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Communitization Agreement Supplement

Bernie Dillon, Federal Onshore Oil and Gas Pooling and Unitization II (1990)

This paper will discuss the relationship between drainage and a communitization agreement. A communitization agreement can be utilized to protect a lease from drainage by an offset well.

This paper will discuss well requirements established under the terms of a federal communitization agreement. It will review circumstances that can occur which require a federal communitization agreement to either be amended or terminated.

This paper is not intended to represent official Bureau policy nor to be a legal analysis. The intent of this paper is to supplement the communitization agreement paper presented by the attorney. As a supplement, this paper should be utilized as a practical guide discussing circumstances that may warrant and/or alter the terms and conditions of a federal communitization agreement.

DEFINITION

A communitization agreement protects correlative rights by providing for an allocation of production to those lands that are being drained by an offset well but cannot be independently developed due to the restrictions of well spacing in the area.

POLICY

As extracted from the BLM 3160-9 Manual, the Bureau's policy for approval of a communitization agreement is:

A.Communitization agreements may be approved when a lease or a portion thereof cannot be independently developed and operated in conformity with an est