Illinois Administrative Code › Title 62 - MINING › Part 240 - THE ILLINOIS OIL AND GAS ACT › Subpart A - GENERAL PROVISIONS › Section 240.131 - Unitization Hearings

Current through Register Vol. 48, No. 28, July 12, 2024
a)
				Commencement of Action
Where separately owned tracts of land are underlain by all or
				  a portion of a common pool of oil or gas or both, an interested person may
				  petition the Department for an order unitizing those tracts, that is to combine
				  those tracts within a unified operation, pursuant to Section 23.3 of the Act.
				  The petition for a unitization order shall contain the following:
1) A legal description of the land and
				geologic description of the reservoirs within the proposed unit area;
2) The names of all persons owning or having
				an interest in the oil and gas rights in the proposed unit area as of the date
				of filing the petition, as disclosed by the records in the office of the
				recorder for the county or counties in which the unit area is situated, and
				their addresses, if known. If the address of any person or the name of any
				owner is unknown, the petition shall so indicate and shall state whether due
				diligence was used in locating the unknown address or unknown owner;
3) A statement of the type of operations
				contemplated for the unit area;
4)
				A copy of a proposed plan of unitization signed by persons owning not less than
				51% of the working interest underlying the surface within the area proposed to
				be unitized, which the petitioner considers fair, reasonable and equitable;
				said plan of unitization shall include (or provide in a separate unit operating
				agreement, if there be more than one working interest owner, a copy of which
				shall accompany the petition) the following:
A) A plan for allocating to each separately
				owned tract in the unit area its share of the oil and gas produced from the
				unit area and not required or consumed in the conduct of the operation of the
				unit area or unavoidably lost; the plan shall include the participation factors
				for each tract and a detailed description of the methodology and supporting
				data used to calculate the participation factors.
B) A provision indicating how unit expense
				shall be determined and charged to the several owners, including a provision
				for carrying or otherwise financing any working interest owner who has not
				executed the proposed plan of unitization and who elects to be carried or
				otherwise financed, and allowing the unit operator, for the benefit of those
				working interest owners who have paid the development and operating costs, the
				recovery of not more than 150% of such person's actual share of development
				costs of the unit plus operating costs, with interest. Recovery of the money
				advanced to owners wishing to be financed, for development and operating costs
				of the unit, together with such other sums provided for herein, shall only be
				recoverable from such owner's share of unit production from the unit
				area.
C) A procedure and basis upon
				which wells, equipment, and other properties of the several working interest
				owners within the unit area are to be taken over and used for unit operations,
				including the method of arriving at the compensation therefor.
D) A plan for maintaining effective
				supervision and conduct of unit operations, in respect to which each working
				interest owner shall have a vote with a value corresponding to the percentage
				of unit expense chargeable against the interest of such owner.
E) A summary of the total cumulative
				production to date, the estimated additional total recoverable reserves from
				the proposed unit and the estimated total development cost and operating cost
				of the unit;
5) The name
				and addresses of the proposed operator or operators of the unit;
6) A map showing the tracts or group of
				leases included within the proposed unit area, the location of the proposed
				injection well or wells and the name, permit number, and location of all oil
				and gas wells, including abandoned wells, active wells and dry holes and the
				reservoirs in which all such wells are currently completed, and the names of
				all operators offsetting the proposed unit area and the name, description and
				depth of the producing zones in those areas;
7) A map showing the structure of the
				geologic horizon that best represents the structure of the proposed reservoirs
				to be unitized;
8) A listing of the
				reservoirs to be unitized and a map showing the productive portion, thickness,
				and extent of each reservoir;
9) An
				induction or electric log of a representative well completed in the proposed
				unitized reservoirs;
10) A
				description of the injection medium to be used, its source and the estimated
				amounts to be injected daily;
11) A
				description of the proposed plan of development of the area included within the
				unit;
12) An allegation of the
				facts required to be found by the Department under Section 23.5 of the Act. The
				required facts are as follows:
A) That the
				unitized management and operation is economically feasible and reasonably
				necessary to increase the ultimate recovery of oil and gas, to prevent waste,
				and to protect correlative rights;
B) That the value of the estimated ultimate
				additional recovery of oil and gas will exceed the estimated additional cost,
				if any, incident to conducting the unit operation;
C) That the areal extent of the pool or
				pools, or parts thereof, has been reasonably defined and determined by drilling
				operations, and the unitization and operation of such will have no
				substantially adverse effect upon the remainder of the pool or pools, or parts
				thereof;
D) That the allocation of
				unit production to each separately owned tract is fair, reasonable and
				equitable to all owners of oil and gas rights in the unit area;
E) That the determination and allocation of
				unit expense is fair, reasonable and equitable to the working interest owners;
				and
F) That the compensation or
				adjustment for wells, equipment and other properties of the working interest
				owners is fair, reasonable and equitable.