery or prevent waste
of oil or gas. The failure to submit such an agreement to the board for
approval does not, for that reason, imply or constitute evidence that the
agreement or operations conducted pursuant thereto violate ORS 59.005 to
59.451, 59.710 to 59.830, 59.991 and 59.995 or any statute of this state now or
hereafter in effect relating to trusts and monopolies.
     (2) An agreement for the unit or
cooperative development or operation of a field, pool or part thereof may be
submitted to the board for approval as being in the public interest or
reasonably necessary to prevent waste or protect correlative rights. Approval
by the board constitutes a complete defense to any proceeding charging
violation of ORS 59.005 to 59.451, 59.710 to 59.830, 59.991 and 59.995 or of
any statute of this state now or hereafter in effect relating to trusts and
monopolies on account thereof or on account of operations conducted pursuant
thereto. The failure to submit such an agreement to the board for approval does
not, for that reason, imply or constitute evidence that the agreement or
operations conducted pursuant thereto violate ORS 59.005 to 59.451, 59.710 to
59.830, 59.991 and 59.995 or any statute of this state now or hereafter in
effect relating to trusts and monopolies. [Formerly 520.085; subsection (2)
enacted as 1961 c.671 §13; 1963 c.69 §1]
     520.240
Voluntary unitization of operations by lessees of tidal or submersible lands;
Department of State LandsÂ’ function. (1) For the purpose of properly conserving the natural resources of
any single oil or gas pool or field, lessees under ORS 274.705 to 274.860 and
their representatives may unite with each other jointly or separately, or
jointly or separately with others owning or operating lands not belonging to
the state, in collectively adopting and operating under a cooperative or unit
plan of development or operation of the pool or field, whenever it is
determined by the Department of State Lands to be necessary or advisable in the
public interest.
     (2) The Department of State Lands may,
with the consent of the holders of the leases involved, establish, alter,
change and revoke any drilling and production requirements of such leases, and
make such regulations with reference to such leases, with like consent on the
part of the lessees, in connection with the institution and operation of any
such cooperative or unit plan, as the Department of State Lands deems necessary
or proper to secure the proper protection of the interests of the state. [1961
c.619 §33]
     520.260
Hearing to determine need for unitization of operations; required findings;
order. (1) The governing
board of the State Department of Geology and Mineral Industries upon its own
motion may, and upon the application of any interested person shall, hold a
hearing to consider the need for the operation as a unit of one or more pools
or parts thereof in a field.
     (2) The board shall make an order
providing for the unit operation of a pool or part thereof if it finds that:
     (a) Unit operation is reasonably necessary
to effectively carry on pressure control, pressure maintenance or repressuring
operations, cycling operations, water flooding operations, injection
operations, or any combination thereof, or any other method of recovery
designed to substantially increase the ultimate recovery of oil from the pool
or pools; and
     (b) The value of the estimated additional
recovery of oil or gas exceeds the estimated additional cost incident to
conducting unit operations. [1961 c.671 §2; 2007 c.672 §19]
     520.270
Plan for unit operations. An
order issued pursuant to ORS 520.260 shall be upon terms and conditions that
are just and reasonable, and shall prescribe a plan for unit operations that
includes the following:
     (1) A description of the pool or pools or
parts thereof to be so operated.
     (2) A statement of the nature of the
operations contemplated.
     (3) An allocation to the separately owned
tracts in the unit area of all the oil and gas that is produced from the unit
area and is saved, being the production that is not used in the conduct of
operations on the unit area or not unavoidably lost.
     (4) A provision for the credits and charges
to be made in the adjustment among the owners in the unit area for their
respective investments in wells, tanks, pumps, machinery, materials and
equipment contributed to the unit operations.
     (5) A provision stating how the costs of
unit operations, including capital investments, shall be determined and charged
to the separately owned tracts and how these costs shall be paid, including a
provision stating when, how and by whom the unit production allocated to an
owner who does not pay the share of the cost of unit operations charged to such
owner, or the interest of such owner, may be sold and the proceeds applied to
the payment of such costs.
     (6) A provision, if necessary, for
carrying or otherwise financing any person who elects to be carried or otherwise
financed, allowing a reasonable interest charge for such service payable out of
that personÂ’s share of the production.
     (7) A provision for the supervision and
conduct of the unit operations, in respect to which each person shall have a
vote with a value corresponding to the percentage of the costs of unit
operations chargeable against the interest of that person.
     (8) The time when the unit operations
shall commence, and the manner in which, and the circumstances under which, the
unit operations shall terminate.
     (9) Additional provisions that are found
appropriate for carrying on the unit operations, and for the protection of
correlative rights. [1961 c.671 §3]
     520.280
Allocation of production under plan; ownership. (1) The allocation described in ORS 520.270
(3) shall be in accord with the agreement, if any, of the interested parties.
If there is no such agreement, the governing board of the State Department of
Geology and Mineral Industries shall determine the relative value, from
evidence introduced at the hearing, of the separately owned tracts in the unit
area, exclusive of physical equipment, for development of oil and gas by unit
operations. The production allocated to each tract shall be the proportion that
the relative value of each tract so determined bears to the relative value of
all tracts in the unit area.
     (2) That portion of the unit production
allocated to any tract, and the proceeds from the sale thereof, are the
property and income of the several persons to whom, or to whose credit, they
are allocated or payable under the order providing for unit operations. [1961
c.671 §§4,10]
     520.290
When unitization order to become effective; supplemental hearings. (1) No order of the governing board of the
State Department of Geology and Mineral Industries providing for unit
operations is effective until:
     (a) The plan for unit operations
prescribed by the board under ORS 520.270 has been approved in writing by (A)
those owners who, under the boardÂ’s order, will be required to pay at least 75
percent of the costs of the unit operation, and (B) those persons who, at the
time of the order of the board, owned of record legal title to 75 percent of
royalty and overriding royalty payable with respect to oil and gas produced
from the pool or part thereof over the entire unit area; and
     (b) The board has made a finding, either
in the order providing for unit operations or in a supplemental order, that the
plan for unit operations has been so approved.
     (2) If the plan for unit operations has
not been approved pursuant to subsection (1) of this section at the time the
order providing for unit operations is made, the board shall upon application
and notice hold such supplemental hearings as are required to determine if and
when the plan for unit operations has been approved. If the persons owning the
percentage of interest in the unit area required by subsection (1) of this
section do not approve the plan for unit operations within a period of six
months after the date on which the order providing for unit operations is made,
the order is ineffective and shall be revoked by the board unless the board,
for good cause shown, extends the time for approval. [1961 c.671 §5]
     520.300
Amending unitization order.
An order providing for unit operations may be amended by an order made by the
governing board of the State Department of Geology and Mineral Industries in
the same manner and subject to the same conditions as an original order
providing for unit operations. However:
     (1) If the amendment affects only the
rights and interests of the owners, the approval of the amendment by the
royalty owners is not required.
     (2) The order of amendment may not change
the percentage for the allocation of:
     (a) Oil and gas as established for any
separately owned tract by the original order, except with the consent of all
persons owning oil and gas rights in the tract; or
     (b) Cost as established for any separately
owned tract by the original order, except with the consent of all owners in the
tract. [1961 c.671 §6; 2007 c.672 §20]
     520.310
Unitization of area including area previously unitized; partial unitization of
pool. (1) The governing
board of the State Department of Geology and Mineral Industries by order may
provide for the unit operation of a pool or pools or parts thereof that embrace
a unit area established by a previous order of the board. The order, in
providing for the allocation of unit production, shall first treat as a single
tract the unit area previously established, and the portion of the unit
production so allocated thereto shall then be allocated among the separately
owned tracts included in the previously established unit area in the same
proportions as those specified in the previous order.
     (2) An order may provide for unit
operations on less than the whole of a pool where the unit area is of such size
and shape as may reasonably be required for that purpose, and the conduct
thereof will have no adverse effect upon other portions of the pool. [1961
c.671 §§7,8; 2007 c.672 §21]
     520.320
Unitization order does not terminate prior agreements or affect oil and gas
rights; acquisition of property during unit operations. (1) No division order or other contract
relating to the sale or purchase of production from a separately owned tract
may be terminated by the order providing for unit operations, but remains in
force and applies to oil and gas allocated to that tract until terminated in
accordance with the provisions thereof.
     (2) Except to the extent that the parties
affected so agree, no order providing for unit operations results in a transfer
of all or any part of the title of any person to the oil and gas rights in any
tract in the unit area.
     (3) All property, whether real or
personal, that may be acquired in the conduct of unit operations under ORS
520.260 to 520.330 and 520.230 (2) shall be acquired for the account of the
owners within the unit area, and is the property of such owners in the
proportion that the expenses of unit operations are charged. [1961 c.671 §§11,12]
     520.330
Effect of operations in unit area. All operations, including but not limited to the commencement,
drilling or operation of a well, upon any portion of the unit area, are
considered for all purposes the conduct of such operations upon each separately
owned tract in the unit area by the several owners thereof. The portion of the
unit production allocated to a separately owned tract in a unit area, when
produced, is considered for all purposes to have been actually produced from
that tract by a well drilled thereon. Operations conducted pursuant to an order
of the governing board of the State Department of Geology and Mineral
Industries providing for unit operations constitute a fulfillment of all the
express or implied obligations of each lease or contract covering lands in the
unit area to the extent that compliance with such obligations cannot be had
because of the order of the board. [1961 c.671 §9; 2007 c.672 §22]
UNDERGROUND
RESERVOIRS
     520.340
Legislative findings. The
underground storage of natural gas in Oregon is found by the Legislative
Assembly to be in the public interest in that the establishment of underground
reservoirs of natural gas will help insure the continued, uninterrupted
availability of natural gas supplies to residential, commercial and industrial
consumers in Oregon during periods of peak demand and during interruptions in
the normal flow of natural gas supplies. [1977 c.296 §5]
     520.350
Property rights in underground reservoirs for natural gas storage. (1) All natural gas in an underground
reservoir utilized for underground storage, whether acquired by eminent domain
or otherwise, shall at all times be the property of the natural gas company
utilizing said underground storage, its heirs, successors, or assigns. In no
event shall such gas be subject to the rights of the owner of the surface of
the land under which said underground reservoir lies or of the owner of any
mineral interest therein or of any person other than said natural gas company,
its heirs, successors and assigns to release, produce, take, reduce to
possessions, or otherwise interfere with or exercise any control thereof.
     (2) Any right of condemnation granted for
the purposes of ORS 520.340, 772.610 to 772.625 and this section shall be
without prejudice to the rights of the owner of the condemned lands or of the
rights and interest therein to drill or bore through the underground reservoir
in such a manner as shall protect the underground reservoir against pollution
and against the escape of natural gas in a manner which complies with the
orders and rules of the State Department of Geology and Mineral Industries.
Such condemnation shall be without prejudice to the owners of such lands or
other rights or interests therein as to all other uses thereof. The additional
costs of complying with rules or orders to protect the underground shall be
paid by the condemnor. [1977 c.296 §6]
PENALTIES
     520.990 [Repealed by 1953 c.667 §21]
     520.991
Penalties. Subject to ORS
153.022, violation of any provision of this chapter, any rule adopted by the
governing board of the State Department of Geology and Mineral Industries under
this chapter or any order issued by the board or the State Department of
Geology and Mineral Industries under this chapter is punishable, upon
conviction, by a fine not exceeding $2,500 or imprisonment in the county jail
for a term not exceeding six months, or both. [1953 c.667 §19; 1999 c.1051 §315;
2007 c.672 §23]
_______________
CHAPTER 521
[Reserved for expansion]
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