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Ohio Regulators Fine-Tune Unitization Process

In an attempt to make the process smoother for oil and gas companies applying for unitization in the emerging Utica Shale, the Ohio Department of Natural Resources (ODNR) has unveiled a series of new application requirements.

Under Section 1509.28 of the Ohio Revised Code, the owner of at least 65% of a designated land area that overlays all or part of a pooled area may apply for unitization through the ODNR's Division of Oil and Gas Resources Management (DOGRM).

ODNR spokesman Mark Bruce told NGI's Shale Daily earlier this week that the agency, encouraged by DOGRM head Rick Simmers, fined-tuned the application requirements for unitization, making them more detailed than they were before.

"Companies were applying for unitization, coming in for their hearings, and chief Simmers was saying, 'listen we need more [information] if you want to move forward with this," Bruce said. "And it was happening several times."

The ODNR's unitization application now contains 15 requirements. In addition to the previous requirements that included a request summary, lists, maps and aerial photographs, applicants will be required to submit an affidavit that provides a detailed account of their attempts to secure unleased properties, including the dates the attempts were made and who was contacted. Also required are:

Once applications are received, the DOGRM would review them for completeness and schedule hearings within 45 days of receipt. Requests for a continuance for a hearing are required within 14 days before a hearing date. Hearings also may be rescheduled or canceled by regulators.

"These are the basic things that we're going to need so that we can move forward with processing an application," Bruce said. "It's just supposed to make to it clearer and easier for everybody."

The DOGRM has received 12 applications for unitizations since February 2012, he noted.

According to ODNR records, Simmers issued the first unitization order last July (No. 2012-13), which established the Rufener unit for Chesapeake Energy Corp. on close to 959 acres in Portage and Stark counties. The unit comprised 146 separate tracts, of which 24 were unleased mineral owners.

A second unitization order, also for Chesapeake, was issued in March for the nearly 550-acre Colescott South unit on 30 separate tracts in Carroll County (see Shale Daily, March 20). Before filing the application, Chesapeake held 88.8% of the leasing rights, well above the 65% required by state statute.

Bruce said it was unclear whether there would be more unitization requests on the horizon.

"It's gone through cycles," he said. "We'll receive two in one month, then it will slow down for a couple of months, and then we'll get a couple more. I think it's been pretty consistent since February of last year. I don't know if we really anticipate it increasing or decreasing, the update was just to make it easier for everybody."

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