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Applying for a Spacing Exception

Applying for a Spacing Exception

Requirements for Applying for an Administrative Spacing Exception request pursuant to R 324.303(2) of Part 615, Supervisor of Wells, of the Natural Resources and Environmental Protection Act, 1994 PA 451, as amended. 

In general, R 324.303(2) (Rule 303) may be used to abrogate spacing in a development unit thereby providing greater flexibility for locating wells. In all cases, the development unit must be formed by combining two or more full drilling units. The rule may be used to drill one or more wells in the development unit.

 

R 324.303 Voluntary pooling. Reads as follows:

Rule 303. (1) The lessees or lessors, or both, of separate tracts or mineral interests that lie partially or wholly within an established drilling unit or larger area may pool or communitize the tracts or interests to form full drilling units or multiples of full drilling units and to develop the units pursuant to the provisions of these rules and the applicable orders of the supervisor.

            (2)        Persons who pool or communitize the tracts or interests may submit an application to the supervisor to abrogate spacing within the pooled or communitized area. The application shall include a certified copy of the pooling or communitization agreement and the plans for exploration or development. The supervisor may approve the application if all of the following conditions are satisfied:

            (a)        Waste is prevented.

            (b)        The drilling of unnecessary wells is prevented.

            (c)        A producing interval of a well is not located closer than 330 feet from the pooled or communitized area boundary.

            (3)        The lessees and lessors of separate tracts or mineral interests that lie partially or wholly within an area encompassing 2 or more full drilling units may voluntarily pool the tracts or interests to form a development unit for the purpose of receiving a permit for a well as an exception to R 324.301(1) or special spacing orders adopted pursuant to R 324.302, if the producing interval location of the well is found by the supervisor to ensure each producer is afforded the opportunity to use his or her just and equitable share of the reservoir energy and to prevent waste, including the drilling of unnecessary wells.

When applying for an administrative spacing exception pursuant to Rule 303 you may choose to provide the information using GRMD form "Application for Drilling Unit Spacing Exception" form number EQP 7200-23 OR by providing the necessary information and documents in your own format according the following instructions:

 Information about the proposed unit and its areal extent--

  1. Name of the applicant . The spacing exception applicant must be the same as the applicant and permittee of the wells in the proposed unit.
  2. Identify the applicable spacing provision which governs the location and spacing of wells in the geographical area and target formation of the exception request. For example: An applicant for a Rule 303 spacing exception for an expanded unit in the Guelph (Niagaran) formation in Livingston County would identify Supervisor's Order 1-73 as the applicable spacing provision. See General Spacing Orders for maps and text of the orders covering broad areas of the State.  If in doubt, contact the Permits and Bonding Unit at 517-284-6826 for assistance.
  3. Describe the proposed unit area . The information should include County name, Township name, Townline and Range numbers and directions, Section numbers, and fractions of sections included in the unit. The unit must be developed using multiples of applicable full drilling units joined along a common side (corner-to-corner joins are not approvable). The proposed unit cannot contain "islands" of unpooled land.
  4. State the number of acres in the proposed unit. Identify the total nominal acreage and total actual acres. The nominal acreage must be a whole number multiple of the unit size for the applicable spacing rule in effect for the area and formation of the proposed unit.

Information to demonstrate that the mineral interests within the proposed unit have been voluntarily pooled--

  1. List the names of all mineral and working interest owners in the proposed unit.
  2. Attach a copy of the Declaration of Pooling (a.k.a. Unit Agreement, etc.) and any Amendments, which comprises or includes all of the unit area. I f a single lease covers the proposed unit, a pooling agreement is not applicable. However, to document the applicant's intentions, a "Declaration of Unit" is required. Please contact OGS for assistance.
  3. Attach copies of ratifications to the Declaration of Pooling (If required to pool leases. For example, State of Michigan mineral leases.)
  4. Attach a certified statement from a person familiar with the mineral interests in the proposed unit and the leases covering those interests that all mineral interests within the unit are leased and controlled by the applicant and that all interests have been voluntarily pooled into the proposed development unit. Please do not enclose copies of any lease unless requested.

Information about development plans and technical data for the proposed unit--

  1. Enclose a large-scale project map (e.g. 1"=1000'), drawn to scale, of the proposed unit. Identify all drilled, permitted, and planned wells in the proposed development unit and all wells in drilling units adjoining the proposed unit. If the spacing exception is for the drilling of a single well, a copy of the permit application's surveyor's plat is sufficient.
  2. List the wells in the proposed unit or planned for the unit by name, permit number, if any, and current status.
  3. Identify what the development plans for the unit will be.   Are wells beyond what are currently proposed likely to be drilled?
  4.  Describe how the proposed plan of development meets the criteria required in R 303(2) listed below: Answer parts a. through c. Part c can be left unanswered if the proposed unit is for the drilling of a single well.

(a) Waste is prevented. (b) The drilling of unnecessary wells is prevented. (c) A well is not closer than 330 feet from the unit boundary 

PLEASE NOTE. Approval of a Rule 303 voluntary pooling request alters applicable well spacing and location provisions only. Proration allowables cannot be changed utilizing Rule 303. Modification of an approved unit any time before unit production ceases shall require approval of the GRMD.

AND: Any future re-drills or alternate plans of development will require a separate approval.

 If you have questions please contact Mark Snow at 517-230-8233. 

 Mail the application to:

     Geologic Resources Management Division
     P.O. Box 30256 
     Lansing, MI 48909-7756 
     Attn: Mark Snow

Ref# 9018