Administrative Rules of Montana › Department 36 - NATURAL RESOURCES AND CONSERVATION › Chapter 36.25 - STATE LAND LEASING › Subchapter 36.25.4 - Geothermal Rules and Regulations › Rule 36.25.412 - UNIT OR COOPERATIVE PLANS OF DEVELOPMENT OR OPERATION

Current through Register Vol. 13, July 5, 2024
(1) For the purpose of more properly
				conserving the natural RESOURCES of any geothermal pool, field, or like area,
				lessees under leases issued by the board are authorized, with the written
				consent of the board, to commit the state lands to unit, cooperative or other
				plans of development or operation with other state lands, federal lands,
				privately-owned lands or Indian lands. Applications to unitize shall be filed
				with the director who shall certify whether such plan is necessary or advisable
				in the interest of the trust of state lands for the support of common schools.
				He may require whatever documents or data he deems necessary. To implement such
				unitization, the board may with the consent of its lessees modify and change
				any and all terms of leases issued by it which are committed to such unit,
				cooperative or other plans of development or operations.
(2) The agreement shall describe the separate
				tracts comprising the unit, disclose the apportionment of production or
				royalties and costs to the several parties, and the name of the operator, and
				shall contain adequate provisions for the protection of the interests of all
				parties, including the state of Montana. The agreement should be signed by or
				in behalf of all interested necessary parties before being submitted to the
				director and will be effective only after approval by the board.
(3) The owners of any right, title, or
				interest in the geothermal resources to be developed or operated under an
				agreement can be regarded as proper parties to a proposed agreement. All such
				owners must be invited to join as parties to the agreement. If any owner fails
				or refuses to join the agreement, the proponent of the agreement should declare
				this to the director and should submit evidence of efforts made to obtain
				joinder of such owner and the reasons for non-joinder.
(4) In lieu of separate bonds required for
				each lease committed to a unit agreement, the unit operator may furnish and
				maintain a collective corporate surety bond or a personal bond conditioned upon
				faithful performance of the duties and obligations of the agreement and the
				terms of the leases subject thereto and these rules. Personal bonds shall be
				accompanied by a deposit of negotiable federal securities in a sum equal at
				their par value to the amount of the bond and by a proper conveyance to the
				department with full authority to sell such securities in case of default in
				the performance of the obligations assumed. The liability under the bond shall
				be for such amounts as the board shall determine to be adequate to protect the
				interests of the state of Montana. Additional bond coverage may be required
				whenever deemed necessary by the director. In case of changes of unit operator,
				a new bond must be filed or a consent of surety to the change in principal
				under the existing bond must be furnished.
(5) Any modification of an approved agreement
				will require approval of the board under procedures similar to those cited in
				(1).
(6) The term of all leases
				included in any cooperative or unit plan of development or operation shall be
				extended automatically for the term of such unit or cooperative agreement.
				Rentals or royalties on leases so extended shall be at the rate specified in
				the lease.
(7) Any lease which
				shall be eliminated from any such cooperative or unit plan of development or
				operation, or any lease which shall be in effect at the termination of any such
				cooperative or unit plan of development or operation, unless relinquished,
				shall continue in effect for the term of the lease or for 1 year after its
				elimination from the plan or agreement or the termination thereof, whichever is
				longer, and so long thereafter as the lessee engages in diligent and continuous
				drilling or so long thereafter as geothermal resources are produced in paying
				quantities, but in no event beyond the time provided in ARM
				36.25.304.
(8) Before issuance of a lease for lands
				within an approved unit agreement, the lease applicant or successful bidder
				will be required to file evidence that he has entered into an agreement with
				the unit operator for the development and operation of the lands in the lease
				if issued to him under and pursuant to the terms and provisions of the approved
				unit agreement, or a statement giving satisfactory reasons for the failure to
				enter into such agreement. If such statement is acceptable, he will be
				permitted to operate independently, but will be required to perform his
				operations in a manner which the director deems to be consistent with the unit
				operations.
(9) Nothing in this
				rule shall excuse the parties to a unit agreement from procuring the approval
				of the department of natural resources and conservation if approval is
				required.
(10) Geothermal resources
				produced from any part of a unit in which state lands are included by virtue of
				a pooling agreement shall be considered to be produced from the state lands
				therein.
77-4-103, MCA; IMP,
					 77-4-124 and
					 77-4-125,
					 MCA;