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Compulsory Fieldwide Unitization

William F. Carr, Proceedings of 49th Annual Rocky Mountain Mineral Law Institute (2003)

To meet the needs of a society characterized by both an insatiable appetite for energy and an ever-increasing concern about its environment, compulsory fieldwide Unitization 2 of reservoirs remains an important part of the oil and gas conservation matrix. All major producing states, except Texas, have adopted some form of a compulsory unitization statute. Initially these statutes were adopted to facilitate successful secondary and tertiary recovery projects. However, many acts now authorize compulsory unitization of reservoirs for primary production. Although not a new regulatory tool, technological advancements, new drilling techniques, and current production practices raise new issues for those desiring to form units under these statutes. New interest in the benefits that can be obtained through field-wide compulsory unitization and concern that these benefits may be lost if present statutes fall behind industry technology and practice are evidenced by recent legislative initiatives and the development of a model unitization statute by the Interstate Oil and Gas Compact Commission. 3

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This paper provides a brief overview of compulsory unitization, discusses practical considerations in the formation of these units, and examines the potential liability of working interest owners for damages resulting from unitized operations. It also reviews this conse