SPACING

Vertical

Horizontal

Eric R. King

Oil and Gas Practice

OU Law School

September 19, 2013

Oklahoma Crude

Conservation

• 52 O.S. 87.1

• Common Source of Supply of Oil

• Well Spacing and Drilling Units

Spacing• Actual Notice at least 15 days prior to Hearing to

all parties who have the right to share in production

• File Application

• Notice via regular mail at least 15 days before Hearing

• Publication Notice – At least 15 days prior in County where Land is situated and Oklahoma County before the Hearing

• Hearing

• Issues

OAC 5-7-6

Drilling and spacing unit establishment or

modification

OAC 5-7-6.1

Horizontal well unitization for shale reservoirs

OAC 5-7-6.2

Multiunit horizontal wells in shale reservoirs

General Well Spacing

Requirements

OAC 165:10-1-21

Drilling and Spacing Units

OAC 165: 10-1-22

Permitted Well Locations

Within Standard Drilling

and Spacing Units

OAC 165: 10-1-24

Drilling and Spacing Units

• A Township - 36 Sections of Land

• Size of Drilling and Spacing Units

– 640 acres (Section)

– 320 acres – stand-up or laydown units

– 160 acres (Quarter Section)

– 80 acres – stand-up or laydown units

– 40 acres (Quarter Quarter Section)

– 20 acres Stand-Up or Lay-Down Units

– 10 acres (Quarter Quarter Quarter Section)

A Township - 36 Sections of Land

36 31 32 33 34 35 36 31

1 6 5 4 3 2 1 6

12 7 8 9 10 11 12 7

13 18 17 16 15 14 13 18

24 19 20 21 22 23 24 19

25 30 29 28 27 26 25 30

36 31 32 33 34 35 36 31

1 6 5 4 3 2 1 6

640 acres (Section)

320 acres (Half Section)

160 acres (Quarter Section)

Proper Well Location Requirements

• 640 acres - No closer than 1320 feet from unit boundaries

• 320 acres - Stand-Up or Lay-Down Units – No closer than 660 feet from proper Quarter Section i.e. on NW-SE proper location within each 320 acre unit (or can be NE-SW)

• 160 acres –No closer than 660 from unit boundaries

• 80 acres – Stand-Up or Lay-Down Units – No closer than 330 feet from proper Quarter QuarterSection i.e. on NW-SE proper location within each 80 acre unit (or can be NE-SW)

Proper Well Location Requirements

(continued)

• 40 acres - No closer than 330 feet from unit

boundary

• 20 acres Stand-Up or Lay-Down Units - No closer

than 165 feet from proper Quarter Quarter Section

i.e. on NW-SE proper location within each 20 acre

unit (or can be NE-SW)

• 10 acres – No closer than 165 feet from unit

boundary

Vertical

Drilling and Spacing Causes

Samples applications/notices/orders

• 40-acre units

• 80 acre stand-up units

• 160-acre units

• 320-acre lay-down Units

• 640-acre units

Horizontal Drilling Offshore

Horizontal Drilling Texas

Horizontal Drilling compared to

Slant Hole Drilling

Horizontal Drilling

OAC 165: 10-3-28

(b) Definitions

(c) General horizontal drilling

requirements

(d) Horizontal well requirements in an

unspaced common source of supply.

(e) Drilling and spacing units

(f) Horizontal well location

requirements for horizontal well units

and horizontal well unitizations

(1) Conventional reservoirs. In a conventional reservoir, the

completion interval of a horizontal well in a horizontal well unit

shall be located not less than the minimum distance from the

unit boundary as follows:

(A) Not less than 165 feet from the boundary of any 10-, 20-,

or 40-acre horizontal well unit.

(B) Not less than 330 feet from the boundary of any 80- or

160-acre horizontal well unit.

(C) Not less than 660 feet from the boundary of any 320- or

640-acre horizontal well unit.

(2) Unconventional reservoirs. In an unconventional reservoir,

the completion interval of a horizontal well in a horizontal well

unit shall be located not less than the minimum distance from

the unit boundary as follows:

(A) Not less than 165 feet from the boundary of any 10-, 20-,

or 40-acre horizontal well unit.

(B) Not less than 330 feet from the boundary of any 80-, 160-,

320-, or 640-acre horizontal well unit.

(3) Horizontal well unitizations. The completion interval of a

horizontal well in a horizontal well unitization shall not be

located less than 330 feet from the unit boundary.

(g) Alternative well location

requirements

(1) Horizontal oil well allowables may be established

administratively using the standard allowables provided in

Appendix A (Allocated Well Allowable Table) supplemented by

the additional allowables provided in Appendix C (Table HD) to

this Chapter.

(2) The allowable for a horizontal gas well shall be computed in

the manner prescribed for a non-horizontal gas well in the same

common source of supply.

(h) Allowable

(3) The allowable for a horizontal well unit or horizontal well

unitization with multiple horizontal gas wells shall be the sum of

allowables for the separate horizontal gas wells. From this

summation, the allowable for each horizontal gas well will be

calculated as if it were the only well in the unit.

(4) The allowable for a multi-unit horizontal well shall be

allocated to each affected unit using the allocation factors

determine in accordance with 52 O.S. § 87.8(B)(1).

Horizontal well units, horizontal well unitizations and multi-unit

horizontal wells may be pooled as provided in 52 O.S. § 87.1, 52

O.S. § 87.6 et seq. and Commission Rules of Practice, OAC 165:5.

Pooling

OAC 165: 10-29-2

Alternative location requirements for horizontal

well units

(a) Scope and effect. The well location requirements of this

Section apply to horizontal wells completed in horizontal well

units in designated common sources of supply and

geographic areas as specified in this Section. Horizontal wells

covered by this Section are subject to OAC 165:10-3-28 and

other applicable Commission rules except as provided in this

Section.

(b) Woodford shale.

(1) This subsection applies to horizontal wells completed in

the Woodford shale common source of supply in Atoka,

Blaine, Caddo, Canadian, Coal, Dewey, Grady, Haskell,

Hughes, Kingfisher, LeFlore, Latimer, McIntosh, Pittsburg,

and Sequoyah Counties.

(2) The completion interval of a horizontal well subject to this

subsection shall be located not less than the minimum

distance from the boundary of a standard or non-standard

horizontal well unit as follows:

(A) Not less than 330 feet from an east or west unit

boundary.

(B) Not less than 165 feet from a north or south unit

boundary.

Appendix C: Table HD

Recommended Additional Allowable for Horizontal Oil Wells

based on True Vertical Depth and Completion Interval

Average True Vertical

Depth of Pool in Feet

Additional Allowable

in Barrels per foot of

Completion Interval

To 4,000 .2

4,001 to 8,000 .3

8,001 to 12,000 .4

Greater than 12,000 .5

All oil produced and marketed during the drilling and completion

operations shall be charged against the allowable assigned to the

well upon completion.

Effective date of the allowable shall be the date of first

production.

Horizontal

Drilling and Spacing Causes

Sample application/notice/final order

Sample Survey

Horizontal Spacing

(OCC Rules and Regulations)

OAC: 165:5-7-6(g)

OAC: 165:5-7-6(h)

OAC: 165:5-7-6(i)

OAC: 165:5-7-6.1

OAC: 165:5-7-6.2

OAC: 165:10-1-21

OAC:165:10-1-24

OAC:165:10-1-25

OAC:165:10-3-4(f)

OAC:165:10-3-27(c)(1)

OAC:165:10-3-28

Appendix C (Table HD)

(Case Law)

Samson Resources Company v. Corporation

Commission, 831 P.2d 663, 665 (Okla. App 1992)

Horizontal Pooling

(OCC Rules and Regulations)

OAC:165:5-15-3(g)

OAC:165:5-13-3(h)

Deviation from the Vertical(OCC Rules and Regulations)

OAC:165:10-3-27

Horizontal Allowables

(OCC Rules and Regulations)

OAC:165:10-3-28(C)(2)

OAC:165:10-3-28(f)(1)

OAC:165:10-3-28(f)(2)

OAC:165:10-3-28(h)(2)

OAC:10-3-29(j)(1)

Horizontal Gross Production Tax

(OCC Rules and Regulations)

OAC:165:10-21-65

OAC:165:10-21-66

OAC:165:10-21-67

OAC:165:10-21-68

Eric R. King

One Leadership Square, 15th Floor

211 N. Robinson Ave.

Oklahoma City, OK 73102

(405) 235-5518