Unitization in the Bakken -- Bakken, North Dakota, USA

Updates

January 24, 2020: "rule of capture," and Pennsylvania; Pennsylvania state supreme court.  

Original Post 

I see that folks have been searching "unitization North Dakota Bakken oil."

A "cut and paste" from FAQ #35:

35. What is unitization? This appears to be best the answer from a reliable source [link no longer exists] posted July 1, 2011:

"Basically, under untization, the spacing units disappear and the entire  field boundary lines become a big spacing unit, where all the owner within  the field share in production from the entire field, which is allocated to  the owners by an agreed upon formula. The field becomes one big "spacing  unit," because the oil is being artificially forced across would would have  been the old spacing unit boundaries by the secondary recovery methods  (i.e., waterflood, CO2 etc.).  There will be a hearing or a number of  hearings with the DMR.

The state law requires that 60% of the mineral ownership approve of the  unit, and I believe votes are weighted by amount of acreage owned in the  unit. Most of the larger, older, conventional (i.e., non-Bakken) fields have  been unitized in ND -- Beaver Lodge, Blue Buttes, Fryburg, Big Stick.  The only one I'm aware that was defeated by the mineral owners was in Little  Knife field (Madison pool), and I think most would agree that such action  left a lot of recoverable oil in the ground.

Don't hold me to this, but if you are leased -- and your leases are not currently held by production -- if your leases are included in the unit (and  assuming the unitization plan is approved), they will be considered to be under production, as you will receive royalties pursuant to the formula."

An earlier source said this, which I posted August 2, 2010: Whatever unitization is, it remains a "non-issue" in North Dakota as of 2010. Seriously, here the discussion begins [link no longer exists]. Unitization is similar to pooling, but it occurs when producer(s) are ready to use enhanced oil recovery to maximize production from a common reservoir. With the Bakken being one huge continuous "reservoir" it's  hard to see how unitization could work, unless they do it by field, an arbitrary designation, in my mind, when it comes to the Bakken. Sixty percent of royalty owners (weighted) must agree to unitization before the NDIC will authorize it. To date, unitization has not occurred in North Dakota (August 2, 2010).

The NDIC hearing docket for August, 2011, will consider unitization of Lost Bridge-Bakken.

The writer of the link from August 2, 2010, has raised a very interesting issue. This brings a whole new question regarding "how do I know a neighbor's well isn't taking oil from my site?" The Texas Railroad Commission recently upheld / clarified a ruling that says a neighbor cannot sue for oil production / loss from a horizontal that comes right up to the section line. The commission said that if the neighbor is worried about a neighbor's well taking oil from his/her site, he/she better drill his/her own well. One can argue that the effectiveness of fracking extends only about 500 feet (radius) from the bore hole, and that may be true of the enhanced recovery, but that question will probably be raised. As noted earlier, the Texas Railroad Commission is similar to the NDIC in North Dakota, and most states follow the rules set by Texas regarding oil / mineral rights.