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A03308
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
694
Session of
2019
INTRODUCED BY YAW, K. WARD, YUDICHAK, FONTANA, MARTIN, REGAN AND
BROWNE, MAY 31, 2019
AS AMENDED ON THIRD CONSIDERATION, SEPTEMBER 24, 2019
AN ACT
Amending Title 58 (Oil and Gas) of the Pennsylvania Consolidated
Statutes, in development, further providing for well permits.
Amending the act of July 20, 1979 (P.L.183, No.60), entitled "An
act regulating the terms and conditions of certain leases
regarding natural gas and oil," providing for cross unit
drilling for unconventional wells.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 3211 of Title 58 of the Pennsylvania
Consolidated Statutes is amended by adding a subsection to read:
ยง 3211. Well permits.
* * *
(n) Cross unit drilling.--
(1) If an operator has the right to drill an oil or gas
well on separate leases or units, the operator may drill and
produce a well that traverses, by horizontal drilling, more
than one lease or unit, if:
(i) the THE operator reasonably allocates production
from the well among the leases or units related to each
lessor's acreage in the unit; and TO OR AMONG EACH UNIT
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THE OPERATOR REASONABLY DETERMINES TO BE ATTRIBUTABLE TO
EACH UNIT. THE OPERATOR MAY ALLOCATE PRODUCTION ON AN
ACREAGE BASIS FOR MULTIPLE UNITS PROVIDED THE ALLOCATION
HAS A REASONABLE CORRELATION TO THE HORIZONTAL WELLBORE
IN EACH UNIT.
(ii) the THE traversing well is not expressly
prohibited by the terms of a lease.
(2) THE 330-FOOT LOCATION REQUIREMENT IN SECTION 6 OF
THE ACT OF JULY 25, 1961 (P.L.825, NO.359), KNOWN AS THE OIL
AND GAS CONSERVATION LAW, SHALL NOT APPLY TO UNIT LINES
TRAVERSED BY A CONSERVATION WELL.
(2) Nothing in this subsection shall be construed to
authorize an operator to drill an oil or gas well that is not
subject to a valid lease or royalty agreement.
(3) NOTHING IN THIS SUBSECTION SHALL BE CONSTRUED TO:
(I) AUTHORIZE AN OPERATOR TO DRILL AN OIL OR GAS
WELL THAT IS NOT SUBJECT TO A VALID LEASE OR ROYALTY
AGREEMENT; AND
(II) AUTOMATICALLY EXPAND OR DIMINISH THE CURRENT
SURFACE RIGHTS OF AN OPERATOR TO INCLUDE OPERATIONS
RELATED TO ANY EXISTING UNIT OR ANY WELL DRILLED BETWEEN
EXISTING UNITS.
Section 2. This act shall take effect in 60 days.
Section 1. The act of July 20, 1979 (P.L.183, No.60), known
as the Oil and Gas Lease Act, is amended by adding a section to
read:
Section 2.2. Cross unit drilling for unconventional wells.
(a) General rule.--If an operator has the right to drill an
oil or gas well on separate units, the operator may drill and
produce a well that traverses, by horizontal drilling, more than
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one unit, if:
(1) The operator reasonably allocates production from
the well to or among each unit the operator reasonably
determines to be attributable to each unit. The operator may
allocate production on an acreage basis for multiple units
provided the allocation has a reasonable correlation to the
portion of the horizontal wellbore in each unit.
(2) The traversing well is not expressly prohibited by
the terms of a lease.
(b) Location requirement.--The 330-foot location requirement
in section 6 of the act of July 25, 1961 (P.L.825, No.359),
known as the Oil and Gas Conservation Law, shall not apply to
unit lines traversed by a conservation well.
(c) Construction.--Nothing in this subsection shall be
construed to:
(1) authorize an operator to drill an oil or gas well
that is not subject to a valid lease or royalty agreement;
and
(2) automatically expand or diminish the current surface
rights of an operator to include operations related to any
existing unit or any well drilled between existing units.
Section 2. This act shall take effect in 60 days.
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