Unit and communitization agreements

Source Credit

(a) Adoption of units by lessees
(1) In general
For the purpose of more properly conserving the natural resources of any geothermal reservoir, field, or like area, or any part thereof (whether or not any part of the geothermal reservoir, field, or like area, is subject to any cooperative plan of development or operation (referred to in this section as a "unit agreement")), lessees thereof and their representatives may unite with each other, or jointly or separately with others, in collectively adopting and operating under a unit agreement for the reservoir, field, or like area, or any part thereof, including direct use resources, if determined and certified by the Secretary to be necessary or advisable in the public interest.
(2) Majority interest of single leases
A majority interest of owners of any single lease shall have the authority to commit the lease to a unit agreement.
(3) Initiative of Secretary
The Secretary may also initiate the formation of a unit agreement, or require an existing Federal lease to commit to a unit agreement, if in the public interest.
(4) Modification of lease requirements by Secretary
(A) In general
The Secretary may, in the discretion of the Secretary and with the consent of the holders of leases involved, establish, alter, change, or revoke rates of operations (including drilling, operations, production, and other requirements) of the leases and make conditions with respect to the leases, with the consent of the lessees, in connection with the creation and operation of any such unit agreement as the Secretary may consider necessary or advisable to secure the protection of the public interest.
(B) Unlike terms or rates
Leases with unlike lease terms or royalty rates shall not be required to be modified to be in the same unit.
(b) Requirement of plans under new leases
The Secretary may—
(1) provide that geothermal leases issued under this chapter shall contain a provision requiring the lessee to operate under a unit agreement; and
(2) prescribe the unit agreement under which the lessee shall operate, which shall adequately protect the rights of all parties in interest, including the United States.
(c) Modification of rate of prospecting, development, and production
The Secretary may require that any unit agreement authorized by this section that applies to land owned by the United States contain a provision under which authority is vested in the Secretary, or any person, committee, or State or Federal officer or agency as may be designated in the unit agreement to alter or modify, from time to time, the rate of prospecting and development and the quantity and rate of production under the unit agreement.
(d) Exclusion from determination of holding or control
Any land that is subject to a unit agreement approved or prescribed by the Secretary under this section shall not be considered in determining holdings or control under section 1006 of this title.
(e) Pooling of certain land
If separate tracts of land cannot be independently developed and operated to use geothermal resources pursuant to any section of this chapter—
(1) the land, or a portion of the land, may be pooled with other land, whether or not owned by the United States, for purposes of development and operation under a communitization agreement providing for an apportionment of production or royalties among the separate tracts of land comprising the production unit, if the pooling is determined by the Secretary to be in the public interest; and
(2) operation or production pursuant to the communitization agreement shall be treated as operation or production with respect to each tract of land that is subject to the communitization agreement.
(f) Unit agreement review
(1) In general
Not later than 5 years after the date of approval of any unit agreement and at least every 5 years thereafter, the Secretary shall—
(A) review each unit agreement; and
(B) after notice and opportunity for comment, eliminate from inclusion in the unit agreement any land that the Secretary determines is not reasonably necessary for unit operations under the unit agreement.
(2) Basis for elimination
The elimination shall—
(A) be based on scientific evidence; and
(B) occur only if the elimination is determined by the Secretary to be for the purpose of conserving and properly managing the geothermal resource.
(3) Extension
Any land eliminated under this subsection shall be eligible for an extension under section 1005(g) of this title if the land meets the requirements for the extension.
(g) Drilling or development contracts
(1) In general
The Secretary may, on such conditions as the Secretary may prescribe, approve drilling or development contracts made by one or more lessees of geothermal leases, with one or more persons, associations, or corporations if, in the discretion of the Secretary, the conservation of natural resources or the public convenience or necessity may require or the interests of the United States may be best served by the approval.
(2) Holdings or control
Each lease operated under an approved drilling or development contract, and interest under the contract, shall be excepted in determining holdings or control under section 1006 of this title.
(h) Coordination with State governments
The Secretary shall coordinate unitization and pooling activities with appropriate State agencies.

History

(Pub. L. 91–581, §18, Dec. 24, 1970, 84 Stat. 1571; Pub. L. 100–443, §4, Sept. 22, 1988, 102 Stat. 1768; Pub. L. 109–58, title II, §227, Aug. 8, 2005, 119 Stat. 666.)

Editorial Notes

Editorial Notes

Amendments
2005—Pub. L. 109–58 inserted section catchline and amended text generally. Prior to amendment, text related to cooperative or unit plan of development or operation of geothermal pool, field, or like area, public interest, determination and certification, regulations, protection of parties in interest, authority respecting rate of prospecting, development, and production, five year review, and leases excepted from control for purposes of State acreage limitation.
1988—Pub. L. 100–443, §4, inserted provisions relating to five year review of plans and elimination of leases from plans.