Oil & Gas Commission: A Regulatory Overview

by Larry Bengal  on Monday, Aug. 27, 2007 12:00 am  

The Arkansas Oil & Gas Commission's mission is to prevent waste, encourage conservation and protect the ownership rights associated with the production of oil, natural gas and brine while protecting the environment during the production process.

The commission's general regulatory functions include:

1. Issuing permits to drill and operate oil, natural gas and brine wells.

2. Issuing permits to drill and operate Class II UIC (Underground Injection Control) enhanced oil recovery injection and saltwater disposal wells and Class V UIC brine injection wells for the disposal of brine fluids, after removal of bromine and other minerals, under the authority of the federal Environmental Protection Agency.

3. Conducting compliance inspections during the drilling process and the operational life of wells and production facilities including supervision of the plugging of wells no longer used for production or injection purposes.

4. Issuing permits for seismic operations for oil and natural gas exploration.

5. Administering the federal Department of Transportation pipeline safety program for natural gas-gathering pipeline systems.

6. Administering the Arkansas Abandoned and Orphan Well Plugging Program. Under this program, which is funded by the industry, the commission oversees the plugging of abandoned and orphan wells and the cleanup and restoration of abandoned production sites and provides emergency response in the cleanup of leaks or spills if an operator doesn't respond.

The agency conducts monthly hearings to review and approve proposed rules and regulations; creates drilling and production units and establishes oil and gas production field rules to protect correlative rights, protect the oil- and gas-producing reservoir, prevent waste resulting from overproduction and establish a defined area for the sharing of production proceeds and production costs; hears applications for requests to integrate drilling units to protect the rights of mineral owners and leasehold working interests; and issues enforcement orders for non-compliance with oil and gas regulations and statutes.

The commission processes royalty and working interest owners' complaints, including those concerning nonpayment, late payment or improper amounts. It has the authority to audit in non-compliance situations and investigate improper assessment of expenses.

Concerning landowners' interests, the agency investigates landowner complaints, seeking both to enforce environmental regulations and facilitate discussions with the operators of energy companies. The commission does not interpret mineral leases or provide legal advice concerning leases, interpret landowner or operator agreements for land use or determine land damage costs resulting from drilling, adjudicate the validity of mineral leases or maintain records of mineral lease ownership.

To facilitate the orderly development of the Fayetteville Shale and other non-Fayetteville Shale gas-producing zones in the area, the commission adopted General Rule B-43, which defines the Fayetteville Shale-producing area and geologic-producing interval; establishes 640-acre production units; establishes 560 feet for well setbacks and well spacing; sets 16 wells as the maximum per 640-acre unit; and establishes well spacing and setbacks for other non-Fayetteville Shale-producing zones that may be discovered.

The Integration Process



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