North Carolina § 113-392 - Protecting pool owners; drilling units in pools; location of wells; shares in pools.

§ 113-392. Protecting pool owners; drilling units in pools; location of wells; shares in pools.

Whether or not the total production from a pool be limited or prorated, no rule or order of the Commission shall be such in terms or effect: That it shall be necessary at any time for the producer from, or the owner of, a tract of land in the pool, in order that he may obtain such tract's just and equitable share of the production of such pool, as such share is set forth in this section, to drill and operate any well or wells on such tract in addition to such well or wells as can produce without waste such share, or As to occasion net drainage from a tract unless there be drilled and operated upon such tract a well or wells in addition to such well or wells thereon as can produce without waste such tract's just and equitable share, as set forth in this section, of the production of such pool. For the prevention of waste and to avoid the augmenting and accumulation of risks arising from the drilling of an excessive number of wells, the Commission shall, after a hearing, establish a drilling unit or units for each pool. The Commission may establish drainage units of uniform size for the entire pool or may, if the facts so justify, divide into zones any pool, establish a drainage unit for each zone, which unit may differ in size from that established in any other zone; and the Commission may from time to time, if the facts so justify, change the size of the unit established for the entire pool or for any zone or zones, or part thereof, establishing new zones and units if the facts justify their establishment. Repealed by Session Laws 2014-4, s. 10, effective June 4, 2014. Subject to the reasonable requirements for prevention of waste, a producer's just and equitable share of the oil and gas in the pool (also sometimes referred to as a tract's just and equitable share) is that part of the authorized production for the pool (whether it be the total which could be produced without any restriction on the amount of production, or whether it be an amount less than that which the pool could produce if no restriction on the amount were imposed) which is substantially in the proportion that the quantity of recoverable oil and gas in the developed area of his tract in the pool bears to the recoverable oil and gas in the total developed area of the pool, insofar as these amounts can be ascertained practically; and to that end, the rules, permits and orders of the Commission shall be such as will prevent or minimize reasonably avoidable net drainage from each developed unit (that is, drainage which is not equalized by counter-drainage), and will give to each producer the opportunity to use his just and equitable share of the reservoir energy. History (1945, c. 702, s. 12; 1973, c. 1262, s. 86; 1987, c. 827, s. 112; 2012-143, s. 2(d); 2014-4, s. 10.) Editor's Note. - For policy recommendations, legislative intent, and statement of principles regarding development of a modern oil and gas regulatory program, see the preface to Session Laws 2012-143, noted at G.S. 113-389 and G.S. 113-395. Effect of Amendments. - Session Laws 2012-143, s. 2(d), effective August 1, 2012, substituted "Commission" for "Department" throughout the section. Session Laws 2014-4, s. 10, effective June 4, 2014, deleted subsection (c) concerning drilling well locations.