Unit Operation of Oil Pool - Compulsory Unit Operation of Oil Pools (With Discussion)

Some attention should be given to definitions. The term "unit operation " may have at least two meanings. One meaning is the merging of titles and the development and operation of the unitized area, as if it were one tract of land held under a single oil and gas lease, according to a definite program intended to accomplish a maximum recovery from the pool as a whole at a minimum of cost. It is incomplete when the royalty owners do not also merge their titles to their oil and gas rights in the area, and is complete when they do. The other meaning is not accompanied by any merger of titles, but the development and operation of the area is in accordance, as nearly as reasonably practicable, with such a program. This second conception may be nothing more than a cooperative development and operation plan, but in this paper it is regarded as more than that. If there cannot be unit operation without a merger of titles, it would seem that the state cannot require unit operation, for it cannot require a merging of titles; but if it may consist in requiring each and all of the leaseholders to develop and operate or to submit to a development and operation according to some such common plan as is referred to above without at the same time requiring a merger of titles, it would seem that unit operation may be required by the state. Whether the states have this power is the subject to be herein considered. If the state can so bind the several lessees, it also can so bind the several lessors. The writer does not know what would be an ideal plan for the development and operation of a pool; but it takes into account the fact that the accumulation of gas and oil is not uniform throughout the formation; that often free gas, highly compressed, occupies the upper portions of the reservoir, the oil with compressed gas in solution coming next in order; that at places oil is not overlain by free gas, and sometimes there are peaks where free gas is not immediately underlain by any oil; and the fact that these substances are held under a uniformly distributed pressure, generally referred to as "rock pressure." It also recognizes that the most efficient utilization of this naturally existing reservoir pressure in the recovery of the oil requires that there be no operation of wells completed into areas where gas only has accumulated, for this diminishes the