A. The commissioner shall, upon notice and hearing, regulate drilling and location of wells in any pool and the production therefrom to prevent reasonably avoidable net drainage from each developed unit so that each owner in a pool shall have the right and opportunity to recover his fair and equitable share of recoverable oil and gas in the pool.

Terms Used In Arizona Laws 27-506

  • commissioner: means the oil and gas conservation commission. See Arizona Laws 27-501
  • developed unit: means a drainage unit having a completed well capable of producing oil or gas in paying quantities. See Arizona Laws 27-501
  • 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
  • Gas: means natural gas, casinghead gas, all other hydrocarbons not defined as oil, carbon dioxide and helium or other substances of a gaseous nature. See Arizona Laws 27-501
  • Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
  • Net drainage: means drainage not equalized by counterdrainage. See Arizona Laws 27-501
  • Oil: means crude petroleum oil and all other hydrocarbons, regardless of gravity, which are produced at a well in liquid form by ordinary production methods and which are not the result of condensation of gas. See Arizona Laws 27-501
  • Owner: means the person having the right to drill into, produce and appropriate production of oil or gas, or both, from a pool. See Arizona Laws 27-501
  • Person: includes a corporation, association, partnership, receiver, trustee, guardian, executor, administrator, fiduciary or representative or any group acting as a unit and includes any department, agency or instrumentality of the state or any of its governmental subdivisions. See Arizona Laws 27-501
  • Pool: means an underground reservoir containing a common accumulation of oil or gas, or both, and includes each zone of a general structure completely separated from any other zone in the structure. See Arizona Laws 27-501
  • Producer: means the owner of a well capable of producing oil or gas. See Arizona Laws 27-501
  • Waste: includes :

    (a) Physical waste, as that term is generally understood in the oil and gas industry. See Arizona Laws 27-501

  • Well: includes any hole drilled or spudded in for the purpose, with the intention or under the representation of penetrating oil or gas bearing strata or of penetrating any strata in search of stratigraphic data pertinent to the location of oil or gas bearing strata, whether or not in either case oil or gas is actually discovered, any hole used in connection with the underground storage of hydrocarbon substances, whether liquid or gaseous, any hole used in connection with a process to inject any substance for purposes of disposal or to increase recovery, any hole used for the purpose of secondary or tertiary recovery and any hole used for the purpose of pressure maintenance. See Arizona Laws 27-501
  • Writing: includes printing. See Arizona Laws 1-215

B. A rule, regulation or order of the commissioner made under the provisions of this section shall not be of such effect as to:

1. Make it necessary for a producer from, or an owner of, a tract of land in a pool, in order to obtain his just and equitable share of the production of the pool, to drill and operate a well on the tract in addition to such wells as may without waste produce his share.

2. Occasion net drainage unless wells are drilled and operated on the tract in addition to such wells thereon as can without waste produce the tract’s just and equitable share of the production of the pool.

C. Any owner of a well, any owner of land upon which a well is located, or any lessor or lessee of land upon which a well is located shall notify the commission, in writing and on such form as the commission may prescribe, of the sale, assignment, transfer, conveyance or exchange of such well, land or lease. Such notice shall be made within ten days of such sale, assignment, transfer, conveyance or exchange and shall contain:

1. The name and address of the person to whom sold, assigned, transferred, conveyed or exchanged.

2. The name and location of the well.

3. The date of the sale, assignment, transfer, conveyance or exchange.

D. Any person who acquires ownership or operation of any well, ownership of any land upon which a well is located or any lease rights to land on which a well is located, whether by purchase, assignment, transfer, conveyance, exchange or otherwise, shall, within ten days after acquiring such well, land or lease rights, notify the commission, in writing and on such form as the commission may prescribe, of his ownership or operation. Such notice shall contain:

1. The name and address of the person from whom acquired.

2. The name and location of the well.

3. The date of acquisition.

4. The date when operations are assumed or resumed by new owner.

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