CHAPTER 14 PLANS OF DEVELOPMENT, SUSPENSION|EXTENSION, CONTRACTIONS, AND TERMINATIONS

• Jurisdiction: United States

Federal Onshore Oil and Gas Pooling and Unitization II
(Jan 1990)
CHAPTER 14
PLANS OF DEVELOPMENT, SUSPENSION/EXTENSION, CONTRACTIONS, AND TERMINATIONS
Teresa Thompson
Bureau of Land Management
Salt Lake City, Utah
Bernie Dillon, B.L.M.,
Denver, Colorado

TABLE OF CONTENTS

SYNOPSIS

Page

I. INTRODUCTION

II. PLANS OF DEVELOPMENT

III. SUSPENSIONS/EXTENSIONS

A. Circumstances Warranting Suspension/Extension

B. Suspension of Lease Term

C. Suspension of Automatic Elimination Provisions

D. Extension of Drilling Requirements

IV. CONTRACTIONS

A. Circumstances Warranting Contraction

B. Procedures for Contraction

V. TERMINATIONS

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INTRODUCTION

This paper will discuss plans of development, suspensions and extensions of time, contractions and terminations. This paper is not intended to represent official Bureau policy nor be a legal analysis. This paper is intended to be practical guide as to the type of miscellaneous activities that can occur under the terms of a federal unit agreement.

PLANS OF DEVELOPMENT¹

Once a unit becomes productive, a plan of development is required pursuant to Section 10 of the agreement. A plan of development is required within 6 months after the completion of a well capable of producing unitized substances in paying quantities (i.e., sufficient to warrant a participating area). Prior to the expiration of the initial or any subsequent plan of development and operation, a new plan covering the next period (following calendar year) should be submitted on a calendar year basis no later than March 1 of each year.

The main purpose of the plan of development is to provide for progressive development of the unit area on an orderly, reasonable, and timely basis until such time as the productive limits of each participating area have been adequately defined. Generally, plans of development and operations should be designed to ensure that the exploration and development drilling necessary for unit development be accomplished as early as 5 years from the effective date of the initial participating area, and certainly with 10 years from such date.

A plan of development should describe the exploratory and development drilling operations and other related operations proposed to be performed within the coming year. All work that would change a well's producing formation or status, or operations that would require the prior approval of the authorized office, such as drill deeper, plug back, abandonment, or conversion to an injection well, (i.e., operations that would affect the boundaries of a participating area) should be included. Each plan must provide for additional exploration and/or development drilling necessary to fully delineate the

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productive limits within the unit area, or justify the lack of drilling. Any proposed modification or additional development to the existing plan should be filed as a supplement to the plan.

All proposed wells and subsequent operations within the unit area will not be approved by the authorized officer unless included on the plan of development.

A yearly operations summary for the previous year is also required. This plan should include up-to-date maps showing the latest geologic interpretations, all wells and participating area boundaries, a list showing the status of all wells, summary of all field operations, and performance curves covering the productive life of each horizon under a participating area, including injectivity curves when appropriate. A field map showing all wells, flow-lines, and roads should also be included.

When the unit area has been fully developed or contracted down to participating areas, the authorized office may require an annual summary of operations to be submitted in lieu of the annual plan of development.

SUSPENSIONS/EXTENSIONS²

Circumstances that may warrant approval of a unit suspension/extension are as follows:

— Actions taken by a surface-managing agency in the interest of conservation which prohibit the unit operator from beneficially using the unit area. If a unit operator is prohibited from drilling on the unitized lease due to restrictions imposed on them by a surface-managing agency, then unitized leases should not be...