§ 17-508. Plan of unitization - Provisions - Ratification by record owners - Election to sell.

A.  The plan of unitization for each such unit and unit area shall be one suited to the needs and requirements of the particular unit dependent upon the facts and conditions found to exist with respect thereto.  In addition to such other terms, provisions, conditions and requirements found by the Commission to be reasonably necessary or proper to effectuate or accomplish the purpose of this act, and subject to the further requirements hereof, each such plan of unitization shall contain fair, reasonable and equitable provisions for:

1.  The efficient unitized management or control of further development and operation of the unit area.  Under such plan the actual operations of the unit shall be carried on by one of the owners of the right to drill for and produce brine within the unit area as unit operator.  The designation of unit operator shall be by majority vote of the owners of the right to drill for and produce brine in the unit in accordance with their acreage ownership in the unit;

2.  The method and circumstances under which brine or effluent from the unit, or from any other source, may be injected into the common source of supply under the unit area or into other formations;

3.  The fair, just and reasonable compensation to be awarded to any owner within the unit who does not wish to participate in development of the unit by paying such owner's share of unit costs;

4.  The fair, just and reasonable manner of participation for any owner desiring to participate in the development of the unit by paying such owners share of unit costs;

5.  The fair, just and reasonable allocation and distribution to each owner and the value of such owner's share of the brine and solution gas produced from the unit;

6.  The procedure and basis upon which wells, equipment and other properties of the owners within the unit area are to be taken over and used for unit operations, including the method of arriving at the compensation therefor, or for otherwise proportionately equalizing the investment of the several owners in the unit;

7.  The method of apportioning costs of development and operation between owners of brine and owners of solution gas, if solution gas has also been unitized;

8.  The time when the plan of unitization shall become effective;

9.  The time when and conditions under which the unit shall or may be dissolved and all affairs concluded.

B.  No order of the Commission creating a unit and prescribing the plan of unitization applicable thereto shall become effective unless and until the plan of unitization has been signed, or in writing ratified or approved by record owners of the right to drill of not less than fifty-five percent (55%) of the unit area affected thereby and by owners of record of not less than fifty-five percent (55%) (exclusive of royalty interest owned by lessees or subsidiaries of any lessee) of the royalty interest in and to the unit area and the Commission has made a finding either in the order creating the unit or in a supplemental order that the plan of unitization has been so signed, ratified or approved by lessees and royalty owners owning the required percentage interest in and to the unit area.  Provided, however, in any instance where a royalty owner has, through lease or other agreement, previously authorized pooling or unitization of a size equal to or larger than the size specified in the Commission order, said lease or other agreement shall be deemed to be such royalty owner's authorization to unitize, and no additional signature, ratification or approval shall be necessary from such owner, unless the lease provides for a different production sharing formula than set out in the plan of unitization.  Further provided, however, in any instance where a royalty owner has, through lease or other agreement, previously consented to have the unit boundaries and the allocation formula established by the Commission, said lease or other agreement shall be deemed to be such royalty owner's authorization to unitize, and no additional signature, ratification or approval shall be necessary from such owner.  Where the plan of unitization has not been so signed, ratified or approved by lessees and royalty owners owning the required percentage interest in and to the unit area at the time the order creating the unit is made, the Commission shall hold such additional and supplemental hearings as may be requested or required to determine if and when the plan of unitization has been so signed, ratified or approved by lessees and royalty owners owning the required percentage interest in and to the unit area and shall, in respect to such hearings, make and enter a finding of its determination in such regard.  In the event lessees or royalty owners, or either, owning the required percentage interest in and to the unit area have not so signed, ratified or approved the plan of unitization within a period of six (6) months from and after the date on which the order creating the unit is made, the order creating the unit shall be deemed vacated and of no force and effect.

C.  A participating brine owner shall have a one-time election to sell, and any brine owner in the unit with brine refining equipment shall have the obligation to buy, the brine produced from the unit at the value determined by the Commission; provided however, nothing herein shall require the purchasing brine owner to purchase brine when it is not producing brine from the unit for its own account.

Added by Laws 1990, c. 255, § 9, eff. Sept. 1, 1990.