From the Sections, 1219 WYBJ, Vol. 42 No. 7. 14

• Author: Stephanie L. Sickler Associate Jost Energy Law, P.C. Jamie L. Jost Managing Shareholder Jost Energy Law, P.C.
• Position: Vol. 42 7 Pg. 14

From the Sections

Vol. 42 No. 7 Pg. 14

Wyoming Bar Journal

December, 2019

From the Energy & Natural Resources Section

Wyoming Oil and Gas Conservation Commission: New Operatorship/APD Rule

Stephanie L. Sickler Associate Jost Energy Law, P.C.

Jamie L. Jost Managing Shareholder Jost Energy Law, P.C.

On November 12, 2019, the five-member panel of the Wyoming Oil and Gas Conservation Commission (WOGCC) adopted a new Application for Permit to Drill Rule (APD Rule) in an effort to address the backlog of tens of thousands of drilling permits as well as the increased number of operatorship challenges affecting the development of Wyoming's valuable oil and gas reserves.^[1] The WOGCC's unanimous adoption pushed the new APD Rule one step closer to final as the 33-step process required by the Wyoming Administrative Procedure Act (APA) continues to conclusion by early 2020.

In early to mid-2019, the Wyoming Legislature's Minerals, Business & Economic Development Committee (Minerals Committee), together with the WOGCC Supervisor, the Petroleum Association of Wyoming, industry operators, mineral owners and other stakeholders collaborated and discussed the development of a WOGCC rule to address the determination of operatorship in a drilling and spacing unit (DSU) as well as how and when an APD may be filed, extended or otherwise challenged. Adhering to the APA's rulemaking mandates, the WOGCC released the draft APD Rule at its July 9, 2019, Commission hearing, opened the 45-day public comment period on July 25, 2019, and held a public meeting to discuss the draft on July 30, 2019. Before the public comment period closed on September 14, 2019, the WOGCC supervisor received over 228 pages of comments that led to certain modifications of the draft APD Rule and the final adopted APD Rule.

The intent of the new APD Rule is to encourage development of Wyoming minerals and to level the playing field for all operators. Effectively, the APD Rule confirms that Wyoming remains a first-to-file state when determining operatorship, but such determination is now limited to two-year intervals in certain instances. Upon the filing of an incumbent operator's new APD, extension of an existing APD, or two-year anniversary of date of spud of the most recent well in a DSU, a challenging operator may now file an APD and an application to seek operatorship within a given DSU to develop the underlying leases and...