Bill Text: PA SB447 | 2011-2012 | Regular Session | Introduced

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Bill Title: Consolidating the Oil and Gas Conservation Law with modifications relating to definitions, standard unit order, process, administration, standard of review, hearings and appeals, establishment of units, integration of various interests, lease extension and scope; providing for gas and hazardous liquids pipelines; and making a related repeal.

Spectrum: Moderate Partisan Bill (Republican 4-1)

Status: (Introduced - Dead) 2011-02-11 - Referred to ENVIRONMENTAL RESOURCES AND ENERGY [SB447 Detail]

Download: Pennsylvania-2011-SB447-Introduced.html

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PRINTER'S NO. 480
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 447 Session of2011
INTRODUCED BY YAW, M. WHITE, MENSCH AND FONTANA, FEBRUARY 11, 2011
REFERRED TO ENVIRONMENTAL RESOURCES AND ENERGY, FEBRUARY 11, 2011
AN ACT
Amending Title 58 (Oil and Gas) of the Pennsylvania Consolidated
Statutes, consolidating the Oil and Gas Conservation Law with
modifications relating to definitions, standard unit order,
process, administration, standard of review, hearings and
appeals, establishment of units, integration of various
interests, lease extension and scope; providing for gas and
hazardous liquids pipelines; and making a related repeal.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Title 58 of the Pennsylvania Consolidated
Statutes is amended by adding parts to read:
PART I
PRELIMINARY PROVISIONS
(RESERVED)
PART II
(RESERVED)
PART III
UTILIZATION
Chapter
31. (Reserved)
32. (Reserved)
33. (Reserved)
34. Unconventional Oil and Gas Conservation
CHAPTER 31
(RESERVED)
CHAPTER 32
(RESERVED)
CHAPTER 33
(RESERVED)
CHAPTER 34
UNCONVENTIONAL OIL
AND GAS CONSERVATION
Subchapter
A. Preliminary Provisions
B. (Reserved)
C. Establishment of Standard Units
D. Procedure
E. Effect of Order
F. (Reserved)
G. (Reserved)
H. (Reserved)
I. (Reserved)
J. Miscellaneous Provisions
SUBCHAPTER A
PRELIMINARY PROVISIONS
Sec.
3401. Short title of chapter.
3402. Legislative intent.
3403. Definitions.
§ 3401. Short title of chapter.
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This chapter shall be known and may be cited as the
Unconventional Oil and Gas Unit Establishment Act.
§ 3402. Legislative intent.
The purposes of this chapter are:
(1) To promote the development of unconventional oil and
gas resources of this Commonwealth in accordance with the
best principles and practices of oil and gas conservation
while reasonably protecting the correlative rights of the
person affected.
(2) To provide for the protection of the environment.
§ 3403. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Coal and Gas Resource Coordination Act." The act of
December 18, 1984 (P.L.1069, No.214), known as the Coal and Gas
Resource Coordination Act.
"Commission." The Pennsylvania Public Utility Commission.
"Consenting party." A person participating in a unit
established under this chapter who agrees or elects to
participate in a pro rata share of costs and production of a
well drilled on that unit in accordance with a joint operating
agreement.
"Control." To own or to have the right to explore for,
develop, operate and produce oil or gas from the stratigraphic
interval proposed to be included in a unit.
"Correlative rights." The rights of each owner of oil and
gas interests included or proposed to be included in a standard
unit or in land that constitutes stranded acreage to have fair
and reasonable opportunity to obtain a just and equitable share
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of the oil and gas in the unit without being required to drill
unnecessary wells or incur other unnecessary expense to recover
the oil or gas or its equivalent. The term includes the owners
of oil and gas interests in properties adjacent to properties
included or proposed to be included within the unit.
"Department." The Department of Environmental Protection of
the Commonwealth.
"Drill." The drilling or redrilling of a well or the
deepening or plugging back of an existing well.
"Drill pad." The area of surface operations surrounding the
surface location of a well or wells.
"Horizontal well." A directional well that is drilled nearly
vertically to a certain depth and then angled out horizontally
or nearly horizontally to produce from and remain substantially
or entirely within a specific geologic interval until the
desired terminus of the well bore is reached.
"Hydraulic fracture." A process to stimulate production in
oil and gas wells by inducing or propping fractures in oil and
gas bearing rocks using hydraulic pressure. The fluid mixtures
which are typically pumped down the well during this process
include water, sand and other specialty items.
"Joint operating agreement." An agreement governing the
actions of all participants in an established standard unit or a
model agreement generally recognized in the extraction industry
and all schedules and exhibits pertaining thereto.
"Lateral." The portion of a well bore that deviates from
approximate vertical orientation to approximate horizontal
orientation and all well bores beyond such deviation to total
depth or terminus.
"Nonconsenting party." A person participating in an
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established standard unit who elects not to participate in its
pro rata share of the costs of a well drilled upon that unit and
who will pay a risk avoidance under the joint operating
agreement.
"Perforated segment." The entire perforated length of each
lateral well bore, as shown on a directional survey or
predrilled unsurveyed plan, projected vertically to the surface.
In the event of the use of a form of completion that does not
involve cementing and perforating, the term shall mean the
entire length of each lateral from penetration point of the
target reservoir to the terminus of the well bore.
"Plat." A map, drawing or print showing the proposed or
existing location of a well or a unit.
"Royalty interests." An interest in oil or gas or rights
expressly stated to be royalty interests, overriding royalty
interests or rights to participate in a share of production but
that do not provide a right to conduct exploration, drilling or
production.
"Standard unit." A unit for the production of oil or natural
gas that is not more than 640 acres in area, plus 10% tolerance
for possible survey error or other acreage discrepancies, and
that, absent interference by an adjacent preexisting voluntary
unit, includes all interests in the oil and gas within the
boundaries of the proposed standard unit. Acreage in excess of
the 640-acre maximum and 10% tolerance may be included in a
standard unit if necessary to:
(1) Avoid the creation of stranded acreage.
(2) Prevent the loss of the use and benefit of potential
recoverable oil and gas.
(3) More efficiently recover oil or gas.
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"Stranded acreage." Land that cannot be developed for
production of oil or gas from unconventional reservoirs because
of the 250 feet minimum setback requirements under this chapter
when applied to the boundaries of standard units.
"Unconventional reservoir." A formation below the base of
the Elk Sandstone or its geologic equivalent stratigraphic
interval that contains or produces oil or gas that generally
cannot be economically produced at flow rates or in volumes
except by hydraulic fracturing, horizontal or multi-lateral well
bores or other techniques to expose the reservoir to the well
bore.
"Unit." A consolidation of interests of persons actively
engaged in the business of extracting oil or gas from land owned
or leased by the persons within a defined geographic area to
facilitate the drilling of wells from one or more unconventional
reservoirs.
"Voluntary unit." A unit created under a lease or other
voluntary agreement of the owners and lessees of all interests
in the oil or gas in the unit.
"Waste." The unnecessary loss of potentially recoverable oil
or gas.
"Working interest owner." An owner of the right to develop,
operate and produce the oil or gas sought to be produced, except
where specifically provided in a joint operating agreement
governing a standard unit.
SUBCHAPTER B
(Reserved)
SUBCHAPTER C
ESTABLISHMENT OF STANDARD UNITS
Sec.
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3421. Standard unit order.
3422. Technical assistance.
§ 3421. Standard unit order.
(a) Authorization.--A person actively engaged in the
business of extracting oil or gas who owns or leases at least
65% of the oil or gas working interests in a proposed unit that
does not have a voluntary agreement to extract oil or gas from
the entire area may apply to the commission for an order to
establish a standard unit under this chapter to integrate the
interests controlled by another person actively engaged in the
business of extracting oil or gas who owns or leases the
remaining land in the proposed unit.
(b) Approval.--If a person does not own or control at least
65% of the oil or gas working interests in a proposed standard
unit but demonstrates by written evidence that it has an
agreement with collaborating owners who control interests within
the proposed unit that total 65% of the unit, the person may
apply for the establishment of a standard unit.
(c) Other interests.--Interests of a person actively engaged
in the business of extracting oil or gas that may be combined
under subsection (a) into a standard unit may include interests
of the other working interest owners and royalty interests.
(d) Integration.--Upon the grant of an order by the
commission establishing a standard unit, all oil and gas
interests within the unit shall be integrated in accordance with
this chapter.
(e) Scope.--This chapter shall apply to interests of owners
engaged in the business of extracting oil or gas.
§ 3422. Technical assistance.
The Bureau of Topographic and Geologic Survey of the
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Department of Conservation and Natural Resources shall provide
technical and other assistance to the commission as requested by
the commission.
SUBCHAPTER D
PROCEDURE
Sec.
3431. Process.
3431.1. Powers of commission.
3432. Standard unit protest.
3433. Standard of review.
3434. Hearings and appeals.
3435. Final action.
3436. Appellate jurisdiction of Commonwealth Court.
§ 3431. Process.
(a) Filing.--An applicant for an order to establish a
standard unit under this chapter shall file the application with
the commission. The commission shall review the application for
completeness and notify the applicant of any deficiencies and
refer a completed application to the Office of Administrative
Law Judge within five business days of submission.
(b) Voluntary unit.--An order of the commission shall not be
required for working interest owners or standard units to
establish a voluntary unit under a lease or other agreement.
(1) Lessees that provide the establishment of voluntary
units may proceed under the terms of their leases and no
proceedings under this chapter shall be required.
(2) A lessee may file to establish a unit under this
chapter. If the application is approved, this chapter shall
supersede the terms of the leases relating to pooling and
utilization with respect to the lands included in the unit.
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(c) Application.--A standard unit application shall be in a
form approved by the commission and shall include:
(1) Information regarding all working interest owners
proposed to be included in the standard unit that are
controlled and that are not controlled by the applicant.
Working interests shall include all leases, mortgages,
judgments and other liens and encumbrances of record upon any
interest in the proposed unit. The list shall include:
(i) The name and address of each owner of an
interest proposed to be integrated.
(ii) The type of interest held by each owner.
(iii) The extent of the interest held.
(2) A plat that:
(i) Depicts the boundaries of the proposed standard
unit, the total acreage and the location and acreage of
each tract included in the proposed standard unit.
(ii) Identifies the location of all initial proposed
wells and laterals.
(iii) Identifies the stratigraphic interval proposed
for integration.
(3) A statement of the allocation of interests in the
proposed standard unit.
(4) Proof that notice of the filing of the standard unit
application has been given to the following:
(i) The owners of interests not controlled by the
applicant that are proposed to be included in the
standard unit.
(ii) The owners of all land adjacent to the proposed
standard unit.
(5) Proof of notice of the filing of the standard unit
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application. The notice shall identify all parcels and parts
of parcels proposed to be included using the existing tax and
property records of the county.
(6) A statement of the estimated well costs that
includes an industry form for authorizing expenditures with
detailed tangible and intangible drilling costs.
(7) A joint operating agreement with an attached
proposed lease and all relevant schedules.
(d) Review.--Applications shall be referred to the Office of
Administrative Law Judge for review within five days of a
determination that the application is complete.
(e) Protests.--
(1) A protest shall be filed within 20 days of the
filing of the application. If no protest is filed within 20
days of the filing of the application, the application shall
be deemed approved and a notice shall be transmitted to the
commission. If the commission takes no action on the
application within 30 days of its filing, the application
shall be deemed approved and a letter closing the docket
shall be filed.
(2) The commission may reject the application if it
fails to meet the requirements of section 3433 (relating to
standard of review). If a protest is filed within 20 days of
the filing of the application, the administrative law judge
shall schedule a hearing to be held within 20 days of the
close of the protest period. The hearing may be held at a
later date if the applicant and protestants agree to an
extension of time.
(3) Following the hearing, the staff shall prepare a
recommendation for submission to the commission. A
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recommendation may include proposed amendments to the
application or joint operating agreement or conditions to
protect correlative rights. The recommendation and
certification of the evidentiary record shall be forwarded to
the commission.
(f) Decision.--The commission shall rule on protested
applications within 45 days of the hearing.
§ 3431.1. Powers of commission.
(a) Authority.--The commission may promulgate regulations
and policy statements and issue orders to carry out its duties
under this chapter.
(b) Temporary regulations.--The commission may promulgate
regulations in order to promptly implement this chapter. The
regulations shall be deemed temporary regulations and shall
expire no later than two years following their adoption. The
temporary regulations shall not be subject to:
(1) Sections 201, 202 and 203 of the act of July 31,
1968 (P.L.769, No.240), referred to as the Commonwealth
Documents Law.
(2) The act of June 25, 1982 (P.L.633, No.181), known as
the Regulatory Review Act.
(c) Expiration of authority.--The authority of the
commission to adopt temporary regulations under subsection (b)
shall expire two years from the effective date of this
subsection. Regulations adopted after this period shall be
promulgated as provided by law. Permanent regulations shall be
published within 12 months following the effective date of this
section.
(d) Compliance.--Every person subject to the provisions of
this chapter shall comply with the regulations and orders of the
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commission and their terms and conditions.
(e) Employees.--The commission may appoint employees,
attorneys, consultants and other individuals as necessary to
carry out the purposes of this chapter. Employees under this
subsection shall serve at the pleasure of the commission.
(f) Fees and costs.--The commission shall adopt a reasonable
filing fee for applications under this chapter. Additional
process costs of the Office of Administrative Law Judge may be
assessed on the application.
§ 3432. Standard unit protest.
(a) Parties with standing.--Parties with standing to protest
a proposed standard unit application are the following:
(1) The owners of a working interest subject to
integration in the standard unit who have not entered into a
voluntary agreement with the applicant.
(2) The owners of oil and gas in land directly adjacent
to but outside the proposed standard unit.
(3) The owners of interests in potentially stranded
acreage who have not entered into a voluntary agreement with
the applicant.
(4) The owner of the mineral rights that are proposed to
be integrated.
(b) Notice.--Applicants shall employ reasonable methods to
determine the identity of persons entitled to notice as follows:
(1) An applicant shall send a notice of the filing of a
standard unit order application to all persons with standing
to object.
(2) All notices shall state the date intended for the
filing of an application.
(3) Notices shall be sent via United States certified
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mail with return receipt requested or other mail or delivery
service providing a proof of delivery.
(4) Notices shall be sent at least five business days
before the filing of a standard unit application.
(5) An applicant may arrange for personal service of a
notice required under this chapter if proof of service is
provided.
(6) Notices to persons who cannot be identified or
located shall be given in accordance with the requirements of
Pa.R.C.P. No. 430 (relating to service pursuant to special
order of court. publication).
§ 3433. Standard of review.
(a) Standard of review.--The commission shall order the
establishment of the proposed standard unit if the applicant
shows by a preponderance of the evidence that the plan for the
establishment of the unit will minimize surface disruption or
impact to property or other environmental impact and:
(1) prevent the unnecessary loss of the use and benefits
of potentially recoverable oil or gas to a person or the
Commonwealth; or
(2) protect the rights of owners of oil or gas interests
in a manner that ensures the fair and reasonable ability to
obtain an equitable share of oil and gas.
(b) Determination.--In making a determination under
subsection (a), the commission may consider whether the
establishment of the unit will permit the optimal development of
oil and gas resources in this Commonwealth consistent with the
protection of the health, safety, environment and property of
its citizens.
(c) Protests.--Protests to applications for a standard unit
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may be filed only for the following reasons:
(1) The application fails to comply with the
requirements of this subsection.
(2) The terms of the proposed joint operating agreement,
including royalty payments, are not reasonable or the
applicant failed to act in good faith.
(3) An owner or lessor of a working interest proposed to
be integrated into the unit has or will have the capacity and
resources and plan to develop their respective acreage
outside the proposed unit in a manner that is consistent with
oil and gas conservation principles. In determining whether a
protest under this paragraph shall result in denial or
modification of the application as to the acreage subject to
the objection, the commission shall consider the following:
(i) The timing of the proposed development of the
applicant and the protestant.
(ii) The investment of the parties in their
respective acreage.
(iii) The impact of the inclusion or exclusion of
the contested parcel on the long-term development plans
of the applicant and the objector.
(iv) The scope of the proposed development of the
applicant and the protestant.
(v) The type of commitments each applicant is
willing to make to develop the contested land.
(vi) Whether inclusion of the acreage that is the
subject of the protest meets the objectives of section
3402 (relating to legislative intent).
(vii) Any other relevant factors the commission
reasonably determines to be appropriate.
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(4) The proposed standard unit fails to protect the
correlative rights of an owner of adjacent oil or gas
interests, the owner of potentially stranded acreage or the
integrated mineral owner. This objection must be filed by the
owner.
(d) Other protests.--Protests by persons other than those
specified with standing or authorized under section 3432(d)
(relating to standard unit protest) shall not be considered.
(e) Averments.--Averments of a party relied upon by the
commission in evaluating a protest under this section shall be
made part of the joint operation agreement.
(f) Expansion.--The commission may order expansion of
proposed standard units to avoid the potential for stranded
acreage.
§ 3434. Hearings and appeals.
(a) Nature of proceedings.--Proceedings at all hearings
shall be conducted in accordance with this chapter and rules
adopted by the commission.
(b) Proposed findings and conclusions.--Before submission of
a recommendation to the commission, the parties are entitled to
a reasonable opportunity to submit for consideration:
(1) proposed findings and conclusions to be included in
the recommendations submitted to the commission; and
(2) supporting reasons for the proposed findings or
conclusions.
(c) Action by commission.--If the commission determines that
an applicant failed to make a good faith effort to reach a
voluntary agreement to establish a unit comprised of land owned
or leased by a business actively engaged in the extraction of
oil or gas for control of all unleased oil and gas interest
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owners and all working interests to be integrated into the unit,
the commission may exclude the property subject to that
determination from the proposed unit and the applicant shall
have the option of proceeding with the unit as modified or of
withdrawing its application for the unit.
§ 3435. Final action.
The decisions of the commission shall constitute the final
action of the commission with respect to the matters subject to
the hearing.
§ 3436. Appellate jurisdiction of Commonwealth Court.
Appeals from decisions of the commission shall be heard by
the Commonwealth Court. The court shall consider appeals on the
record of the proceedings before the commission and shall apply
a narrow certiorari review standard.
SUBCHAPTER E
EFFECT OF ORDER
Sec.
3441. Establishment of units.
3442. (Reserved).
3443. Integration of working interests.
3444. Additional considerations.
3445. Joint operating agreement.
§ 3441. Establishment of units.
(a) Establishment.--Upon the grant of an order establishing
a standard unit, all oil or gas interests within the unit shall
be integrated in accordance with this chapter.
(b) Stratigraphic intervals.--Standard units created under
this chapter:
(1) Shall be specific as to the stratigraphic intervals
sought to be explored and produced by the applicant.
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(2) May be created in stratigraphic intervals in lands
already subject to voluntary units or to involuntary units
established under this chapter. To incorporate in whole or in
part a prior voluntary or involuntary unit of which the
applicant does not control at least 65% of the interests, the
prior units may not contain a well capable of producing from
that stratigraphic interval and no active drilling permit
exists for such a well, and, upon the creation of a unit
under this chapter within any part of a preexisting voluntary
or involuntary unit producing from a different stratigraphic
interval, the voluntary or involuntary unit shall not be
applicable to the portion of the specific stratigraphic
interval that is subject to the new standard unit. Otherwise,
the prior unit shall continue in effect as originally
created.
(c) Location of involuntary unit.--Nothing in this chapter
shall prohibit the commission from establishing a standard unit
which is located around or, in whole or in part, within a
voluntary unit of which the applicant controls at least 65% of
the interests producing from the same formation or stratigraphic
interval. An objection to a proposed allocation of royalty or
other payment from that unit may be adjusted as necessary to
promote fairness among all interest holders.
(d) Perforated segments.--A standard unit may be established
on lands upon which a well exists, except no perforated segment
of a well drilled under a later unit shall be less than 500 feet
from any perforated segment in the same stratigraphic interval
existing on the date of its establishment.
(e) Contiguous units.--Upon the agreement of the working
interest owner of at least 65% of the cost-bearing interests in
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two or more contiguous units, wells may be drilled within 250
feet from the adjacent boundaries of those units and production
shall be allocated among the units as agreed by the working
interest owner.
(f) Royalties and interests.--Royalties and interests shall
be apportioned and paid to royalty interest holders based upon
the relative surface acreage of the interests in each unit as
set forth in the commission's order unless all of the owners of
integrated interests expressly agree in writing to deviate from
this chapter and adopt a different allocation method. Nothing in
this section shall alter the application of the rule of
apportionment of royalties as to oil and gas leases partially
included in any unit established under this chapter.
(g) Stranded acreage.--If an application results in stranded
acreage and 65% of the interests in the stranded acreage is
timely filed as a protest to the application, the commission may
order any of the following:
(1) Incorporation of the stranded acreage into the unit.
(2) Granting the protesters an exception to allow the
land to be developed for oil and natural gas production
without regard to the mandatory 250 feet setback requirements
under this chapter.
§ 3442. (Reserved).
§ 3443. Integration of working interests.
(a) Working interest.--A working interest owner within the
approved standard unit who has not entered into a voluntary
agreement with the applicant may elect to be treated as one of
the following:
(1) A nonconsenting party subject to the terms of the
joint operating agreement for the unit, entitling him to a
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proportionate share of profits after being assessed a risk
fee apportioned among all nonconsenting parties at the rate
of 300% of their proportionate share of all of the costs
incurred by the designated operator.
(2) A consenting party subject to the terms of the joint
operating agreement for the unit, requiring him to contribute
a proportionate share of the costs of preparing, drilling,
completing and operating the well at the time of his election
under this subsection and entitling him to a proportionate
share of profits.
(b) Election.--The election under subsection (a) shall be
exercised by returning a signed election form to the working
interest owner and the Commonwealth within 14 calendar days of
the date of the order establishing the unit. A working interest
owner who fails to make an election under this subsection shall
be treated as a nonconsenting party under subsection (a)(1).
(c) Limited nature of election.--A working interest owner
shall be subject to the terms, conditions, rights and
obligations specified in the joint operating agreement. The
election shall apply only to the well for which the election is
made, with any further elections to be governed by the joint
operating agreement.
§ 3444. Additional considerations.
(a) Additional matters.--Additional matters subject to an
order of the commission under this chapter shall be governed by
a joint operating agreement. An applicant may file a proposed
joint operating agreement for the unit as part of the
application for a standard unit order on a form approved by the
commission. The following shall apply to an agreement under this
subsection:
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(1) A party controlling at least 15% of the working
interests in the unit may propose additional drilling. No
party owning or controlling less than 65% of interests in the
unit may propose the drilling of more than one well in a
calendar year.
(2) A lease attached to the joint operating agreement
shall be the lease currently in use by the applicant.
(3) The cash and royalty provided under the lease shall
be as provided under this chapter. The royalty shall be
treated as a cost shared pro rata among all consenting and
nonconsenting parties to the joint operating agreement.
(4) A risk avoidance penalty as provided under this
chapter.
(5) Parties to the joint operating agreement shall have
the right to take their gas in kind. Should a consenting or a
nonconsenting party not elect to take its share of gas in
kind, the operator of the unit shall have the right to market
the share of production along with the operator's production
in accordance with the terms of the joint operating
agreement. In no event may the nonoperator be entitled to
receive an amount in excess of the amount received by the
operator for its share of production. The joint operating
agreement shall include an oil and gas balancing agreement.
No working interest owner transporting oil or gas from a well
in which the working interest owner has an interest shall be
deemed a utility.
(b) Aggrieved party.--A party aggrieved by terms proposed by
the applicant in a joint operating agreement filed with the
application may protest as provided in this chapter.
(c) Withdrawal.--An applicant may withdraw its application
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within ten days after an order.
§ 3445. Joint operating agreement.
(a) Applicants and lessors.--A standard unit under this
chapter shall be operated in accordance with the terms of the
applicable leases, as modified by an order issued by the
commission, if the only interest holders in the unit are the
applicant and lessors.
(b) Other units.--All other standard units established under
this chapter shall be operated under the terms of applicable
leases, as modified by commission order and under the terms of
the joint operating agreement. The consenting and nonconsenting
parties may alter the terms of the joint operating agreement
only by unanimous consent or by filing a petition with the
commission for amendment. The commission shall approve or deny
the amendment within 90 days of the date of filing. An amendment
adopted by unanimous consent shall be filed with the commission.
SUBCHAPTER F
(Reserved)
SUBCHAPTER G
(Reserved)
SUBCHAPTER H
(Reserved)
SUBCHAPTER I
(Reserved)
SUBCHAPTER J
MISCELLANEOUS PROVISIONS
Sec.
3491. Certain rights preserved.
3492. Trade secrets.
3493. Applicability.
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3494. Well setback.
3495. Voluntary establishment of a standard unit.
3496. Drilling permit not required.
§ 3491. Certain rights preserved.
(a) Policy statement.--Voluntary units implemented in
accordance with the terms of executed oil and gas leases for the
bona fide purpose of promoting the development of unconventional
natural gas resources are declared to be necessary and
reasonable for the development of unconventional gas resources
in accordance with reasonable conservation principles and to
reasonably protect affected correlative rights. Units created
under a voluntary unitization agreement are declared to be per
se reasonable and subject to modification only in accordance
with the terms of the applicable leases or the express terms of
this chapter.
(b) Common law rights.--Except as expressly provided under
this chapter and in orders issued by the commission, this
chapter does not supersede any common law rights of any person
before or after the effective date of this chapter recognized by
the courts of this Commonwealth.
(c) Successors in interest.--All rights related to units
created under this chapter and all leases integrated in the
units, in whole or in part, shall be binding upon the heirs,
successors and assigns of all parties, including a party taking
title to the property as the result of judicial sale, mortgage
foreclosure, tax sale or by other operation of law and shall be
binding upon and shall run with the land. No action by an owner
of any interest in a lien, judgment, mortgage or other
encumbrance shall extinguish or impair the establishment of a
standard unit under this chapter.
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§ 3492. Trade secrets.
(a) Right to privacy.--Confidential proprietary information
or trade secrets submitted by parties during proceedings under
this chapter may not be disclosed by the commission or any other
parties privy to such information or secrets. The information
may be submitted under seal for review by the administrative law
judge only and shall be exempt from the act of February 14, 2008
(P.L.6, No.3), known as the Right-to-Know Law.
(b) Violations.--A violation of this section shall
constitute a violation of this chapter and also a violation of
12 Pa.C.S. Ch. 53 (relating to trade secrets), for which relief
may be sought by an aggrieved party under and in accordance with
the terms of 12 Pa.C.S. Ch. 53.
§ 3493. Applicability.
(a) Sandstone extractions.--This chapter shall apply to all
wells drilled after the effective date of this chapter into and
producing from unconventional oil and natural gas reservoirs
below the base of the Elk Sandstone or its geologic equivalent
stratigraphic interval in this Commonwealth other than coal bed
methane.
(b) Vertical wells.--The only provision of this chapter that
shall apply to vertical wells is the 250 feet setback
requirement from lease or unit lines and from other wells
seeking production from the same stratigraphic interval. In the
event of a preexisting vertical well on land subject to an
integrated unit proceeding, a setback of 250 feet around the
bore of that well shall be maintained in all operations upon a
unit created under this chapter. The acreage within that setback
area shall not be acreage within the unit. For horizontal wells,
the 250 feet setback requirement from lease and unit lines
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imposed under section 3421(c) (relating to standard unit order)
shall apply to wells drilled after the effective date of this
chapter.
§ 3494. Well setback.
No perforated segment of any well drilled to be produced from
an unconventional reservoir shall be located at any point less
than 250 feet from the boundary of:
(1) a lease not included in a proposed voluntary unit or
unit applied for or established under this chapter;
(2) a voluntary unit formed for the well; or
(3) any unit applied for or established under this
chapter for the well.
§ 3495. Voluntary establishment of a standard unit.
An order of the commission shall not be required for the
voluntary establishment of a standard unit.
§ 3496. Drilling permit not required.
The commission may not require an applicant to obtain a
drilling permit to qualify for the establishment of a standard
unit.
Section 2. Repeals are as follows:
(1) The General Assembly declares that the repeal under
paragraph (2) is necessary to effectuate the addition of 58
Pa.C.S. Ch. 34.
(2) The act of July 25, 1961 (P.L.825, No.359), known as
the Oil and Gas Conservation Law, is repealed.
Section 3. The addition of 58 Pa.C.S. Ch. 34 is a
continuation of the act of July 25, 1961 (P.L.825, No.359),
known as the Oil and Gas Conservation Law. The following apply:
(1) Except as otherwise provided in 58 Pa.C.S. Pt. III
Ch. 34, all activities initiated under the Oil and Gas
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Conservation Law shall continue and remain in full force and
effect and may be completed under 58 Pa.C.S. Ch. 34. Orders,
regulations, rules and decisions which were made under the
Oil and Gas Conservation Law and which are in effect on the
effective date of section 2(2) of this act shall remain in
full force and effect until revoked, vacated or modified
under 58 Pa.C.S. Ch. 34. Contracts, obligations and
collective bargaining agreements entered into under the Oil
and Gas Conservation Law are not affected nor impaired by the
repeal of the Oil and Gas Conservation Law.
(2) Except as set forth in paragraph (3), any difference
in language between 58 Pa.C.S. Ch. 34 and the Oil and Gas
Conservation Law is intended only to conform to the style of
the Pennsylvania Consolidated Statutes and is not intended to
change or affect the legislative intent, judicial
construction or administration and implementation of the Oil
and Gas Conservation Law.
(3) Paragraph (2) does not apply to the addition of the
following provisions:
(i) The following definitions in section 3403:
(A) "Nonconsenting party."
(B) "Unit."
(ii) Section 3421(a) and (c).
(iii) Section 3431.1(a) and (c).
(iv) Section 3433(c)(2) and (3).
(v) Section 3434(c).
(vi) Section 3441(c).
(vii) Section 3443(a) introductory paragraph.
Section 4. This act shall take effect immediately.
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