Ohio Code 1509.27 – Mandatory pooling orders
If a tract or tracts are of insufficient size or shape to meet the requirements for drilling a proposed well thereon as provided in section 1509.24 or 1509.25 of the Revised Code, whichever is applicable, and the owner has been unable to form a drilling unit under agreement as provided in section 1509.26 of the Revised Code, on a just and equitable basis, the owner may make application to the division of oil and gas resources management for a mandatory pooling order.
Terms Used In Ohio Code 1509.27
- Correlative rights: means the reasonable opportunity to every person entitled thereto to recover and receive the oil and gas in and under the person's tract or tracts, or the equivalent thereof, without having to drill unnecessary wells or incur other unnecessary expense. See Ohio Code 1509.01
- Drilling unit: means the minimum acreage on which one well may be drilled, but does not apply to a well for injecting gas into or removing gas from a gas storage reservoir and does not apply to a stratigraphic well. See Ohio Code 1509.01
- Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Gas: means all natural gas and all other fluid hydrocarbons that are not oil, including condensate. See Ohio Code 1509.01
- Oil: means crude petroleum oil and all other hydrocarbons, regardless of gravity, that are produced in liquid form by ordinary production methods, but does not include hydrocarbons that were originally in a gaseous phase in the reservoir. See Ohio Code 1509.01
- Person: includes any political subdivision, department, agency, or instrumentality of this state; the United States and any department, agency, or instrumentality thereof; any legal entity defined as a person under section 1. See Ohio Code 1509.01
- Royalty interest: means the fee holder's share in the production from a well, except a stratigraphic well. See Ohio Code 1509.01
- state: means the state of Ohio. See Ohio Code 1.59
- Tract: means a single, individual parcel of land or a portion of a single, individual parcel of land. See Ohio Code 1509.01
- Well: includes a stratigraphic well. See Ohio Code 1509.01
The application shall include information as shall be reasonably required by the chief of the division of oil and gas resources management and shall be accompanied by an application for a permit as required by section 1509.05 of the Revised Code. The chief shall notify all mineral rights owners of tracts within the area proposed to be pooled by an order and included within the drilling unit of the filing of the application and of their right to a hearing. After the hearing or after the expiration of thirty days from the date notice of application was mailed to such owners, the chief, if satisfied that the application is proper in form and that mandatory pooling is necessary to protect correlative rights and to provide effective development, use, and conservation of oil and gas, shall issue a drilling permit and a mandatory pooling order complying with the requirements for drilling a well as provided in section 1509.24 or 1509.25 of the Revised Code, whichever is applicable. The mandatory pooling order shall:
(A) Designate the boundaries of the drilling unit within which the well shall be drilled;
(B) Designate the proposed production site;
(C) Describe each separately owned tract or part thereof pooled by the order;
(D) Allocate on a surface acreage basis a pro rata portion of the production to each tract pooled by the order. The pro rata portion shall be in the same proportion that the percentage of the tract’s acreage is to the state minimum acreage requirements established in rules adopted under this chapter for a drilling unit unless the applicant demonstrates to the chief using geological evidence that the geologic structure containing the oil or gas is larger than the minimum acreage requirement in which case the pro rata portion shall be in the same proportion that the percentage of the tract’s acreage is to the geologic structure.
(E) Specify the basis upon which each mineral rights owner of a tract pooled by the order shall share all reasonable costs and expenses of drilling and producing if the mineral rights owner elects to participate in the drilling and operation of the well;
(F) Designate the person to whom the permit shall be issued.
A person shall not submit more than five applications for mandatory pooling orders per year under this section unless otherwise approved by the chief.
No surface operations or disturbances to the surface of the land shall occur on a tract pooled by an order without the written consent of or a written agreement with the surface rights owner of the tract that approves the operations or disturbances.
If a mineral rights owner of a tract pooled by the order does not elect to participate in the risk and cost of the drilling and operation of a well, the mineral rights owner shall be designated as a nonparticipating owner in the drilling and operation of the well on a limited or carried basis and is subject to terms and conditions determined by the chief to be just and reasonable. In addition, if a mineral rights owner is designated as a nonparticipating owner, the mineral rights owner is not liable for actions or conditions associated with the drilling or operation of the well. If the applicant bears the costs of drilling, equipping, and operating a well for the benefit of a nonparticipating owner, as provided for in the pooling order, then the applicant shall be entitled to the share of production from the drilling unit accruing to the interest of that nonparticipating owner, exclusive of the nonparticipating owner’s proportionate share of the royalty interest until there has been received the share of costs charged to that nonparticipating owner plus such additional percentage of the share of costs as the chief shall determine. The total amount receivable hereunder shall in no event exceed two hundred per cent of the share of costs charged to that nonparticipating owner. After receipt of that share of costs by such an applicant, a nonparticipating owner shall receive a proportionate share of the working interest in the well in addition to a proportionate share of the royalty interest, if any.
If there is a dispute as to costs of drilling, equipping, or operating a well, the chief shall determine those costs.