Chapter 5 - Oil And Gas
CHAPTER 5 - OIL AND GAS
ARTICLE 1 - IN GENERAL
30-5-101. Definitions.
(a) As used in this act unless the context otherwise requires:
(i) The term "waste" means and includes:
(A) Physical waste, as that term is generally understood in theoil and gas industry;
(B) The inefficient, excessive or improper use, or theunnecessary dissipation of, reservoir energy;
(C) The inefficient storing of oil or gas;
(D) The locating, drilling, equipping, operating, or producingof any oil or gas well in a manner that causes, or tends to cause, reduction inthe quantity of oil or gas ultimately recoverable from a pool under prudent andproper operations, or that causes or tends to cause unnecessary or excessive surfaceloss or destruction of oil or gas;
(E) The production of oil or gas in excess of (I)transportation or storage facilities; (II) the amount reasonably required to beproduced in the proper drilling, completing, or testing of the well from whichit is produced, or oil or gas otherwise usefully utilized: except gas producedfrom an oil well pending the time when with reasonable diligence the gas can besold or otherwise usefully utilized on terms and conditions that are just andreasonable;
(F) Underground or aboveground waste in the production orstorage of oil, gas, or condensate, however caused, and whether or not definedin other subdivisions hereof;
(G) The flaring of gas from gas wells except that necessary forthe drilling, completing or testing of the well; and
(H) The drilling of any well not in conformance to a welldensity and spacing program fixed by the commission or other agency, state orfederal, as to any field or pool during a national emergency when casing orother materials necessary to the drilling and operation of wells are rationedor in short supply.
(ii) "Commission" means the Wyoming oil and gasconservation commission herein created to carry out the provisions of this act;
(iii) The word "pool" shall mean an undergroundreservoir containing a common accumulation of oil or gas, or both. Each zone ofa general structure, which zone is completely separated from any other zone inthe structure, is covered by the word "pool" as used herein;
(iv) "Person" means and includes any natural person,corporation, association, partnership, receiver, trustee, executor,administrator, guardian, fiduciary, or other representative of any kind, andincludes any department, agency, or instrumentality of the state or of anygovernmental subdivision thereof; the masculine gender, in referring to aperson, includes the feminine and the neuter genders;
(v) "Owner" means the person who has the right todrill into and produce from a pool and to appropriate the oil or gas heproduces therefrom either for himself or others or for himself and others;
(vi) "Producer" means the owner of a well or wellscapable of producing oil or gas or both;
(vii) The word "oil" shall mean crude petroleum oil andany other hydrocarbons, regardless of gravities, which are produced at the wellin liquid form by ordinary production methods, and which are not the result ofcondensation of gas before or after it leaves the reservoir. The word"gas" shall mean all natural gases and all hydrocarbons not definedherein as oil;
(viii) The word "and" includes the word "or,"and the use of the word "or" includes the word "and." Theuse of the plural includes the singular, and the use of the singular includesthe plural;
(ix) "Correlative rights" shall mean the opportunityafforded the owner of each property in a pool to produce, so far as it isreasonably practicable to do so without waste, his just and equitable share ofthe oil or gas, or both, in the pool;
(x) The term "surety bond or other guaranty" means asurety bond, a first priority security interest in a deposit of the proceeds ofa collected cashier's check, a first priority security interest in acertificate of deposit or an irrevocable letter of credit, all in an amount andincluding other terms, conditions and requirements determined by thecommission.
30-5-102. Waste prohibited; power of commission to allocate allowableproduction.
(a) The waste of oil and gas or either of them in the state ofWyoming as in this act defined is hereby prohibited.
(b) Whenever in order to prevent waste the commission limitsthe total amount of oil and gas which may be produced in any pool in this stateto an amount less than that amount which the pool could produce if norestriction was imposed, the commission shall allocate or distribute theallowable production among the several wells or producing properties in thepool on a reasonable basis, preventing or minimizing reasonably avoidabledrainage from each developed area not equalized by counter-drainage, so thateach property will have the opportunity to produce or to receive its just andequitable share, subject to the reasonable necessities for the prevention ofwaste.
30-5-103. Oil and gas conservation commission; composition; expenses;hearings; director of oil and gas conservation; legal advisors.
(a) The governor, director of the office of state lands andinvestments, the state geologist and two (2) additional members from the publicat large who shall be appointed by the governor, by and with the consent of thestate senate and shall be citizens and residents of the state of Wyoming andshall be qualified to serve the oil and gas industry of this state, shallcomprise the commission. The terms of the two (2) members appointed by thegovernor shall be for two (2) years except that, of the initially appointedmembers, one (1) designated by the governor, shall serve for one (1) year. Thegovernor may remove any member he appoints as provided by W.S. 9-1-202.
(b) Each member of the commission not otherwise in full timeemployment of the state, shall receive the same allowances as other stateofficials and employees as set forth in W.S. 9-3-102, as amended whileattending and traveling to and from meetings of the commission, said fees andexpenses to be paid from the funds of the Wyoming conservation commission.
(c) The governor shall serve as chairman of the Wyoming oil andgas conservation commission. The commission shall meet or hold hearings at suchtimes and places as may be found by the commission to be necessary to carry outits duties. Three (3) members of the board shall constitute a quorum.
(d) The state oil and gas supervisor shall be ex officio thedirector of oil and gas conservation, and as such shall be charged with theduty of enforcing this act and all rules, regulations and orders promulgated bythe commission. The director of oil and gas conservation with the concurrenceof the commission shall have the authority, and it shall be his duty, to employall personnel necessary to carry out the provisions of this act. The directorof oil and gas conservation shall be ex officio secretary of the Wyoming oiland gas conservation commission and shall keep all minutes and records of thecommission.
(e) The attorney general shall be attorney for the commission;provided, that in cases of emergency, the commission may call upon the countyattorney for the county of Laramie or the county attorney of the county inwhich the action is to be brought or defended to represent the commission untilsuch time as the attorney general may take charge of the litigation and uponrequest, or with the consent of the attorney general, the commission may retainadditional counsel to assist the attorney general, and for such purpose mayemploy any funds available under this act. Any member of the commission, or thesecretary thereof, shall have power to administer oaths to any witness in anyhearing, investigation, or proceeding contemplated by this act, or by any otherlaw of this state relating to the conservation of oil and gas.
(f) Effective July 1, 1979, appointments and terms under thissection shall be in accordance with W.S. 28-12-101 through 28-12-103.
30-5-104. Oil and gas conservation commission; powers and duties;investigations; rules and regulations.
(a) The Wyoming oil and gas conservation commission, hereincalled "the commission," has jurisdiction and authority over allpersons and property, public and private, necessary to effectuate the purposesand intent of this act, including the authority to set, assess and collectreasonable fees as provided in this subsection. The fees authorized under thissubsection shall be set in accordance with the following:
(i) Fees shall be established by rule or regulation promulgatedin accordance with the Wyoming Administrative Procedure Act;
(ii) Fees shall be established in an amount to ensure that, tothe extent practicable, the total revenue generated from the fees collectedapproximates, but does not exceed, the direct and indirect costs of the administrativeactivity associated with the fee;
(iii) The commission shall maintain records sufficient to supportthe fees charged;
(iv) Fees may be imposed only for:
(A) Applications for commission or examiner hearings and forcontinuances of those hearings;
(B) Applications for administrative approval;
(C) Applications for permits to drill oil and gas wells;
(D) Applications for stratigraphic tests or core holes;
(E) Injection wells subject to the environmental protectionagency underground injection control program administered by the commission.
(b) The commission has authority and it is its duty to makeinvestigations to determine whether waste exists or is imminent, or whetherother facts exist, which justify or require action by it hereunder. Thecommission is authorized to enter orders following any investigatory hearingsif properly noticed to operators, producers and processors under the provisionsof the Wyoming Administrative Procedure Act and rules of the commission.
(c) The commission shall make rules, regulations, and orders,and shall take other appropriate action, to effectuate the purposes and intentof this act.
(d) The commission has authority:
(i) To require:
(A) Identification of ownership of wells, producing leases,tanks, plants and drilling structures;
(B) The making and filing of reports, well logs, anddirectional surveys; provided, however, that logs of exploratory or"wildcat" wells marked confidential shall be kept confidential forsix (6) months after the filing thereof, unless the owner gives writtenpermission to release such logs at an earlier date;
(C) The drilling, casing, and plugging of wells in such manneras to prevent the escape of oil or gas out of one (1) stratum into another, theintrusion of water into an oil and gas stratum, the pollution of fresh watersupplies by oil, gas, or salt water, and to prevent blowouts, cavings,seepages, and fires;
(D) The furnishing of a surety bond or other guaranty,conditioned for or securing the performance of the duty to plug each dry orabandoned well or the repair of wells causing waste and compliance with therules and orders of the commission;
(E) The operation of wells with efficient gas-oil and water-oilratios, and to fix these ratios;
(F) Gauging or other measuring of oil and gas to determine thequantity and quality thereof;
(G) That every person who produces oil or gas in this stateshall keep and maintain for a period of five (5) years within this statecomplete and accurate record of the quantities thereof, which records orcertified copies thereof shall be available for examination by the commissionor its agents at all reasonable times;
(H) The payment of reasonable fees authorized under thisarticle.
(ii) To regulate, for conservation purposes:
(A) The drilling, producing, and plugging of wells;
(B) The shooting and chemical treatment of wells;
(C) The spacing of wells;
(D) Disposal of salt water, nonpotable water, drilling fluidsand other oil-field wastes which are uniquely associated with exploration andproduction operations;
(E) The contamination or waste of underground water;
(F) All aspects of oil mining operations provided that nothingherein shall limit the authority of state mining inspector. "Oil miningoperations" means operations associated with the production of oil or gasfrom reservoir access holes drilled from underground shafts or tunnels.
(iii) To classify wells as oil or gas wells for purposes materialto the interpretation or enforcement of this act, to make the determination ofwells required by the Natural Gas Pricing Policy Act of 1978 [Natural GasPolicy Act of 1978], Public Law 95-621 and to make any other determination ofwells that be required by the United States department of energy;
(iv) When required, in order to protect correlative rights, toestablish drilling units affording each owner an opportunity to drill for andproduce as a prudent operator, and so far as it is reasonably practicable to doso without waste, his just and equitable share of the oil or gas or both in thepool and to restrict or limit the production of oil or gas from any well whichis allowed, after the effective date of this act, as an exception to thelocation requirements of or as an additional well permitted under any order ofthe commission establishing drilling units for a pool or part thereof or of anygeneral well spacing rule or order adopted by the commission for conservationpurposes, upon such terms and conditions as the commission may determine, uponthe commission's own motion or upon application of any interested person andafter notice and hearing as provided by chapter 6, Wyoming Statutes 1957, asamended, and by the commission's rules;
(v) To adopt rules and regulations to:
(A) Regulate the plugging, sealing or capping of seismic shotholes, and to require, and fix the amount of, a surety bond or other guarantyto ensure compliance with regulations governing all geophysical operations;
(B) Require an applicant to certify that all undergroundelectrical conductors outside of its facilities, fenced enclosures or postedareas comply with the national electric code; and
(C) Require an operator to install and maintain all electricalequipment located in and around an oil and gas well to comply with the nationalelectrical code.
(vi) To regulate, excluding discharges permitted under thenational pollutant discharge elimination system, the:
(A) Location, construction, operation and reclamation of allnoncommercial reserve pits and produced water retention and emergency overflowpits used solely for the storage, treatment and disposal of drilling fluids,produced waters, emergency overflow wastes or other oil field wastes associatedwith the maintenance and operation of oil and gas exploration and productionwells on a lease, unit or communitized area in such a manner as to prevent thecontamination of the waters of the state;
(B) The noncommercial underground disposal into Class twoinjection wells as defined under the federal Safe Drinking Water Act of saltwater, nonpotable water and oil field wastes related to oil and gas productionin such a manner as to prevent contamination of the waters of the state.
(vii) To use funds collected under W.S. 30-5-116(b) to plug wellsand seismic holes and reclaim the surrounding area affected by them, if thecommission is unable to enforce its regulations and laws requiring the owner,seismic contractor or hole plugger to plug and reclaim and if the owner,seismic contractor or hole plugger does not have an adequate surety bond orother guaranty to cover the cost of plugging and reclamation. Nothing in thisparagraph shall be construed to create any liability by the state for failureto adequately plug or reclaim wells or holes. If oil field equipment appears tohave been abandoned in the area of a well or hole which is plugged or reclaimedunder this paragraph, the commission may, after notice and a hearing asprovided in W.S. 30-5-105 and 30-5-106 and a finding that the equipment isabandoned, dispose of the equipment. The commission may dispose of theequipment by public sale or by transferring it to the contractor who performsthe plugging and reclamation for the commission. The transfer or proceeds ofthe sale shall be used to defray the cost of plugging or reclamation. Thecommission shall promulgate rules to implement this paragraph;
(viii) To issue orders allowing the unitization of pore spaceassociated with geologic sequestration sites pursuant to W.S. 35-11-314 through35-11-317 and adopt such rules and regulations as necessary to effectuate thepurposes of W.S. 35-11-314.
30-5-105. Oil and gas conservation commission; hearings; conducted byexaminers; procedures.
Inaddition to the powers and authority, either express or implied, granted to theWyoming oil and gas conservation commission by virtue of the statutes of thestate of Wyoming, the commission is hereby authorized and empowered inprescribing its rules of order or procedure in connection with hearings orother proceedings before the commission to provide for the appointment of one(1) or more examiners to conduct a hearing or hearings with respect to anymatter properly coming before the commission and to make reports andrecommendations to the commission with respect thereto. Any member of thecommission, or its staff or any other person designated by the commission mayserve as an examiner. The commission may also provide for additionalcompensation to be paid to a member of the commission appointed from the publicat large or any other person designated by the commission for servicesperformed as an examiner at the same rate as the at-large members of thecommission are presently compensated. The commission shall promulgate rules andregulations with regard to hearings to be conducted before examiners whichshall provide for rehearing before the commission, upon the request of anyinterested party, of any matter heard before an examiner. The commission mayenter orders based upon the reports and recommendations of its examiners. Ifsuch an order grants the request of an applicant, and no objection to thegranting thereof has been filed or made before or during the hearing before theexaminer, said order shall become effective immediately. If such an orderdenies the request of the applicant, in whole or in part, or if a timelyprotest to the granting of an application is filed or made, said order shallnot become effective until: (a) the time prescribed by rule for the making of arequest for rehearing before the commission has expired without any suchrequest having been made or (b) all interested parties have waived their rightto request a rehearing, or (c) if timely request for rehearing is made, thecommission after rehearing, shall affirm, revoke or modify such order. After anorder based upon a hearing conducted by an examiner has become effective, itshall have the same force and effect as if said hearing had been conductedbefore the members of said commission.
30-5-106. When hearings held before commission.
Notwithstandingany provision of this act, or any rule of the commission adopted pursuant tothe powers granted to it by this act, the hearing on any matter or proceedingshall be held before the commission (a) if the commission in its discretiondesires to hear the matter, or (b) if the application or motion so requests, or(c) if the matter is initiated on the motion of the commission for enforcementof any rule, regulation, order, or statutory provision, or (d) if any party whomay be affected by the matter or proceeding files with the commission more thanthree (3) days prior to the date set for the hearing on the matter orproceeding a written objection to such matter or proceeding being heard beforean examiner, or (e) if the matter or proceeding is for the purpose of amending,removing or adding a statewide rule or administrative fee.
30-5-107. Hearings; W.S. 30-5-105 through 30-5-107 subordinate toAdministrative Procedure Act.
Thisact shall be supplemental but subordinate to the Wyoming AdministrativeProcedure Act (Original House Bill No. 196, 38th Legislature).
30-5-108. State oil and gas supervisor; appointment; duties; authorityof commission to appoint other employees; payment of traveling and livingexpenses.
Toenable the commission to carry out its duties and powers under the laws of thisstate with respect to conservation of oil and gas, and to enforce the rules andregulations so prescribed, the commission shall appoint one (1) chiefadministrator who shall be a qualified and registered professional petroleumengineer or petroleum geologist who shall be designated and known as the"State Oil and Gas Supervisor." Such supervisor shall hold office atthe pleasure of the commission and shall receive a salary, to be fixed by the commission.The state oil and gas supervisor shall be charged with such duties as aredelegated by the commission, and in addition thereto he shall investigatecharges and complaints of violation of the laws of this state with respect toconservation of oil and gas, and any order, rules and regulation of thecommission made in connection therewith, and report concerning all suchviolations to the commission. The commission may at any time, when it findsthat the public interest will be served thereby appoint such other employees asare found to be necessary, to assist the commission and the state oil and gassupervisor in the discharge of their respective duties. All employees orassistants authorized by this act shall be paid their necessary traveling andliving expenses when traveling on official business, at such rates and withinsuch limits as may be fixed by the commission, subject to existing law.
30-5-109. Rules and regulations governing drilling units.
(a) When required, to protect correlative rights or, to preventor to assist in preventing any of the various types of waste of oil or gasprohibited by this act, or by any statute of this state, the commission, uponits own motion or on a proper application of an interested party, but afternotice and hearing as herein provided shall have the power to establishdrilling units of specified and approximately uniform size covering any pool.
(b) In establishing a drilling unit, the acreage to be embracedwithin each unit and the shape thereof shall be determined by the commissionfrom the evidence introduced at the hearing but shall not be smaller than themaximum area that can be efficiently drained by one (1) well.
(c)(i) Subject to the provisions of this act, the orderestablishing drilling units for a pool or part thereof shall direct that nomore than one (1) well shall be drilled to and produced from such pool on anyunit, and that the well shall be drilled at a location authorized by the order,with such exception as may be reasonably necessary where the drilling unit islocated on the edge of the pool and adjacent to a producing unit, or, for someother reason, the requirement to drill the well at the authorized location onthe unit would be inequitable or unreasonable;
(ii) The state oil and gas supervisor, upon proper applicationtherefor in accordance with the commission's rules, may grant exceptions fromsuch authorized location for good cause shown, either (A) where writtenconsents to the exception applied for have been given by all owners of drillingunits directly or diagonally offsetting the unit for which the exception isrequested and, as to lands for which drilling units have not been soestablished for such pool, by the owners of those lands which would comprisethe directly and diagonally offsetting drilling units if the drilling unitorder for the pool involved were extended to include such additional lands, inwhich case said supervisor may grant such exception immediately, or (B) if lessthan all of such owners have so consented to such exception, where theapplicant shows to the satisfaction of said supervisor (by affidavit statingthe time, place and manner of mailing, or such further proof as said supervisormay require) that notice of the filing of such application for exception has beenmailed by registered or certified mail with return receipt to all of suchowners failing to so consent and that fifteen (15) days have elapsed since thedate of such mailing without any of such owners having filed with saidsupervisor written objections to the granting of such exception, in which casethe exception may be granted upon the expiration of such fifteen (15) dayperiod;
(iii) If any of the owners specified in paragraph (ii) above ofthis subsection (c), who have not in writing consented to the exception appliedfor, file written objections to the requested exception with the state oil andgas supervisor during said fifteen (15) day period following the applicant'smailing of the notice of filing, or if for any other reason said supervisor failsto grant such requested exception, then no well shall be drilled on thedrilling unit involved except at the location authorized by the orderestablishing such unit, unless and until the commission shall grant suchexception after notice and hearing upon the application as required by thisact. Provided that in addition to any other notice required by W.S.30-5-111(d) as amended, or any other provision of law or the commission'srules, the commission shall cause notice of any hearing before it on an applicationfor such exception to be mailed by registered or certified mail with returnreceipt to each of the owners specified in paragraph (ii) above of thissubsection (c) at least ten (10) days before the date of such hearing.
(d) The commission, upon application, notice, and hearing, maydecrease the size of the drilling units or permit additional wells to bedrilled within the established units in order to prevent or assist inpreventing any of the various types of waste prohibited by this act or in orderto protect correlative rights, and the commission may enlarge the area coveredby the order fixing drilling units, if the commission determines that thecommon source of supply underlies an area not covered by the order.
(e) After an order fixing drilling units has been entered bythe commission, the commencement of drilling of any well or wells into anycommon source of supply for the purpose of producing oil or gas therefrom, at alocation other than authorized by the order, is hereby prohibited. Theoperation of any well drilled in violation of an order fixing drilling units isprohibited.
(f) When two (2) or more separately owned tracts are embracedwithin a drilling unit, or when there are separately owned interests in all ora part of the drilling unit, then persons owning such interests may pool theirinterests for the development and operation of the drilling unit. In theabsence of voluntary pooling, the commission, upon the application of anyinterested person, may enter an order pooling all interests in the drillingunit for the development and operation thereof. Each such pooling order shallbe made after notice and hearing and shall be upon terms and conditions thatare just and reasonable. Operations incident to the drilling of a well upon anyportion of a unit covered by a pooling order shall be deemed for all purposesto be the conduct of such operations upon each separately owned tract in theunit by the several owners thereof. That portion of the production allocated orapplicable to each tract included in a unit covered by a pooling order shall,when produced, be deemed for all purposes to have been produced from such tractby a well drilled thereon.
(g) Each pooling order shall provide for the drilling andoperation of a well on the drilling unit, and for the payment of the costthereof, as provided in this subsection. The commission is specificallyauthorized to provide that the owner or owners drilling or paying for thedrilling or for the operation of a well for the benefit of all owners shall beentitled to all production from the well which would be received by the owneror owners, for whose benefit the well was drilled or operated, after payment ofroyalty as provided in the lease, if any, applicable to each tract or interest,and obligations payable out of production, until the owner or owners drillingor operating the well or both have been paid the amount due under the terms ofthe pooling order or order settling the dispute. In the event of any disputedcost, the commission shall determine the proper cost. The order shall determinethe interest of each owner in the unit, and may provide that each owner whoagrees with the person or persons drilling and operating the well for thepayment by the owner of his share of the costs, unless he has agreed otherwise,shall be entitled to receive, subject to royalty or similar obligations, theshare of the production of the well applicable to the tract of thenonconsenting owner. Each owner who does not agree, shall be entitled to receivefrom the person or persons drilling and operating the well on the unit hisshare of the production applicable to his interest after the person or personsdrilling and operating the well have recovered the following:
(i) One hundred percent (100%) of each such nonconsentingowner's share of the cost of any newly acquired surface equipment beyond thewellhead connections (including, but not limited to, stock tanks, separators,treaters, pumping equipment and piping), plus one hundred percent (100%) ofeach such nonconsenting owner's share of the cost of operation of the wellcommencing with first production and continuing until each such nonconsentingowner's relinquished interest shall revert to it under other provisions in thissection, it being intended that each nonconsenting owner's share of such costsand equipment will be that interest which would have been chargeable to eachnonconsenting owner had it initially agreed to pay its share of the costs ofsaid well from the beginning of the operation; and
(ii) Up to three hundred percent (300%) of that portion of thecosts and expenses of drilling, reworking, deepening or plugging back, testingand completing, after deducting any cash contributions received and up to twohundred percent (200%) of that portion of the cost of newly acquired equipmentin the well, to and including the wellhead connections, which would have beenchargeable to the nonconsenting owner if he had participated therein.
30-5-110. Agreements for waterflooding or other recovery operations,repressuring or pressure-maintenance operations, cycling or recyclingoperations; operation as a unit of 1 or more pools or parts thereof and poolingof interests in oil and gas therein; amendment of orders and agreements.
(a) An agreement for waterflooding or other recovery operationsinvolving the introduction of extraneous forms of energy into any pool,repressuring or pressure-maintenance operations, cycling or recyclingoperations, including the extraction and separation of liquid hydrocarbons fromnatural gas in connection therewith, or for carrying any other method of unitor cooperative development or operation of one (1) or more pools or partsthereof, is authorized and may be performed, and shall not be held or construedto violate any of the statutes of this state relating to trusts, monopolies, orcontracts and combinations in restraint of trade, and may be submitted to thecommission for approval as being in the public interest or reasonably necessaryto prevent waste or to protect correlative rights. Approval of such agreementby the commission shall constitute a complete defense to any suit chargingviolation of any statute of this state relating to trusts, monopolies andcombinations in restraint of trade on account of such agreement or on accountof operations conducted pursuant thereto. The failure to submit such anagreement to the commission for approval shall not for that reason imply orconstitute evidence that such agreement or operations conducted pursuantthereto are in violation of laws relating to trusts, monopolies andcombinations in restraint of trade.
(b) Except when context otherwise requires, the terms used ordefined in W.S. 30-5-101, shall have the same meaning when used in thissection.
(c) Any interested person may file an application with thecommission requesting an order providing for the operation as a unit of one (1)or more pools or parts thereof and for the pooling of the interests in the oiland gas in the proposed unit area for the purpose of conducting such unitoperation. Such application shall contain:
(i) A description of the land and pool, pools or portionsthereof proposed to be so operated, termed the "unit area";
(ii) The names, as disclosed by the conveyance records of thecounty or counties in which the proposed unit area is situated, and the statusrecords of the district office of the bureau of land management, of (A) allpersons owning or having an interest in the oil and gas in such unit area orthe production therefrom including mortgages and the owners of other liens orencumbrances, (B) all owners of every tract of land not included within butwhich immediately adjoins the proposed unit area or a corner thereof, and (C)the addresses of all such persons and owners, if known. If the name or addressof any such person or owner is unknown, the application shall so indicate;
(iii) A statement of the type of operations contemplated in orderto effectuate the purposes of this section;
(iv) A proposed plan of unitization applicable to the proposedunit area which the applicant considers fair, reasonable and equitable andwhich shall include provisions for the formula or method of allocating oil andgas produced from the proposed unit area to and among the separately ownedtracts within such area, the appointment of a unit operator and the time whenthe plan is to become effective;
(v) A proposed operating plan providing the manner in which theunit will be supervised and managed and costs allocated and paid, unless allowners within the proposed unit area have joined in executing an operatingagreement or plan providing for such supervision, management and allocation andpayment of costs.
(d) Upon filing of such application, the commission shallpromptly set the matter for hearing, and in addition to the notice, if anyotherwise required by law or the commission's rules, shall cause notice of suchhearing, specifying the time and place of hearing, and describing briefly itspurpose and the land affected, to be mailed by certified mail at least fifteen(15) days prior to the hearing to all persons whose names and addresses arerequired to be listed in the application.
(e) If after considering the application and hearing theevidence offered in connection therewith, the commission shall enter an ordersetting forth the following described findings and approving the proposed planof unitization and proposed operating plan, if any, if the commission findsthat:
(i) The material allegations of the application aresubstantially true;
(ii) Such unit operation is feasible, will prevent waste, willprotect correlative rights, and can reasonably be expected to increasesubstantially the ultimate recovery of oil or gas;
(iii) The value of the estimated additional recovery of oil orgas will exceed the estimated additional costs incident to conducting unitoperations;
(iv) The oil and gas allocated to each separately owned tractwithin the unit area under the proposed plan of unitization represents, so faras can be practically determined, each such tract's just and equitable share ofthe oil or gas in the unit area;
(v) Where the unit embraces less than the whole of a pool, thatthe portion thereof to be included within the unit area is of such size andshape as may be reasonably required for the successful and efficient conduct ofthe unitized method or methods of operation for which the unit is created andthat the conduct thereof will have no material adverse effect upon theremainder of such pool;
(vi) In case there are owners who have not executed an operatingagreement or agreed to the proposed operating plan covering the supervision,management and allocation of payment costs, that such proposed operating plan:
(A) Makes a fair and equitable adjustment among the ownerswithin the unit area for their respective investments in wells, tanks, pumps,machinery, materials and equipment which have contributed to the unitoperations;
(B) Provides for a fair and equitable determination of the costof unit operations, including capital investment, and establishes a fair andequitable method for allocating such costs to the separately owned tracts andfor the payment of such costs by the persons owning such tracts, eitherdirectly or out of such person's respective share of unit production;
(C) If necessary, prescribes fair, reasonable and equitableterms and conditions as to time and rate of interest for carrying or otherwisefinancing any person who is unable to promptly meet his financial obligationsin connection with the unit;
(D) Provides that each owner shall have a vote in thesupervision and conduct of unit operations corresponding to the percentage ofcosts of unit operations chargeable against the interests of such person; and
(E) Provides for fair and equitable terms and conditions forremoval of unit operator and for appointment of a successor unit operator.
(f) No order of the commission authorizing the commencement ofunit operations shall become effective until the plan of unitization has beensigned or in writing ratified or approved by those persons who own at leasteighty percent (80%) of the unit production or proceeds thereof that will becredited to royalty and overriding royalty interests which are free of costs,and unless both the plan of unitization and the operating plan, if any, havebeen signed, or in writing approved or ratified, by those persons who will berequired to pay at least eighty percent (80%) of the cost of unit operations.However, to the extent that overriding royalty interests are in excess of atotal of twelve and one-half percent (12 1/2%) of the production from anytract, such excess interests shall not be considered in determining thepercentage of approval or ratification by such cost-free interests. If suchconsent has not been obtained at the time the commission order is made, thecommission shall, upon application, hold such supplemental hearings and makesuch findings as may be required to determine when and if such consent has beenobtained. Notice of such supplemental hearing shall be given by regular mail atleast fifteen (15) days prior to such hearing to each person owning interestsin the oil and gas in the proposed unit area whose name and address wasrequired by the provisions of subsection (c) (ii) of this section to be listedin the application for such unit operations. If the required percentages ofconsent have not been obtained within a period of six (6) months from and afterthe date on which the order of approval is made, such order shall beineffective and revoked by the commission, unless, for good cause shown, thecommission extends that time. Any interested person may file an applicationwith the commission requesting an order applicable only to the proposed unitarea described in the application which shall provide for the percentage ofapproval or ratification by either cost-free or cost-bearing interests, orboth, to be reduced from eighty percent (80%) to seventy-five percent (75%).The application shall contain the information required by subsection (c) ofthis section and any order of the commission entered pursuant to theapplication must comply with subsection (e) of this section. Notice of thehearing on the application shall be given in the same manner and to the samepersons as required by subsection (d) of this section. If the commission findsthat negotiations were being conducted on the effective date of this act orhave been conducted for a period of at least nine (9) months prior to thefiling of the application, that the applicant has participated in thenegotiations diligently and in good faith, and that the percentage of approvalor ratification required by this subsection cannot be obtained, the commissionmay reduce any percentage of approval or ratification required by this sectionfrom eighty percent (80%) to seventy-five percent (75%). Such an order shallaffect only the unit area described in the application and shall operate onlyto approve the proposed plan of unitization and proposed operating plan and toreduce the required percentage of approval or ratification thereof and shallnot change any other requirement contained in this section.
(g) From and after the effective date of an order of thecommission entered under the provisions of this section, the operation of anywell producing from the unit area defined in the order by persons other thanthe unit operator or persons acting under the unit operator's authority, orexcept in the manner and to the extent provided in the plan of unitizationapproved by the order, shall be unlawful and is hereby prohibited.
(h) An order entered by the commission under this section, oran agreement under subsection (a) of this section establishing a unit areaunder which waterflooding or other recovery operations involving theintroduction of extraneous forms of energy into the pool have been conducted,may be amended in the same manner and subject to the same conditions as anoriginal order or previous agreement: provided, (i) if the amendment affectsonly the rights of owners, then consent to the amendment by those persons whowill be credited with unit production or proceeds thereof free of cost shallnot be required; and (ii) no amendatory order shall change the percentage forthe allocation of oil and gas as established by the original order or previousagreement, except with the written consent of those persons who own at leasteighty percent (80%) of the unit production or proceeds thereof that will becredited to royalty and overriding royalty interests which are free of costs,and of those persons who will be required to pay at least eighty percent (80%)of the cost of unit operations, nor change the percentage for the allocation ofcosts as established by the original order or previous agreement, except withthe written consent of those persons who own at least eighty percent (80%) ofthe unit production or proceeds thereof that will be credited to royalty andoverriding royalty interests which are free of costs, and of those persons whowill be required to pay at least eighty percent (80%) of the cost of unitoperations. However, to the extent that overriding royalty interests are inexcess of a total of twelve and one-half percent (12 1/2%) of the productionfrom any tract, such excess interests shall not be considered in determining thepercentage of approval or ratification by such cost-free interests. If suchconsent has not been obtained at the time the commission order is made, thecommission shall, upon application, hold such supplemental hearings and makesuch findings as may be required to determine when and if such consent has beenobtained. Notice of such supplemental hearing shall be given by regular mail atleast fifteen (15) days prior to such hearing to each person owning interestsin the oil and gas in the unit area whose name and address was required by theprovisions of paragraph (c)(ii) of this section to be listed in the applicationfor such unit operations. If the required percentages of consent have not beenobtained within a period of six (6) months from and after the date on which theorder of approval is made, such order shall be ineffective and revoked by thecommission, unless, for good cause shown, the commission extends that time. Anyinterested person may file an application with the commission requesting an orderapplicable only to the unit area described in the application which shallprovide for the percentage of approval or ratification by either cost-free orcost-bearing interests, or both, to be reduced from eighty percent (80%) toseventy-five percent (75%). The application shall contain the informationrequired by subsection (c) of this section and any order of the commissionentered pursuant to the application must comply with subsection (e) of thissection. Notice of the hearing on the application shall be given in the samemanner and to the same persons as required by subsection (d) of this section.If the commission finds that negotiations were being conducted on the effectivedate of this act or have been conducted for a period of at least nine (9) monthsprior to the filing of the application, that the applicant has participated inthe negotiations diligently and in good faith, and that the percentage ofapproval or ratification required by this subsection cannot be obtained, thecommission may reduce any percentage of approval or ratification required bythis section from eighty percent (80%) to seventy-five percent (75%). Such anorder shall affect only the unit area described in the application and shalloperate only to approve a proposed plan of unitization and a proposed operatingplan and to reduce the required percentage of approval or ratification thereofand shall not change any other requirement contained in this section.
(j) Upon application by any interested person, the commission,by order may, in the same manner and subject to the same conditions as anoriginal order, provide for the unit operation of a pool or pools, or partsthereof, that embrace a unit area established by a previous order of thecommission or that embrace a unit area previously established by a previousagreement under which waterflooding or other recovery operations involving theintroduction of extraneous form of energy into the pool have been conducted.Such order in providing for the allocation of unit production, shall firsttreat the unit area previously established as a single tract, and the portionof unit production so allocated thereto shall then be allocated among theseparately owned tracts included in such previously established unit area inthe same proportions as those specified in the previous order or such previousagreement as the case may be.
(k) All operations, including, but not limited to, thecommencement, drilling, or operation of a well upon any portion of the unitarea for all purposes shall be deemed to be the conduct of such operations uponeach separately owned tract in the unit area by the owner or owners thereof.The portion of the unit production allocated to a separately owned tract in aunit area shall, when produced, be deemed, for all purposes, to have beenactually produced from such tract by a well drilled thereon. Operationsconducted pursuant to an order of the commission providing for unit operationsshall constitute a fulfillment of all the express or implied obligations ofeach lease or contract covering lands in the unit area to the extent thatcompliance with such obligations cannot be had because of the orders of thecommission. Whenever the commission enters an order providing for a unitoperation, any lease, other than a state or federal lease, which covers landsthat are in part within the unit area embraced in any such plan of unitizationand that are in part outside of such unit area shall be vertically segregatedinto separate leases, one (1) covering all formations underlying the landswithin such unit area and the other covering all formations underlying thelands outside each unit area, such segregation to be effective as of theanniversary date of such lease next ensuing after the expiration of ninety (90)days from the effective date of unitization; provided, however, that any suchsegregated lease as to the outside lands shall continue in force and effect forthe primary term thereof, but not for less than two (2) years from the date ofsuch segregation and so long thereafter as operations are conducted under theprovisions of the lease. If any such lease provides for a lump-sum rental andif rentals become payable under any segregated lease covering the outside land,such lump-sum rental shall be prorated between such segregated leases on anacreage basis.
(m) The portion of the unit production allocated to any tract,and the proceeds from the sale thereof, shall be the property and income of theseveral persons to whom, or to whose credit, the same are allocated or payableunder the order providing for unit operations.
(n) No division order or other contract relating to the sale orpurchase of production from a separately owned tract shall be terminated by theorder providing for unit operations, but shall remain in force and apply to oiland gas allocated to such tract until terminated in accordance with theprovisions thereof.
(o) Except to the extent that the parties affected so agree, noorder providing for unit operations shall be construed to result in a transferof all or any part of the title of any person to the oil and gas rights in anytract in the unit area. All property, whether real or personal that may beacquired for the account of the owners within the unit area, shall be theproperty of such owners in the proportion that the expenses of unit operationsare charged.
(p) Subject to the limitations set forth in this section, andto such further limitations as may be set forth in the plan of unitization andoperating plan, the operator of the unit shall have a first and prior lien forcosts incurred pursuant to the plan of unitization and operating plan upon eachowner's oil and gas rights and his share of unitized production to secure thepayment of such owner's proportionate part of the costs of developing andoperating the unit area. The lien may be established and enforced in the samemanner as provided by W.S. 29-3-101 through 29-3-111. For such purposes anynonconsenting owner shall be deemed to have contracted with the unit operatorfor his proportionate part of the cost of developing and operating the unitarea. A transfer or conversion of any owner's interest or any portion thereofhowever accomplished after the effective date of the order creating the unit,shall not relieve the transferred interest of said operator's lien on saidinterest for the cost and expense of unit operations.
(q) Notwithstanding any other provisions in this section to thecontrary, any person who owns an interest in oil or gas within the unit areawhich is not subject to an oil and gas lease or similar contract, shall, withrespect to seven-eighths of the interest, be deemed to be an owner obligated topay all costs of unit operations attributable to the interest and shall bedeemed to be a royalty owner to the extent of one-eighth of the interest freefrom the costs.
(r) The provisions of subsections (b) through (q) of thissection shall never be applicable for the purpose of:
(i) Changing the terms of unit agreements under whichwaterflooding or other recovery operations involving the introduction ofextraneous forms of energy into a pool have been conducted prior to theeffective date of this section or changing the rights of either any person whohas executed or ratified a preexisting unit agreement or any person who, beingqualified to become a party to a preexisting unit agreement and having receivedan opportunity to become a party thereto, has failed or refused to execute orratify the agreement; or
(ii) Subjecting the interest of any person in the oil and gas inthe unit area to a unit agreement which allocates unit production to suchinterest under a formula based solely upon the surface acreage of the separatetracts within the unit area.
(s) A certified copy of any order of the commission enteredunder the provisions of this section shall be entitled to be recorded in theoffice of the county clerk for the counties where all or any portion of theunit area is located, and such recordation shall constitute notice thereof toall persons.
(t) If any section, subsection, sentence or clause of thissection is adjudged to be unconstitutional or invalid, such adjudication shallnot affect any other portions of this section which can be given effect withoutthe unconstitutional or invalid provision, and to this end the provisions ofthis section are severable.
30-5-111. Rules of practice and procedure; hearings; emergency orders;notice; public inspection.
(a) The commission shall prescribe rules and regulationsgoverning the practice and procedure before it.
(b) No rule, regulation, or order, or amendment thereof, exceptas otherwise provided in this act, shall be made by the commission without ahearing upon at least ten (10) days notice. The hearing shall be held at suchtime and place as may be prescribed by the commission, and any interestedperson shall be entitled to be heard.
(c) When an emergency requiring immediate action is found bythe commission to exist, it is authorized to issue an emergency order withoutnotice or hearing, which shall be effective upon promulgation. No emergencyorder shall remain effective for more than fifteen (15) days.
(d) Notice of all hearings before the commission shall be givenby the commission by one (1) publication in a newspaper of general circulationin Natrona county, and by one (1) publication in a newspaper of generalcirculation in the county where the land affected, or some part thereof, issituated. In all cases where there is an application for the entry of a poolingorder, the commission, in addition to such publication notice, shall causenotice of the hearing to be mailed to all owners whose interests are sought tobe pooled. In all cases where a complaint is made by the commission, or by thestate oil and gas supervisor or by any party that any provision of this act, orany rule, regulation or order of the commission is being violated, notice ofthe hearing on such complaint shall be served on the parties charged with suchviolation by any officer authorized by law to serve summons in civil actions orby an agent authorized and directed by the commission or its secretary, in thesame manner as is provided in the code of civil procedure for service ofprocess in civil actions in the district courts of this state; proof of suchservice by an officer shall be in the form provided by law with respect tocivil process and proof of such service by an agent shall be by such agent'saffidavit.
(e) All notices of hearings required to be given by thecommission shall issue in the name of the state, and be signed by a member ofthe commission or its secretary, and shall specify the style and number of theproceeding, the time and place of hearing, and shall briefly state the purposeof the proceeding.
(f) In addition to the notice herein provided the commissionmay, by rule, regulation or order, require such additional notice to be givenin such manner and for such time as it may deem necessary and proper.
(g) All rules, regulations, and orders issued by the commissionshall be in writing, shall be entered in full in books to be kept by thecommission for that purpose, shall be indexed, and shall be public records openfor inspection at all times during reasonable office hours. Except for ordersestablishing or changing rules of practice or procedure, all orders made andpublished by the commission shall include and be based upon written findings offact, which said findings of fact shall be entered and indexed as publicrecords in the manner hereinbefore provided. A copy of any rule, regulation, ororder certified by the commission or its secretary shall be received inevidence in all courts in this state with the same effect as the original.
(h) The commission may act upon its own motion, or upon thepetition of any interested person. On the filing of a petition for a hearingconcerning any matter within the jurisdiction of the commission, it shallpromptly fix a date for a hearing thereon and shall cause notice of the hearingto be given. The hearing shall be held without undue delay after the filing ofthe petition. The commission shall enter its order within thirty (30) daysafter the hearing. Any person affected by any order of the commission shallhave the right at any time to apply to the commission to repeal, amend, modify,or supplement the same.
30-5-112. Summoning witnesses and production of record; no abridgmentof rights; failure to testify.
(a) The commission shall have the power to summon witnesses, toadminister oaths, and to require the production of records, books, and documentsfor examination at any hearing or investigation conducted by it. No personshall be excused from attending and testifying, or from producing books,papers, and records before the commission or a court, or from obedience to thesubpoena of the commission or a court, on the ground or for reason that thetestimony or evidence, documentary or otherwise, required of him may tend toincriminate him or subject him to a penalty or forfeiture; provided, thatnothing herein contained shall be construed as requiring any person to produceany books, papers, or records, or to testify in response to any inquiry notpertinent to some question lawfully before the commission or court fordetermination. No natural person shall be subjected to criminal prosecution orto any penalty or forfeiture for or on account of any transaction, matter, orthing concerning which, in spite of his objection, he may be required totestify or produce evidence, documentary or otherwise, before the commission orcourt, or in obedience to a subpoena; provided, that no person testifying shallbe exempted from prosecution and punishment for perjury committed in sotestifying.
(b) Nothing in this act, and no suit by or against thecommission, and no violation charged or asserted against any person under anyprovisions of this act, or any rule, regulation or order issued hereunder,shall impair or abridge or delay any cause of action for damages which anyperson may have or assert against any other person violating any provision ofthis act, or any rule, regulation, or order issued thereunder. Any person sodamaged by the violation may sue for and recover such damages as he otherwisemay be entitled to receive. In the event the commission shall fail to bringsuit to enjoin any actual or threatened violation of this act, or of any rule,regulation or order made hereunder, then any person or party in interestadversely affected and who has notified the commission in writing of suchviolation or threat thereof and has requested the commission to sue, may, toprevent any or further violation, bring suit for that purpose in the districtcourt of any county in which the commission could have brought suit. If, insuch suit, the court holds that injunctive relief should be granted, then thecommission may be made a party and the court may in its discretion order thecommission to be substituted for the person who brought the suit or theinjunction issue as to the court may be deemed meet and proper in the premises.
(c) In case of failure or refusal on th