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S08169 Summary:

BILL NOS08169A
 
SAME ASSAME AS A10526-A
 
SPONSORYOUNG
 
COSPNSRMARCELLINO, LIBOUS
 
MLTSPNSR
 
Amd SS23-0501 & 23-0503, En Con L
 
Makes amendments to the calculations of statewide spacing requirements for oil and gas wells.
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S08169 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         8169--A
 
                    IN SENATE
 
                                       May 7, 2008
                                       ___________
 
        Introduced  by  Sens.  YOUNG,  MARCELLINO,  LIBOUS -- (at request of the
          Department of Environmental Conservation) -- read  twice  and  ordered
          printed, and when printed to be committed to the Committee on Environ-
          mental  Conservation  --  reported  favorably  from said committee and
          committed to the Committee on  Rules  --  committee  discharged,  bill

          amended,  ordered reprinted as amended and recommitted to said commit-
          tee
 
        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]
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD15187-05-8

        S. 8169--A                          2
 
     1  1,000  feet from any unit boundary that is not defined by a field-bound-
     2  ing fault but in no event less than 660 feet from any unit boundary;
     3    (iv)  For fault-bounded Trenton and/or Black River hydrothermal dolom-

     4  ite gas pools where the majority of the pool is below [8000] 8,000 feet,
     5  within five percent of 640 acres with the proposed productive section of
     6  the wellbore within the target formation no less than one mile from  any
     7  other  well  in  another  unit  in the same pool and no less than [1500]
     8  1,500 feet from any unit boundary that is not defined by a  field-bound-
     9  ing fault but in no event less than 660 feet from any unit boundary;
    10    (v)  For shale gas pools at any depth, for a vertical well outside any
    11  existing spacing unit for the same formation, 40 acres with the wellbore
    12  within the target formation no less than 460 feet from any unit  bounda-
    13  ry;
    14    (vi)  For  shale gas pools at any depth, for a horizontal well outside

    15  any existing spacing unit for the same  formation  and  with  a  written
    16  commitment  from  the  well  operator  to drill infill wells pursuant to
    17  subdivision 4 of section 23-0503 of  this  title,  with  all  horizontal
    18  infill  wells  in  the  unit to be drilled from a common well pad within
    19  three years of the date the first well in the unit  commences  drilling,
    20  notwithstanding  the  ten  percent  tolerance specified in this subpara-
    21  graph, up to 640 acres with the initial horizontal wellbore or wellbores
    22  within the target formation approximately centered in the  spacing  unit
    23  and no wellbore in the target formation less than 330 feet from any unit
    24  boundary;
    25    (vii)  For shale gas pools at any depth, for a horizontal well outside

    26  any existing spacing unit for the same formation and in the absence of a
    27  written commitment from the well operator to drill infill wells pursuant
    28  to subdivision 4 of section 23-0503 of this title,  40  acres  with  the
    29  wellbore within the target formation no less than 330 feet from any unit
    30  boundary plus the number of additional acres necessary and sufficient to
    31  ensure  that  the  wellbore within the target formation is not less than
    32  330 feet from any unit boundary;
    33    (viii) For all other gas pools where the majority of the pool is above
    34  the depth of 4,000 feet, 80 acres with the wellbore  within  the  target
    35  formation  no  less than [660] 460 feet from any unit boundary, plus, if

    36  applicable, the number of additional acres necessary and  sufficient  to
    37  ensure  that  any horizontal wellbore within the target formation is not
    38  less than 460 feet from any unit boundary;
    39    [(vi)] (ix) For all other gas pools where the majority of the pool  is
    40  4,000  to 6,000 feet deep, 160 acres with the wellbore within the target
    41  formation no less than 660 feet from any unit boundary, plus, if  appli-
    42  cable, the number of additional acres necessary and sufficient to ensure
    43  that  any  horizontal  wellbore  within the target formation is not less
    44  than 660 feet from any unit boundary;
    45    [(vii)] (x) For all other gas pools where the majority of the pool  is

    46  6,000  to 8,000 feet deep, 320 acres with the wellbore within the target
    47  formation no less than [1000] 1,000 feet from any unit  boundary,  plus,
    48  if  applicable,  the number of additional acres necessary and sufficient
    49  to ensure that any horizontal wellbore within the  target  formation  is
    50  not less than 1,000 feet from any unit boundary; [and
    51    (viii)] (xi) For all other gas pools where the majority of the pool is
    52  below  8,000  feet,  within  five percent of 640 acres with the wellbore
    53  within the target formation no less than [1500] 1,500 feet from any unit
    54  boundary, plus, if applicable, the number of additional acres  necessary
    55  and  sufficient to ensure that any horizontal wellbore within the target

    56  formation is not less than 1,500 feet from any unit boundary;

        S. 8169--A                          3
 
     1    (xii) For oil pools in the Bass Island, Trenton, Black River, Onondaga
     2  reef or other oil-bearing reefs at any depth, 40 acres with the wellbore
     3  within the target  formation  no  less  than  460  feet  from  any  unit
     4  boundary,  plus, if applicable, the number of additional acres necessary
     5  and  sufficient to ensure that any horizontal wellbore within the target
     6  formation is not less than 460 feet from any unit boundary; and
     7    (xiii) For all other oil pools at any depth, the wellbore  within  the
     8  target formation shall be no less than 165 feet from any lease boundary.

     9    Wells completed under a well permit issued pursuant to clause (xii) or
    10  (xiii)  of  this  subparagraph  that do not produce oil may not commence
    11  production of natural gas prior to  modification  of  the  spacing  unit
    12  pursuant to applicable provisions of this title.
    13    §  2.  Subdivision 4 of section 23-0503 of the environmental conserva-
    14  tion law, as added by chapter 386 of the laws of  2005,  is  amended  to
    15  read as follows:
    16    4. The department may issue permits to drill infill wells on a reason-
    17  ably  uniform pattern within the spacing unit after an integration order
    18  has been issued, if required, and only if it  determines  that  drilling
    19  infill  wells  is  necessary to satisfy the policy objectives of section
    20  23-0301 of this article. The distances  from  the  unit  boundaries  set

    21  forth  in  paragraph b of subdivision 1 of section 23-0501 of this title
    22  shall apply to any infill wells.  For  purposes  of  this  section,  new
    23  lateral wellbores drilled from the original wellbore in the unit are not
    24  considered  infill  wells if they are drilled prior to the first product
    25  sales from the original surface location.  In a spacing unit established
    26  pursuant to clause (vi) of subparagraph 1 of paragraph b of  subdivision
    27  1  of section 23-0501 of this title, infill wells shall be deemed neces-
    28  sary, and the number of infill wells  required  to  satisfy  the  policy
    29  objectives  of  section  23-0301  of this article must be drilled within
    30  three years of the date the first well in the unit commences drilling.
    31    § 3. Subdivision 6 of section 23-0503 of the  environmental  conserva-

    32  tion  law,  as  added  by chapter 386 of the laws of 2005, is amended to
    33  read as follows:
    34    6. [An order establishing]  Unless  it  is  extinguished  pursuant  to
    35  subdivision  seven  of  this  section, a spacing unit established by the
    36  department shall be binding upon all persons and their heirs, successors
    37  and assigns. Upon good cause shown, an order establishing a spacing unit
    38  or a spacing unit which conforms to statewide spacing may be modified by
    39  the department without conducting a hearing if a finding has  been  made
    40  that  no  facts  are  in  dispute  after  all affected persons have been
    41  provided a reasonable opportunity to comment.  In a spacing unit  estab-
    42  lished  pursuant  to  clause  (vi)  of  subparagraph 1 of paragraph b of

    43  subdivision 1 of section 23-0501 of this title, failure to drill  infill
    44  wells  pursuant  to  subdivision 4 of this section shall constitute good
    45  cause for the department to initiate a modification of the spacing unit.
    46  If necessary, upon issuance of [a modified] an order which changes  unit
    47  boundaries, the well operator shall adjust the accounts for owners with-
    48  in the original and modified units to reflect the modified boundary. Any
    49  participation  by  new owners and any adjustment of revenue or royalties
    50  [based thereon] resulting from participation by new owners shall be on a
    51  prospective basis only. If the initial risk penalty  phase  pursuant  to
    52  title  9  of  this article is in effect, any new owner added to the unit
    53  may elect to be integrated as a participating owner, a non-participating

    54  owner or an integrated royalty owner as defined by title 9 of this arti-
    55  cle. Full well costs shall be assessed against new participating  owners
    56  and  non-participating  owners  and  included in the risk penalty calcu-

        S. 8169--A                          4
 
     1  lation. If the initial risk penalty phase has concluded, any  new  owner
     2  added  to the spacing unit may elect to be integrated as a participating
     3  owner or an integrated royalty owner on a prospective basis only.
     4    § 4. This act shall take effect immediately.
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