Communitization of Federal Lands: An Overview

Within the scope of this paper, “Communitization” is a term applied to the joint development of federal and/or Indian oil and gas leases, but the reader should be mindful that many states also employ the term when state leases are pooled with other leases for the exploration and development of a single drilling or spacing unit. It is quite common to see the terms unitization, pooling and communitization used interchangeably,2 which results in confusion and precipitates miscommunication between the parties.3

Although the above definitions are adequate, the authors favor the following explanations of unitization and communitization. Unitization has been defined as:

The agreement to jointly operate an entire producing reservoir or a prosectively producing area of oil and/or gas. The entire unit area is operated as a single entity, without regard to lease boundaries, and allows for the maximum recovery of production from the reservoir....The objective of unitization is to provide for the unified development and operation of an entire geologic prospect or producing reservoir so that exploration, drilling and production can proceed in the most efficient and economical manner by one operator.4

Communitization has been defined as:

The agreement to combine small tracts for the purpose of committing enough acreage to form the [3A-3] spacing and prorat