PARTICIPATING AREAS

• Jurisdiction: United States

Federal Onshore Oil & Gas Pooling & Unitization - part 1
(Oct 2014)
CHAPTER 6A
PARTICIPATING AREAS
J. David Chase
U.S. Bureau of Land Management
Casper, Wyoming

[Page 6A-1]

J. DAVID CHASE is the chief of the Reservoir Management Group (RMG) for the Bureau of Land Management (BLM) in Casper, Wyoming. He is responsible for the following BLM programs in Wyoming: unitization and communitization, drainage, gas storage, Indian diligence, and reasonable foreseeable development scenarios for NEPA documents. After receiving a B.S. degree in petroleum engineering from the University of Wyoming in December 1983, he started his BLM career in Lander in February 1984 as a drilling and production engineer. He transferred to Rock Springs in June 1987 to work with the BLM as a reservoir engineer. In August 1993, when the RMG was formed, Dave moved to Casper to work as a reservoir engineer before becoming the chief in July 2008. Dave has a wide range of knowledge working with all aspects of unitization agreements including lease suspensions and unavoidable delay requests, paying well determinations and establishment/revisions of participating areas. He also has a wide range of knowledge with well spacing and communitization agreements. During the past five years, Dave has presented agreements training to various BLM, ONRR, and industry personnel in a wide variety of settings.

Participating Areas

David Chase - Wyoming Reservoir Management Group

Mickey Coulthard - Utah State Office

Joe Galluzzi - New Mexico State Office

Pat Gallagher - Colorado State Office

Will Lambert - Washington Office Montana State Office

October 28, 2014

Participation After Discovery Participating Area (PA)

Definition:

✓ The area that is "reasonably proven productive" by a well that produces in "unit paying" quantities.

✓ The area that shares in:

✓ Costs and revenue of the PA well(s), and

✓ Allocation of royalty

[Page 6A-2]

Authority/References

43 CFR 3183.5: Participating Area

43 CFR 3186.1 : Model Onshore Unit Agreement for Unproven Areas

Section 11 - Participation After Discovery

Section 12 - Allocation of Production

Unitization (Exploratory) Manual H-3180, Part C

Unitization (Exploratory) Handbook, H-3180-1, Part F

Participation After Discovery

"Reasonably proven productive"

How do we define this in order to come up with the PA boundary?

♦ Circle-tangent method unless additional info available

♦ Simple

♦ Equitable

♦ Well accepted by industry

[Page 6A-3]

Boxelder Creek Unit

[Page 6A-4]

Initial Almond Formation PA "A"

560 Total Acres:

360 Fee acres -	64.3%
200 Federal acres -	35.7%
100.0%

Production Allocation EXAMPLE:

If PA well No. 1 produces 10,000 mcf gas during May, 2010, then

64.3% of gas, or...