Oklahoma Gov. Mary Fallin (R) signed the 2011 Shale Reservoir Development Act into law on Wednesday. The measure is designed to protect stakeholders, clarifies the jurisdiction of the Oklahoma Corporation Commission (OCC) and modifies the state's oil and gas laws to address advances in technology.
"This legislation is an important step in bringing state oil and gas laws up to date with innovations needed to keep Oklahoma's oil and gas industry competitive," Fallin said Wednesday. "[It] will help Oklahoma to more effectively compete against other shale plays around the country, and help ensure that drilling dollars stay home in Oklahoma."
OCC Chairman Dana Murphy concurred, adding "This isn't just an oil and gas matter. Keeping Oklahoma's oil and gas industry competitive with other states and protecting stakeholders means millions of dollars for Oklahoma schools, roads and many other things as production of our shale gas resources grows."
The new law authorizes the OCC to allow multiunit horizontal wells under certain conditions, and may also unitize a shale reservoir for the drilling of horizontal wells under certain limited conditions. The law also addresses ownership and the allocation of costs for multiunit horizontal wells, their comingled production and proceeds, and the OCC's role in the application and notice processes.
The unitization of shale reservoirs is also addressed by the new law, outlining the prerequisites for unitization and development plans, unit sizes and the ownership of oil and gas rights within the unit.
Under the definitions for the new regulations, a "unit" is a drilling and spacing unit for a common source of supply, while a "multiple horizontal well" is drilled into the same shale reservoir as two or more similar wells. The OCC is authorized to unitize a shale reservoir as a way to maximize the amount of oil and gas recovered, prevent waste and protect the correlative rights of owners.
Additional details concerning the pooling of a unit, owner consent and the timetable for a notice of hearing are also contained in the new law.
Murphy said it took nine months of collaboration with the oil and gas industry to put the new law together. It was known as HB 1909 as it advanced through the legislature, and was sponsored by Rep. Mike Jackson (R-Enid) and Sen. Cliff Branan (R-Oklahoma City).
"The [OCC] is working hard to make certain the agency is ready to deal efficiently with the cases I anticipate will be filed at the Commission as a result of this legislation," Murphy said.
In February the nonprofit State Review of Oil and Natural Gas Environmental Regulations said regulation of hydraulic fracturing by the OCC's oil and gas division was well managed but needed additional funding (see Shale Daily, Feb. 28).