CHAPTER 16 3180 UNITIZATION MANUAL

JurisdictionUnited States
Federal Onshore Oil & Gas Pooling & Unitization - part 2
(Oct 2014)

CHAPTER 16
3180 UNITIZATION MANUAL

[Page 78]

UNITED STATES DEPARTMENT OF THE INTERIOR

BUREAU OF LAND MANAGEMENT

Washington, D.C. 20240

November 20, 1992

In Reply Refer To 3180 (610)

Instruction Memorandum No. 93-66

Expires 9/30/94

To: All Field Offices
From: Director
Subject: Interim Guidance on Oil and Gas Units Administration

ISSUE: The Bureau of Land Management (BLM) Manual Section 3180 and Handbook H-3180-1 have been revised to implement the recommendations of a special BLM task force on exploratory units and to reflect other changes that have occurred in the units program since Manual 3180 was last released in 1986. However, since work remains to be done on several unit issues, the new Manual cannot yet be released in final form. Nonetheless, the revised units Manual, in its present form, contains updated policy and procedural guidance that should be made available to BLM field personnel.

OBJECTIVE: This Instruction Memorandum transmits the current final draft versions of Manual Section 3180 and Handbook H-3180-1 for use as interim guidance in administering the units program.

BACKGROUND AND POLICY: Release of this draft revised Manual for the units program is consistent with BLM's policy of providing up-to-date procedural guidance to our field personnel.

IMPLEMENTATION AND SCHEDULE: The attached final draft Manual Section 3180 and Manual H-3180-1 should be used as interim guidance until final versions of the units Manual/Handbook are completed and released. During the next few months, we will finish work on a more comprehensive version of Illustration 2 to the Handbook, which is a compilation of explanatory material and suggested forms designed to assist unit operators in submitting the various information and requests for approval required by the BLM. During this period, we will also try to resolve selected program issues related to the treatment of unleased Federal lands in units, the effective commitment of tracts to the unit agreement when minority working interest owner approval is unobtainable, the possible use of a self-certification procedure for subsequent joinders to the unit agreement, and the transition from exploratory to enhanced recovery unit operations.

While we complete revision of the Manual and Handbook for final publication, we encourage feedback on this revised guidance from you as well as from those in the industry who are affected by it.

[Page 79]

COORDINATION: Preparation of the 3180 Manual was coordinated among BLM offices of the major oil and gas producing States through their respective representatives on the oil and Gas Agreements Task Force.

BUDGET IMPLICATIONS: Minimal.

CONTACT PERSONS: Wayne Stevens (916) 978-4735 or Rob Coleman (307) 775-6193.

Hillary A Oden
Assistant Director
Energy and Mineral Resources

2 Attachments

1 - Interim Guidance-Draft BLM Manual Section 3180-Unitization (Exploratory (23 pp.)

2 - Interim Guidance-Draft BLM Handbook H-3180-1-Unitization Exploratory (126 pp.)

[Page 80]

DRAFT BLM MANUAL SECTION 3180 - UNITIZATION (EXPLORATORY)

NOTE TO USERS: The attached DRAFT BLM Manual Section 3180 is being issued as INTERIM GUIDANCE for those involved in administration of the oil and gas units program.

[Page 81]

Table of Contents

.01 Purpose

.02 Objectives

.03 Authority

.04 Responsibility

.05 References

.06 Policy

.1 Unit Management

.11 Overview

.12 Guidelines and Procedures

A. Designation of Unit Area; Depth of Test Well

B. Approval of Executed Unit Agreement

C. Establishment and Revision of Participating Area

D. Plan of Further Development and Operation

E. Contraction or Expansion of Unit Area--Automatic Elimination

F. Extensions of Time

G. Suspensions

H. Termination

I. Unit Operating Agreement

J. Amendment of Approved Unit Agreement

K. Designation of Agent or Suboperator

L. Successor Unit Operator

M. Proprietary Data

N. Bankrupt Unit Operator

O. Reporting Format for Unit Wells

P. Case Recordation System (CRS)

Q. Coordination

R. Operations on Non-Federal Unitized Land

S. Surface Use Plan

T. Indian Land

U. State Agencies

Glossary of Terms

Illustrations

1. General Flowchart for Administration of Units

2. Detail Flowchart for Administration of Units

Handbook

H-3180-1 - Unitization (Exploratory)

[Page 82]

.01 Purpose.

Unit agreements embracing Federally-supervised leases including all or part of an oil and/or gas pool, field, or like area may be classified as either exploratory or enhanced recovery in nature. This Manual Section defines Bureau of Land Management (BLM) responsibilities concerning the review, approval, and supervision of operations for exploratory units involving Federal (except for the National Petroleum Reserve in Alaska) and Indian lands. Procedural guidance for the approval and administration of exploratory units is contained in Handbook H-3180-1.

.02 Objectives.

Unitization provides for the exploration, development, and operation of a geologically defined area by a single operator so that drilling and production may proceed in the most efficient and economical manner.

.03 Authority.

A. 43 CFR 3180- -Onshore Oil and Gas Unit Agreements--General.

B. 25 CFR 211 , 212 , 213 , and 227 .

.04 Responsibility.

A. State Director. Unless further delegated, the State Director is responsible for:

1. Designation of an area and/or lands as logically subject to exploration and/or development under a unit agreement.
2. Approval of executed unit agreement.
3. Approval of unit plan of development.
4. Approval of expansion/contraction of unit area.
5. Approval of amendment to an approved unit agreement.
6. Approval of a successor unit operator.
7. Approval of designation of agent or suboperator.
8. Approval of extension of time for drilling test wells.
9. Approval of request for the termination of a unit agreement where such request conforms to the procedures set forth in the unit agreement.
10. Paying well determination under an approved unit.
11. Establishment and/or revision of a participating area.
12. Concurrence with the operator's description of the lands automatically eliminated from a unit area under terms of the unit agreement.

[Page 83]

B. District Manager. Unless further delegated, the District Manager is responsible for:
1. Approval to drill wells on Federal and Indian lands within approved units in conformance with the terms of the plan or subsequently approved plans of development and operations, unless that responsibility is retained by the State Director.
2. Conducting inspections of unit operations.
3. Recommending revision of plans of development, additional drilling, and/or secondary recovery program.
4. Acceptance, for the record, of applications for State and fee wells within the unit and approval for "Unit Purposes Only."
5. Drainage determinations involving unitized lands.
6. Any or all of the responsibilities of the State Director, as delegated.

.05 References.

A. 43 CFR 3107.1, Extension by Drilling.

B. 43 CFR 3107.3-2, Segregation of Leases Committed in Part.

C. 43 CFR 3107.4, Extension by Elimination.

D. 43 CFR 3162.8 , Confidentiality.

E. 43 CFR 3186.1 , Model Onshore Unit Agreement for Unproven Areas.

F. Bureau of Indian Affairs - Order 551, Amendment 103, April 2, 1965.

G. BLM Manual Section 3160-1, Application for Permit to Drill and Subsequent Operations.

H. BLM Manual Section 3160-10, Suspension of Operations and/or Production.

I. Onshore Oil and Gas Order No. 1, Approval of Operations on Onshore Federal and Indian Oil and Gas Leases (Circular No. 2538).

J. Memorandum of Understanding Between the Bureau of Indian Affairs, the Bureau of Land Management, and the Minerals Management Service Regarding Working Relationships Affecting Mineral Lease Activities (BLM MOU WO600-9111, effective 9/6/91).

[Page 84]

.06 Policy.

A. The guidelines and procedures outlined in this Manual Section apply generally to all unit agreements for unproven areas, but specifically to those agreements using the language shown in the form of agreement for unproven areas at 43 CFR 3186.1 . Various forms of unit agreements have been approved over the years and, while many of the provisions have remained similar, important differences exist. For this reason, the individual agreement must always be consulted.

B. All involved parties must be familiar with the contents of the model unit agreement at 43 CFR 3186.1 .

[Page 86]

.1 Unit Management.

The Mineral Leasing Act, as amended, and the regulations issued thereunder provide that unit plans must be for the purpose of conserving the natural resources of the pool, field, or area involved and must be determined to be necessary or advisable in the public interest.

.11 Overview.

A unit agreement is an agreement approved by the authorized officer of the BLM, submitted by an operator on behalf of the owners of oil and gas interests over a potential oil or gas reservoir who wish to unite with each other to facilitate the orderly and timely development of the oil and gas resources within the unit area. This consolidation of separate leasehold interests eliminates the need to drill protective wells along common boundaries between unitized leases and serves to maximize benefits through a continuing exploration and development program. The agreement designates one party as the operator to conduct all activities in the unit area and commits that party to diligently pursue an exploration program to develop the oil and gas potential of the area on behalf of all committed interests. Where Federal or Indian lands are to be committed to the unit agreement, approval by the Federal Government is required. Approval of the unit agreement does not, in itself, authorize any on-the-ground activities. All such activities are...

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