Papers - Unitization - Study of Unitization in the Rocky Mountain Region

Since the earliest discoveries of oil in the Rocky Mountain area the spirit of cooperation in drilling and production programs has prevailed. There has scarcely been a field which has not been developed in an orderly manner through mutual agreement between competitive operators. An appreciable saving has resulted, as many unnecessary wells have been eliminated. We have unit operation plans and agreements which were developed at an early date. Rock River, found in 1918, has been a unit operation. One of the first prorate agreements ever attempted was made in Salt Creek in 1921. Teapot, first developed in 1922, has been a unit operation; the lessee, the Government, and the lessor, one operator. South Casper Creek, found in 1918, has been developed as a unit. Rex Lake, found in 1923, is a unit operation. The list might be extended materially but it serves to indicate that the Rocky Mountain region enjoyed the fruits of unit operation at an early date. It is concluded from this unitization study in the Rocky Mountain region that there is an appreciable saving in both development and production costs as well as the elimination of waste of a natural resource. Certainly, when unit operation conserves an irreplaceable natural resource as well as capital, any legal or political impediment to its successful development will be overcome. If one company supervises the operations in one field, it appears to be a unit operation. This may not be true if the lands involved have been leased from a great number of lessors. Royalty holders create a most intense competitive operation. The Rocky Mountain region has its full quota of such diversified interests. The original study calls for consideration of two types of fields, unit and near-unit operation. This Committee has felt that if an agreement of any character has brought about a saving it is an approach to unit operation. The fields have been classified into four types: 1. Unit Operation.—Any field whereby the competitive drilling-drainage feature is or will be absent in the development and operation of the pool.