CHAPTER 24 SUSPENSION INSTRUCTION MEMORANDA (88-75, 92-331)

• Jurisdiction: United States

Federal Onshore Oil & Gas Pooling & Unitization - part 2
(Oct 2014)
CHAPTER 24
SUSPENSION INSTRUCTION MEMORANDA (88-75, 92-331)

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United States Department of the Interior

BUREAU OF LAND MANAGEMENT

WASHINGTON, D.C. 20240

November 3, 1987

Instruction Memorandum No. 88-75

Expires 9/30/88

To: All State Directors

From: Director

Subject: Suspension of the Automatic Elimination Provisions of Section 2(e) of the Model Form of Unit Agreement for Unproven Areas

Instruction Memorandum No. 85-537 of July 9, 1985 (copy attached), established the Bureau's policy concerning the subject matter and provided guidelines for implementing that policy.

Although the above Instruction Memorandum expired at the end of its extended term on September 30, 1987, the policy and implementing guidance contained therein remain unchanged and, further, are scheduled to be incorporated in a revision of Manual 3180 Unitization (Exploratory). Thus, the Bureau will continue to entertain applications in this regard and will approve or reject those applications in accordance with the policy guidance previously provided. Moreover, any suspension that is now in effect may be extended beyond its present termination date so long as the circumstances are the same or essentially the same as those that originally warranted the suspension.

Should you require further clarification of these instructions or have questions not addressed by this memorandum, please communicate those directly to the Division of Fluid Mineral Operations at 653-2127 (FTS) or 202/653-2127 (commercial).

Tom Allen

Deputy Director

Acting

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outlet, or the lack of an economic marketing outlet. Thus, the applications received to date have requested the authorized officer's: (1) concurrence that an unavoidable delay situation existed pursuant to section 25 of the unit agreement; (2) approval of a suspension of the automatic elimination provisions of section 2(e); and, in one of the two nos: recent cases, (3) approval of a request for a suspension under section 33 of the Mineral Leasing Act of 1920 of the operating and producing requirements of the Federal leases committed to the unit agreement. (A suspension of unit obligations under section 25 of the unit agreement does not suspend the obligations under the leases committed to the unit.)

The first of these cases to be reviewed by this office collectively involved three separate unit agreements (same unit operator) in southwestern Wyoming where approvals to drill proposed unit wells were being held in abeyance by this Bureau pending the completion of a related environmental impact statement. Each unit area had been proven capable of producing substances in paying quantities. Two were early in the initial 5-year term and the other had reached the end of its initial 5-year term. The unit operator requested concurrence in its determination that an unavoidable delay existed and a suspension of the automatic elimination provisions. In our memorandum of February 7, 1984, to the Wyoming State Director, copy enclosed, the State Director was advised that this office was persuaded that the circumstances in this case warranted some form of relief. On the basis of that review, it was concluded that the unavoidable delay provision set out in section 25 of each of the involved unit agreements was applicable to the existing situation. The memorandum then stated that "If the unit operator is unable to meet his section 2(e) drilling obligations, despite the exercise of due care and diligence, because of acts of Federal agencies or any other cause described in section 25, you may suspend those obligations and the related provisions of Section 2(e). Thus, the unit operator would not need to conduct diligent drilling operations on unitized lands not entitled to participation in order to prevent elimination of nonparticipating lands from the unit areas . . . so long as it is prevented from doing so by our actions." Subsequently, the Rock Springs District Manager granted the relief sought by the unit operator in this case, and a copy of that decision is enclosed.

This office has now concluded its review of the two most recent cases in which the unit operator is seeking relief from the automatic...