S T A T E O F N E W Y O R K
________________________________________________________________________
2274
2017-2018 Regular Sessions
I N A S S E M B L Y
January 17, 2017
___________
Introduced by M. of A. ROSENTHAL, ABINANTI -- read once and referred to
the Committee on Environmental Conservation
AN ACT to amend the environmental conservation law, in relation to
compulsory integration and unitization in oil and natural gas orders
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Subdivision 2, subparagraphs 4 and 5 of paragraph a of
subdivision 3 and subdivision 13 of section 23-0901 of the environmental
conservation law, subdivision 2 and subparagraphs 4 and 5 of paragraph a
of subdivision 3 as amended and subdivision 13 as added by chapter 386
of the laws of 2005, are amended and two new subdivisions 14 and 15 are
added to read as follows:
2. The department shall not make any order requiring the integration
of interests in any spacing unit or requiring the development or opera-
tion of any field, pool or part thereof as a unit unless it finds, after
detailed study and analysis, notice and hearing, that the integration of
interests in spacing units, under conditions then existing in this
state, or in the field or pool to be affected, is necessary to carry out
the policy provisions of section 23-0301 of this article. THE DEPART-
MENT SHALL ALSO CONSIDER THE IMPACT THAT COMPULSORY INTEGRATION WILL
HAVE ON AN EXISTING MORTGAGE PRIOR TO MAKING AN INTEGRATION ORDER.
(4) "NON-INTEGRATED, NON-PARTICIPATING OWNER" MEANS AN OWNER, THE
OWNER'S HEIRS, SUCCESSORS AND ASSIGNS, WHOLLY OR PARTIALLY LOCATED WITH-
IN THE SPACING UNIT, WHO ELECTS NOT TO PARTICIPATE IN THE INITIAL WELL
IN A SPACING UNIT, REFUSES TO PAY ANY COSTS ASSOCIATED WITH PARTIC-
IPATION, REFUSES TO REIMBURSE THE WELL OPERATOR, OUT OF PRODUCTION
PROCEEDS FOR SUCH OWNER'S PROPORTIONATE SHARE OF THE ACTUAL WELL COSTS
OF THE INITIAL WELL IN A SPACING UNIT, AND REFUSES TO COMPLY WITH THE
REQUIREMENTS FOR INTEGRATION, INCLUDING THE TERMS OF INTEGRATION, AS
SPECIFIED IN AN ORDER OF INTEGRATION ISSUED PURSUANT TO THE COMPULSORY
INTEGRATION PROVISIONS OF THIS SECTION. NOTWITHSTANDING ANY OTHER
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD05362-01-7
A. 2274 2
PROVISION OF LAW TO THE CONTRARY, ALL NON-INTEGRATED, NON-PARTICIPATING
PROPERTY OWNERS, IN ADDITION TO POSSIBLE PURCHASERS, SHALL BE PROVIDED
WITH AN OPTION TO REFUSE INTEGRATION ALTOGETHER, AT OR BEFORE THE INTE-
GRATION HEARING REQUIRED PURSUANT TO THIS SECTION.
(5) "Risk penalty" means the percentage applied to well costs to reim-
burse the well operator for the risk involved with the exploration for
and development of a well or the percentage applied to other costs that
are subject to recoupment and a risk penalty, as provided herein. At
any time during a risk penalty phase, an owner subject to a risk penalty
may pay to the well operator the full amount subject to recoupment by
the well operator, to terminate the risk penalty phase and be eligible
for other opportunities for participation as provided herein.
[(5)] (6) "Well costs" means the costs incurred or estimated to be
incurred by the well operator in relation to the drilling, completion,
and the installation of surface equipment, other than as described in
item E of clause (ii) of subparagraph 1 of paragraph c of this subdivi-
sion, including, without limitation, surveying, drill site preparation,
leasing of surface rights and access roads pertinent to the drill site,
construction of access roads, permitting, drilling, stimulation, test-
ing, well logging, drilling insurance, plugging and abandonment of the
well, environmental mitigation costs associated with drilling and any
other costs associated with the foregoing that the operator has incurred
or anticipates incurring, including a reasonable charge for supervision
of the foregoing activities.
13. A. Any person taking title by operation of law to any oil and gas
interests integrated into a spacing unit pursuant to an order of inte-
gration, shall take such interests subject to the terms and conditions
of the final order of integration issued by the department duly recorded
in accordance with the provisions of this section and shall be subject
to all liabilities and benefits associated therewith, unless such
person, within sixty days of the taking of such interest, elects to be
an integrated royalty owner and notifies the well operator of such
election.
B. FULL COST AND LIABILITY FOR ANY DAMAGES CAUSED BY WELL OPERATIONS
SHALL BE BORNE SOLELY BY THE WELL OPERATOR AND THE BURDEN OF PROOF WITH
RESPECT TO LIABILITY FOR SUCH DAMAGES SHALL BE UPON THE WELL OPERATOR.
14. INTEGRATION ORDERS ISSUED PURSUANT TO THIS SECTION SHALL BE
SUBJECT TO JUDICIAL REVIEW.
15. NO PARTY INVOLVED WITH COMPULSORY INTEGRATION MAY HAVE, ON OR
WITHIN ONE THOUSAND OR MORE FEET FROM THE PROPERTY BOUNDARY OF ANY POOL,
ANY: A. SURFACE ACTIVITY INCLUDING, BUT NOT LIMITED TO ANY DRILLING,
COMPRESSOR PITS OR CLOSED WASTE SYSTEMS, OR B. SUBSURFACE GAS STORAGE.
§ 2. This act shall take effect on the sixtieth day after it shall
have become a law.