NY Env Conserv L § 23-0503 (2021)
2021 New York Laws ENV - Environmental Conservation Article 23 - Mineral Resources Title 5 - Well Permits and Well Spacing in Oil and Natural Gas Pools and Fields 23-0503 - Well Spacing in Oil and Natural Gas Pools and Fields.

§ 23-0503. Well spacing in oil and natural gas pools and fields.1.  Spacing  orders  are  not  required  for  wells drilled, deepened,   plugged back or converted in oil fields or pools which were  discovered,   developed   and  operated  prior  to  January  first,  nineteen  hundred   eighty-one. Spacing orders are not required for wells drilled, deepened,   plugged back or converted in natural gas fields  or  pools,  which  were   discovered,  developed  and  operated  prior  to January first, nineteen   hundred ninety-five and which are not being extended.2. The department shall issue a permit to drill, deepen, plug back  or   convert a well, if the proposed spacing unit submitted to the department   pursuant  to  paragraph  a  of  subdivision 2 of section 23-0501 of this   title conforms to statewide spacing  and  is  of  approximately  uniform   shape  with other spacing units within the same field or pool, and abuts   other spacing units in the same pool, unless sufficient distance remains   between units for another unit to be developed.  Prior  to  issuing  any   such  permit, the department shall publish a notice of intent to issue a   well permit in the environmental notice bulletin,  which  shall  include   information concerning the spacing unit associated with the well.3.  a.  If  the  proposed  spacing unit does not meet the requirements   described in subdivision two  of  this  section,  the  department  shall   determine  if  the proposed spacing unit satisfies the policy objectives   of section 23-0301 of this article.b. If the department determines the proposed spacing  unit  meets  the   policy  objectives  of  section  23-0301 of this article, the department   shall issue a notice of intent to issue a permit and spacing order.  The   well  operator  shall  cause  such  notice to be published in a form and   manner prescribed by the department. If the notice of intent relates  to   a  proposed  spacing  unit  that is not of a uniform size and shape with   other spacing units for the field or  pool,  the  department  shall,  if   necessary,  make  such  adjustment  of the allowable production from the   well to be drilled thereon so  that  the  owners  in  the  spacing  unit   receive their just and equitable shares of the production from the pool.   Any such adjustment of the allowables shall be included in the notice of   intent to issue a permit and spacing order.c.  Any  comments  regarding  a notice of intent to issue a permit and   spacing order must be received by the department within thirty  days  of   the  date  of  the  notice  of  intent and must meet the substantive and   significant requirement for establishing an issue for adjudication.  Any   challenge  to a spacing unit must contain (i) a description and a map of   the proposed alternative spacing unit; (ii) a technical justification of   the proposed alternative spacing unit, which shall include a description   and analysis of the scientific data intended by the owner to support its   proposed spacing unit configuration; and (iii)  the  name,  address  and   experience  of  any  expert  witness  proposed  to  support the proposed   alternative spacing unit configuration. The department may  request  the   owner challenging the spacing unit to present its scientific data to the   department.d.  The department shall determine whether substantive and significant   issues have been raised. If the department receives no  comments  or  if   the  comments  do  not  raise  a  substantive and significant issue, the   department shall issue the permit and the final spacing  order.  If  the   department  determines that substantive and significant issues have been   raised in a timely manner, the department shall schedule an adjudicatory   hearing.4. The department may  issue  permits  to  drill  infill  wells  on  a   reasonably  uniform pattern within the spacing unit after an integration   order has been issued, if required,  and  only  if  it  determines  that   drilling  infill  wells is necessary to satisfy the policy objectives of    section 23-0301 of this article. The distances from the unit  boundaries   set  forth  in  paragraph  b of subdivision 1 of section 23-0501 of this   title shall apply to any infill wells. For purposes of this section, new   lateral wellbores drilled from the original wellbore in the unit are not   considered  infill  wells if they are drilled prior to the first product   sales from the original surface location. In a spacing unit  established   pursuant  to clause (vi) of subparagraph 1 of paragraph b of subdivision   1 of section 23-0501  of  this  title,  infill  wells  shall  be  deemed   necessary, and the number of infill wells required to satisfy the policy   objectives  of  section  23-0301  of this article must be drilled within   three years of the date the first well in the unit commences drilling.5. For wells permitted prior to the effective  date  of  this  section   where  a  spacing  order  is  required  but  has  not  been  issued, the   department shall issue a notice of intent to issue a spacing order.  The   well  operator  shall  cause  such  notice to be published in a form and   manner prescribed by the department. The department may issue  an  order   without  a  hearing  if  the  proposed  spacing  unit  complies with the   requirements of subdivision two of this section and no  substantive  and   significant  objections  to  the boundaries of the proposed spacing unit   are received within thirty days after publication of the notice  by  the   well  operator.    If  the  department  determines  that substantive and   significant issues have been raised in a timely manner,  the  department   shall schedule an adjudicatory hearing.6.  Unless  it  is  extinguished pursuant to subdivision seven of this   section, a spacing unit established by the department shall  be  binding   upon  all  persons  and  their  heirs, successors and assigns. Upon good   cause shown, an order establishing a spacing  unit  or  a  spacing  unit   which  conforms  to  statewide spacing may be modified by the department   without conducting a hearing if a finding has been made  that  no  facts   are  in  dispute  after  all  affected  persons  have  been  provided  a   reasonable  opportunity  to  comment.  In  a  spacing  unit  established   pursuant  to clause (vi) of subparagraph 1 of paragraph b of subdivision   1 of section 23-0501 of  this  title,  failure  to  drill  infill  wells   pursuant  to  subdivision  4 of this section shall constitute good cause   for the department to initiate a modification of the  spacing  unit.  If   necessary,  upon issuance of an order which changes unit boundaries, the   well operator shall adjust the accounts for owners within  the  original   and  modified  units to reflect the modified boundary. Any participation   by new owners and any adjustment of revenue or royalties resulting  from   participation by new owners shall be on a prospective basis only. If the   initial  risk  penalty  phase  pursuant to title 9 of this article is in   effect, any new owner added to the unit may elect to be integrated as  a   participating  owner, a non-participating owner or an integrated royalty   owner as defined by title 9 of this article. Full well  costs  shall  be   assessed  against  new participating owners and non-participating owners   and included in the  risk  penalty  calculation.  If  the  initial  risk   penalty phase has concluded, any new owner added to the spacing unit may   elect to be integrated as a participating owner or an integrated royalty   owner on a prospective basis only.7.  Upon  the  expiration  of  a  well  permit  or  the  plugging  and   abandonment of all wells in a spacing unit, the spacing  unit  shall  be   extinguished.    Upon extinguishment, all lands within such spacing unit   shall be eligible for inclusion in subsequent spacing units.8. The department, without considering correlative rights, may grant a   permit to those entities described in paragraphs b and c of  subdivision   3  of  section  23-1901  of this article for the purposes of natural gas   development if the department determines, after notice and hearing, that   the natural gas resource would not be  developed  by  any  other  entity    within  twelve  months  of the close of the hearing record. In the event   that the department shall not receive timely notice of appearance  prior   to  the scheduled date of hearing, it may dispense with such hearing. In   making  its  determination  the department shall require that the entity   described in paragraphs b and c of subdivision 3 of section  23-1901  of   this  article submit a finding made by such entity that such drilling is   likely to be economically sound, and that the entity in question utilize   the resource for its exclusive use when granting such a permit.