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Developments in Underground Gas Storage

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					SPACING
 Vertical
Horizontal
         Week Three
      September 8, 2011


        Eric R. King
             Conservation
• 52 O.S. 87.1
• Common Source of Supply of Oil
• Well Spacing and Drilling Units
                    Spacing
• Actual Notice at least 15 days prior to Hearing to
  all parties who have the right to share in
  production
• File Application
• Notice via regular mail at least 15 days before
  Hearing
• Publication Notice – At least 15 days prior in
  County where Land is situated and Oklahoma
  County before the Hearing
• Hearing
• Issues
                 OAC 5-7-6
Drilling and spacing unit establishment or
modification
                OAC 5-7-6.1
Horizontal well unitization for shale reservoirs
                OAC 5-7-6.2
Multiunit horizontal wells in share reservoirs
       General Well Spacing
          Requirements
OAC 165:10-1-21
 Any unspaced common source of supply 2,500 feet or
  more in depth – No closer than 330 feet from any
  property line or 600 feet from any drilling or
  producing oil or gas well from the same formation
 Any unspaced common source of supply 2,500 feet or
  less in depth – No closer than 165 feet from any
  property line or 300 feet from any drilling or
  producing oil or gas well from the same formation
   Drilling and Spacing Units
OAC 165: 10-1-22
(a) The Commission may establish drilling and spacing units
in any common source of supply a s provided by law, and the
special orders creating drilling and spacing units shall
supersede the provisions of 165:10-1-21. It shall be
The responsibility of any operator who proposes to drill a
well to ascertain the existence and provisions of special
spacing orders.
(b) The drilling of a well or wells in to a common source of supply
in an area covered by an application pending before the
Commission seeking the establishment of drilling and spacing
units is prohibited except by special order of the Commission.
However, if an Intent to Drill (Form 1000) has been approved by
the Commission and operations commenced prior to the filing of
a spacing application, the operator shall be permitted to drill and
complete the well without a special order of the Commission.
     Permitted Well Locations
     Within Standard Drilling
        and Spacing Units
OAC 165: 10-1-24
• (a) The permitted well location within any standard square
  drilling and spacing unit shall be the center of the unit. The
  permitted well locations within standard rectangular drilling
  and spacing units shall be the centers of alternate square
  tracts constituting the units (alternate halves of the units);
  provided, however, a well will be deemed drilled at the
  permitted location if drilled within the following tolerance
  areas:
 (1) Not less than 165 feet from the boundary of any
  standard 10-acre drilling and spacing unit or the
  proper square 10-acre tract within any standard 20-
  acre drilling and spacing unit.
 (2) Not less than 330 feet from the boundary of any
  standard 40-acre drilling and spacing unit or the
  proper square 40-acre tract within any standard 80-
  acre drilling and spacing unit.
 (3) Not less than 660-feet from the boundary of any
  standard 160-acre drilling and spacing unit or the
  proper square 160-acre tract within any standard
  320-acre drilling and spacing unit.
 (4 ) Not less than 1320 feet from the boundary of
  any standard 640-acre drilling and spacing unit.
       Drilling and Spacing Units
• A Township - 36 Sections of Land
• Size of Drilling and Spacing Units
  – 640 acres (Section)
  – 320 acres – stand-up or laydown units
  – 160 acres (Quarter Section)
  – 80 acres – stand-up or laydown units
  – 40 acres (Quarter Quarter Section)
  – 20 acres Stand-Up or Lay-Down Units
  – 10 acres (Quarter Quarter Quarter Section)
     A Township - 36 Sections of Land


36      31   32   33   34   35   36     31
1       6    5    4    3    2    1      6
12      7    8    9    10   11   12     7
13      18   17   16   15   14   13     18
24      19   20   21   22   23   24     19
25      30   29   28   27   26   25     30
36      31   32   33   34   35   36     31
1       6    5    4    3    2    1      6
640 acres (Section)
320 acres (Half Section)
160 acres (Quarter Section)
 Proper Well Location Requirements

• 640 acres - No closer than 1320 feet from unit
  boundaries
• 320 acres - Stand-Up or Lay-Down Units – No
  closer than 660 feet from proper Quarter Section
  i.e. on NW-SE proper location within each 320
  acre unit (or can be NE-SW)
• 160 acres –No closer than 660 from unit
  boundaries
• 80 acres – Stand-Up or Lay-Down Units – No
  closer than 330 feet from proper Quarter Quarter
  Section i.e. on NW-SE proper location within each
  80 acre unit (or can be NE-SW)
  Proper Well Location Requirements
             (continued)
• 40 acres No closer than 330 feet from unit boundary
• 20 acres Stand-Up or Lay-Down Units - No closer
  than 165 feet from proper Quarter Quarter Section
  i.e. on NW-SE proper location within each 20 acre
  unit (or can be NE-SW)
• 10 acres – No closer than 165 feet from unit
  boundary
                Vertical
     Drilling and Spacing Causes
Samples applications/notices/orders
• 40-acre units
• 80 acre stand-up units
• 160-acre units
• 320-acre lay-down Units
• 640-acre units
Horizontal Drilling Offshore
Horizontal Drilling Texas
Horizontal Drilling compared to
      Slant Hole Drilling
     Horizontal Drilling

OAC 165: 10-3-28
Definitions
General horizontal drilling
     requirements
(1) Within 30 days after completion of a horizontal well, the
operator shall show that the location of the completion interval
complies with the applicable general rule, location exception
order, or other order of the Commission by submitting the
following to the Technical Services Department:
   (A) A directional survey run in the horizontal well.
   (B) A plat constructed from the results of the directional
   survey showing the completion interval.
(2) The completion interval of a horizontal well shall be located
not closer than the minimum distance as set out below from any
other oil or gas well completed in the same common source of
supply except as authorized by a special order of the
Commission:
(A) Three hundred feet from any other oil or gas well
completed in the same common source of supply, the top of
which is less than 2,500 feet in true vertical depth.
B) Six hundred feet from any other oil or gas well completed
in the same common source of supply, the tope of which is
2,500 feet or more in true vertical depth.
(C) This paragraph does not apply to horizontal wells drilled in
a unit created for secondary or enhanced recovery operations
pursuant to 52 O.S. § 287.1 et seq. or to horizontal wells
drilled in a horizontal well unitization created pursuant to 52
O.S. § 87.6 et seq.
 Horizontal well requirements in an
unspaced common source of supply.
In a horizontal well drilled in a common source of supply in
which the Commission has not established any drilling and
spacing units or horizontal well units, the completion interval of
a horizontal well may not be located closer to the boundaries of
the applicable mineral estate, oil and gas leasehold estate, or
voluntary unit than the minimum distance set out below except
as authorized by a special order of the Commission:
   (1) Not less than 165 feet when the top of the common source
   of supply is less than 2,500 feet in true vertical depth.
   (2) Not less than 330 feet when the top of common source of
   supply is 2,500 feet or more in true vertical depth.
Drilling and spacing units
(1) A horizontal well may be drilled on any drilling and spacing
unit.
(2) A horizontal well unit may be created in accordance with
165:10-1-22 and 165:5-7-6. Such units shall be created as new
units after notice and hearing as provided for by the Rules of
Practice, OAC 165:5.
(3) The Commission may create a non-standard horizontal well
   unit covering contiguous lands in any configuration or shape
   deemed by the Commission to be necessary for the
   development of a conventional reservoir or an
   unconventional reservoir by the drilling of one or more
   horizontal wells. A non-standard horizontal well unit may not
   exceed 640 acres plus the tolerances and variances allowed
   pursuant to 52 O.S. § 87.1.
 Horizontal well location requirements
for horizontal well units and horizontal
            well unitizations
(1) Conventional reservoirs. In a conventional reservoir, the
completion interval of a horizontal well in a horizontal well unit
shall be located not less than the minimum distance from the
unit boundary as follows:
   (A) Not less than 165 feet from the boundary of any 10-, 20-,
   or 40-acre horizontal well unit.
   (B) Not less than 330 feet from the boundary of any 80- or
   160-acre horizontal well unit.
   (C) Not less than 660 feet from the boundary of any 320- or
   640-acre horizontal well unit.
(2) Unconventional reservoirs. In an unconventional reservoir,
the completion interval of a horizontal well in a horizontal well
unit shall be located not less than the minimum distance from
the unit boundary as follows:
   (A) Not less than 165 feet from the boundary of any 10-, 20-,
   or 40-acre horizontal well unit.
   (B) Not less than 330 feet from the boundary of any 80-, 160-,
   320-, or 640-acre horizontal well unit.
(3) Horizontal well unitizations. The completion interval of a
horizontal well in a horizontal well unitization shall not be
located less than 330 feet from the unit boundary.
Alternative well location requirements.

The Commission may establish well location requirements
different from those provided in subsection (f) of this Section
when necessary to prevent waste and protect correlative rights.
These requirements may be established in the order creating a
standard or nonstandard horizontal well unit or through a special
rule of the Commission covering a conventional or
unconventional reservoir in a designated geographic area. (see
OAC 165:10, Subchapter 29, Special Area Rules).
                        Allowable

(1) Horizontal oil well allowables may be established
administratively using the standard allowables provided in
Appendix A (Allocated Well Allowable Table) supplemented by
the additional allowables provided in Appendix C (Table HD) to
this Chapter.
(2) The allowable for a horizontal gas well shall be computed in
the manner prescribed for a non-horizontal gas well in the same
common source of supply.
(3) The allowable for a horizontal well unit or horizontal well
unitization with multiple horizontal gas wells shall be the sum of
allowables for the separate horizontal gas wells. Fro this
summation, the allowable for each horizontal gas well will be
calculated as if it were the only well in the unit.
(4) The allowable for a multi-unit horizontal well shall be
allocated to each affected unit using the allocation factors
determine in accordance with 52 O.S. § 87.8(B)(1).
                           Pooling

Horizontal well units, horizontal well unitizations and multi-unit
horizontal wells may be pooled as provided in 52 O.S. § 87.1, 52
O.S. § 87.6 et seq. and Commission Rules of Practice, OAC 165:5.
            OAC 165: 10-29-2

Alternative location requirements for horizontal
well units
(a) Scope and effect. The well location requirements of this
    Section apply to horizontal wells completed in horizontal well
    units in designated common sources of supply and
    geographic areas as specified in this Section. Horizontal wells
    covered by this Section are subject to OAC 165:10-3-28 and
    other applicable Commission rules except as provided in this
    Section.
(b) Woodford shale.
   (1) This subsection applies to horizontal wells completed in
       the Woodford shale common source of supply in Atoka,
       Blaine, Caddo, Canadian, Coal, Dewey, Grady, Haskell,
       Hughes, Kingfisher, LeFlore, Latimer, McIntosh, Pittsburg,
       and Sequoyah Counties.
(2) The completion interval of a horizontal well subject to this
subsection shall be located not less than the minimum
distance from the boundary of a standard or non-standard
horizontal well unit as follows:
   (A) Not less than 330 feet from an east or west unit
   boundary.
   (B) Not less than 165 feet from a north or south unit
   boundary.
           Appendix C: Table HD
Recommended Additional Allowable for Horizontal Oil Wells
based on True Vertical Depth and Completion Interval

         Average True Vertical Additional Allowable
         Depth of Pool in Feet in Barrels per foot of
                               Completion Interval
               To 4,000                   .2
             4,001 to 8,000               .3
            8,001 to 12,000               .4
          Greater than 12,000             .5
All oil produced and marketed during the drilling and completion
operations shall be charged against the allowable assigned to the
well upon completion.

Effective date of the allowable shall be the date of first
production.
               Horizontal
     Drilling and Spacing Causes

Sample application/notice/final order
Sample Survey
           Horizontal Spacing
       (OCC Rules and Regulations)
OAC: 165:5-7-6(g)
OAC: 165:5-7-6(h)
OAC: 165:5-7-6(i)
OAC: 165:5-7-6.1
OAC: 165:5-7-6.2
OAC: 165:10-1-21
OAC:165:10-1-24
OAC:165:10-1-25
OAC:165:10-3-4(f)
OAC:165:10-3-27(c)(1)
OAC:165:10-3-28

Appendix C (Table HD)

                  (Case Law)

Samson Resources Company v. Corporation
Commission, 831 P.2d 663, 665 (Okla. App 1992)
           Horizontal Pooling
       (OCC Rules and Regulations)
OAC:165:5-15-3(g)
OAC:165:5-13-3(h)


        Deviation from the Vertical
         (OCC Rules and Regulations)

OAC:165:10-3-27
          Horizontal Allowables
       (OCC Rules and Regulations)
OAC:165:10-3-28(C)(2)
OAC:165:10-3-28(f)(1)
OAC:165:10-3-28(f)(2)
OAC:165:10-3-28(h)(2)
OAC:10-3-29(j)(1)
     Horizontal Gross Production Tax
      (OCC Rules and Regulations)
OAC:165:10-21-65
OAC:165:10-21-66
OAC:165:10-21-67
OAC:165:10-21-68
         Eric R. King
One Leadership Square, 15th Floor
      211 N. Robinson Ave.
   Oklahoma City, OK 73102
        (405) 235-5518

				
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