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S T A T E O F N E W Y O R K ________________________________________________________________________
10526--A
I N A S S E M B L Y
April 8, 2008 ___________
Introduced by M. of A. PARMENT, SWEENEY, MAGEE -- Multi-Sponsored by -- M. of A. CROUCH -- (at request of the Department of Environmental Conservation) -- read once and referred to the Committee on Environ- mental Conservation -- reported and referred to the Committee on Codes -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee
AN ACT to amend the environmental conservation law, in relation to statewide spacing for oil and gas wells
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS:
1 Section 1. Subparagraph 1 of paragraph b of subdivision 1 of section 2 23-0501 of the environmental conservation law, as added by chapter 386 3 of the laws of 2005, is amended to read as follows: 4 (1) "Statewide spacing" means spacing units for gas OR OIL wells that 5 are within ten percent of the following sizes, AS APPLICABLE, unless 6 another percentage is specifically stated: 7 (i) For Medina {polls and shale} GAS pools at any depth, 40 acres with 8 the wellbore within the target formation no less than {660} 460 feet 9 from any unit boundary, PLUS, IF APPLICABLE, THE NUMBER OF ADDITIONAL 10 ACRES NECESSARY AND SUFFICIENT TO ENSURE THAT ANY HORIZONTAL WELLBORE 11 WITHIN THE TARGET FORMATION IS NOT LESS THAN 460 FEET FROM ANY UNIT 12 BOUNDARY; 13 (ii) For Onondaga reef or Oriskany GAS pools at any depth, 160 acres 14 with the wellbore within the target formation no less than 660 feet from 15 any unit boundary, PLUS, IF APPLICABLE, THE NUMBER OF ADDITIONAL ACRES 16 NECESSARY AND SUFFICIENT TO ENSURE THAT ANY HORIZONTAL WELLBORE WITHIN 17 THE TARGET FORMATION IS NOT LESS THAN 660 FEET FROM ANY UNIT BOUNDARY; 18 (iii) For fault-bounded Trenton and/or Black River hydrothermal dolom- 19 ite GAS pools where the majority of the pool is between 4,000 and 8,000 20 feet deep, 320 acres with the proposed productive section of the well- 21 bore within the target formation no less than one-half mile from any 22 other well in another unit in the same pool and no less than {1000} 23 1,000 feet from any unit boundary that is not defined by a field-bound- 24 ing fault but in no event less than 660 feet from any unit boundary; 25 (iv) For fault-bounded Trenton and/or Black River hydrothermal dolom- 26 ite GAS pools where the majority of the pool is below {8000} 8,000 feet, 27 within five percent of 640 acres with the proposed productive section of
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets { } is old law to be omitted. LBD15187-04-8
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1 the wellbore within the target formation no less than one mile from any 2 other well in another unit in the same pool and no less than {1500} 3 1,500 feet from any unit boundary that is not defined by a field-bound- 4 ing fault but in no event less than 660 feet from any unit boundary; 5 (v) FOR SHALE GAS POOLS AT ANY DEPTH, FOR A VERTICAL WELL OUTSIDE ANY 6 EXISTING SPACING UNIT FOR THE SAME FORMATION, 40 ACRES WITH THE WELLBORE 7 WITHIN THE TARGET FORMATION NO LESS THAN 460 FEET FROM ANY UNIT BOUNDA- 8 RY; 9 (VI) FOR SHALE GAS POOLS AT ANY DEPTH, FOR A HORIZONTAL WELL OUTSIDE 10 ANY EXISTING SPACING UNIT FOR THE SAME FORMATION AND WITH A WRITTEN 11 COMMITMENT FROM THE WELL OPERATOR TO DRILL INFILL WELLS PURSUANT TO 12 SUBDIVISION 4 OF SECTION 23-0503 OF THIS TITLE, WITH ALL HORIZONTAL 13 INFILL WELLS IN THE UNIT TO BE DRILLED FROM A COMMON WELL PAD WITHIN 14 THREE YEARS OF THE DATE THE FIRST WELL IN THE UNIT COMMENCES DRILLING, 15 NOTWITHSTANDING THE TEN PERCENT TOLERANCE SPECIFIED IN THIS SUBPARA- 16 GRAPH, UP TO 640 ACRES WITH THE INITIAL HORIZONTAL WELLBORE OR WELLBORES 17 WITHIN THE TARGET FORMATION APPROXIMATELY CENTERED IN THE SPACING UNIT 18 AND NO WELLBORE IN THE TARGET FORMATION LESS THAN 330 FEET FROM ANY UNIT 19 BOUNDARY; 20 (VII) FOR SHALE GAS POOLS AT ANY DEPTH, FOR A HORIZONTAL WELL OUTSIDE 21 ANY EXISTING SPACING UNIT FOR THE SAME FORMATION AND IN THE ABSENCE OF A 22 WRITTEN COMMITMENT FROM THE WELL OPERATOR TO DRILL INFILL WELLS PURSUANT 23 TO SUBDIVISION 4 OF SECTION 23-0503 OF THIS TITLE, 40 ACRES WITH THE 24 WELLBORE WITHIN THE TARGET FORMATION NO LESS THAN 330 FEET FROM ANY UNIT 25 BOUNDARY PLUS THE NUMBER OF ADDITIONAL ACRES NECESSARY AND SUFFICIENT TO 26 ENSURE THAT THE WELLBORE WITHIN THE TARGET FORMATION IS NOT LESS THAN 27 330 FEET FROM ANY UNIT BOUNDARY; 28 (VIII) For all other GAS pools where the majority of the pool is above 29 the depth of 4,000 feet, 80 acres with the wellbore within the target 30 formation no less than {660} 460 feet from any unit boundary, PLUS, IF 31 APPLICABLE, THE NUMBER OF ADDITIONAL ACRES NECESSARY AND SUFFICIENT TO 32 ENSURE THAT ANY HORIZONTAL WELLBORE WITHIN THE TARGET FORMATION IS NOT 33 LESS THAN 460 FEET FROM ANY UNIT BOUNDARY; 34 {(vi)} (IX) For all other GAS pools where the majority of the pool is 35 4,000 to 6,000 feet deep, 160 acres with the wellbore within the target 36 formation no less than 660 feet from any unit boundary, PLUS, IF APPLI- 37 CABLE, THE NUMBER OF ADDITIONAL ACRES NECESSARY AND SUFFICIENT TO ENSURE 38 THAT ANY HORIZONTAL WELLBORE WITHIN THE TARGET FORMATION IS NOT LESS 39 THAN 660 FEET FROM ANY UNIT BOUNDARY; 40 {(vii)} (X) For all other GAS pools where the majority of the pool is 41 6,000 to 8,000 feet deep, 320 acres with the wellbore within the target 42 formation no less than {1000} 1,000 feet from any unit boundary, PLUS, 43 IF APPLICABLE, THE NUMBER OF ADDITIONAL ACRES NECESSARY AND SUFFICIENT 44 TO ENSURE THAT ANY HORIZONTAL WELLBORE WITHIN THE TARGET FORMATION IS 45 NOT LESS THAN 1,000 FEET FROM ANY UNIT BOUNDARY; {and 46 (viii)} (XI) For all other GAS pools where the majority of the pool is 47 below 8,000 feet, within five percent of 640 acres with the wellbore 48 within the target formation no less than {1500} 1,500 feet from any unit 49 boundary, PLUS, IF APPLICABLE, THE NUMBER OF ADDITIONAL ACRES NECESSARY 50 AND SUFFICIENT TO ENSURE THAT ANY HORIZONTAL WELLBORE WITHIN THE TARGET 51 FORMATION IS NOT LESS THAN 1,500 FEET FROM ANY UNIT BOUNDARY; 52 (XII) FOR OIL POOLS IN THE BASS ISLAND, TRENTON, BLACK RIVER, ONONDAGA 53 REEF OR OTHER OIL-BEARING REEFS AT ANY DEPTH, 40 ACRES WITH THE WELLBORE 54 WITHIN THE TARGET FORMATION NO LESS THAN 460 FEET FROM ANY UNIT 55 BOUNDARY, PLUS, IF APPLICABLE, THE NUMBER OF ADDITIONAL ACRES NECESSARY
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1 AND SUFFICIENT TO ENSURE THAT ANY HORIZONTAL WELLBORE WITHIN THE TARGET 2 FORMATION IS NOT LESS THAN 460 FEET FROM ANY UNIT BOUNDARY; and 3 (XIII) FOR ALL OTHER OIL POOLS AT ANY DEPTH, THE WELLBORE WITHIN THE 4 TARGET FORMATION SHALL BE NO LESS THAN 165 FEET FROM ANY LEASE BOUNDARY. 5 WELLS COMPLETED UNDER A WELL PERMIT ISSUED PURSUANT TO CLAUSE (XII) OR 6 (XIII) OF THIS SUBPARAGRAPH THAT DO NOT PRODUCE OIL MAY NOT COMMENCE 7 PRODUCTION OF NATURAL GAS PRIOR TO MODIFICATION OF THE SPACING UNIT 8 PURSUANT TO APPLICABLE PROVISIONS OF THIS TITLE. 9 S 2. Subdivision 4 of section 23-0503 of the environmental conserva- 10 tion law, as added by chapter 386 of the laws of 2005, is amended to 11 read as follows: 12 4. The department may issue permits to drill infill wells on a reason- 13 ably uniform pattern within the spacing unit after an integration order 14 has been issued, if required, and only if it determines that drilling 15 infill wells is necessary to satisfy the policy objectives of section 16 23-0301 of this article. The distances from the unit boundaries set 17 forth in paragraph b of subdivision 1 of section 23-0501 of this title 18 shall apply to any infill wells. For purposes of this section, new 19 lateral wellbores drilled from the original wellbore in the unit are not 20 considered infill wells if they are drilled prior to the first product 21 sales from the original surface location. IN A SPACING UNIT ESTABLISHED 22 PURSUANT TO CLAUSE (VI) OF SUBPARAGRAPH 1 OF PARAGRAPH B OF SUBDIVISION 23 1 OF SECTION 23-0501 OF THIS TITLE, INFILL WELLS SHALL BE DEEMED NECES- 24 SARY, AND THE NUMBER OF INFILL WELLS REQUIRED TO SATISFY THE POLICY 25 OBJECTIVES OF SECTION 23-0301 OF THIS ARTICLE MUST BE DRILLED WITHIN 26 THREE YEARS OF THE DATE THE FIRST WELL IN THE UNIT COMMENCES DRILLING. 27 S 3. Subdivision 6 of section 23-0503 of the environmental conserva- 28 tion law, as added by chapter 386 of the laws of 2005, is amended to 29 read as follows: 30 6. {An order establishing} UNLESS IT IS EXTINGUISHED PURSUANT TO 31 SUBDIVISION SEVEN OF THIS SECTION, a spacing unit ESTABLISHED BY THE 32 DEPARTMENT shall be binding upon all persons and their heirs, successors 33 and assigns. Upon good cause shown, an order establishing a spacing unit 34 OR A SPACING UNIT WHICH CONFORMS TO STATEWIDE SPACING may be modified by 35 the department without conducting a hearing if a finding has been made 36 that no facts are in dispute after all affected persons have been 37 provided a reasonable opportunity to comment. IN A SPACING UNIT ESTAB- 38 LISHED PURSUANT TO CLAUSE (VI) OF SUBPARAGRAPH 1 OF PARAGRAPH B OF 39 SUBDIVISION 1 OF SECTION 23-0501 OF THIS TITLE, FAILURE TO DRILL INFILL 40 WELLS PURSUANT TO SUBDIVISION 4 OF THIS SECTION SHALL CONSTITUTE GOOD 41 CAUSE FOR THE DEPARTMENT TO INITIATE A MODIFICATION OF THE SPACING UNIT. 42 If necessary, upon issuance of {a modified} AN order which changes unit 43 boundaries, the well operator shall adjust the accounts for owners with- 44 in the original and modified units to reflect the modified boundary. Any 45 participation by new owners and any adjustment of revenue or royalties 46 {based thereon} RESULTING FROM PARTICIPATION BY NEW OWNERS shall be on a 47 prospective basis only. If the initial risk penalty phase pursuant to 48 title 9 of this article is in effect, any new owner added to the unit 49 may elect to be integrated as a participating owner, a non-participating 50 owner or an integrated royalty owner as defined by title 9 of this arti- 51 cle. Full well costs shall be assessed against new participating owners 52 and non-participating owners and included in the risk penalty calcu- 53 lation. If the initial risk penalty phase has concluded, any new owner 54 added to the spacing unit may elect to be integrated as a participating 55 owner or an integrated royalty owner on a prospective basis only. 56 S 4. This act shall take effect immediately.
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