G:\WP\Jmd\pfd\PFD-Nowak MIPA.wpd - The Railroad Commission ...

Oil & Gas Docket No. 06-0245016 Page 14
Proposal for Decision
that are fair and reasonable that will afford the owners of each tract or interest in the unit the
opportunity to produce or receive his fair share. See §102.017 of the Code.
The MIPA contemplates that the Commission may order force pooling into a proration unit,
and a proration unit is, by definition, unique to a single well. 5 This concept becomes difficult to
apply where force pooling is proposed into an existing pooled unit that has been extensively
developed and proration units for wells have changed over time as additional wells have been drilled
or field rules have been amended. Nonetheless, the Commission may not at once force pool the
entirety of Nowak’s acreage into a 339 acre unit which includes all or portions of the proration units
for multiple wells.
For the proposition that her offer to pool voluntarily was fair and reasonable, Nowak relies
heavily on the provisions of §102.013(c) of the Code pertaining to offers by owners in an existing
proration unit to participate on the same yardstick basis as other owners in the existing proration unit.
At the time of Nowak’s offer to pool voluntarily, the acreage she had under lease was in an existing
proration unit for Well No. 1-5 only. The examiners conclude that an order force pooling Nowak’s
leases into a 220 acre unit coextensive with the proration unit for Well No. 1-5, as it existed on the
date of Nowak’s offer to pool voluntarily, subject to the right of Comstock voluntarily to add other
acreage from the Waldrop Gas Unit 1 sufficient to make the resulting unit equal in size to the
standard proration unit for the Carthage (Cotton Valley) Field plus 10% tolerance, will be fair and
reasonable. 6
While a facially appealing argument can be made that it is not fair to force pool Nowak’s
acreage into a 220 acre unit for Well No. 1-5 when there is no evidence that such acreage is
contributing to the production of that well, there are other factors that make such force pooling fair
and reasonable. At the time of Nowak’s offer to pool voluntarily, Comstock had elected to include
Nowak’s acreage in a 220 acre proration unit for Well No. 1-5. Had the allocation formula for the
subject field not been suspended, all the acreage in the proration unit would have contributed to the
well’s allowable. Under §102.013(c) of the Code, an offer by an owner of an interest in oil and gas
within an existing proration unit to participate in the unit on the same basis as the other owners must
be considered fair and reasonable.
Although Comstock is the lessor of only a portion of the mineral interest in the 82 acre and
18 acre tracts covered by Nowak’s leases, Comstock had entitlement to pool all of this acreage into
the Waldrop Gas Unit 1 and to include all of the acreage in the proration unit for Well No. 1-5.
5 See, for example, §102.017 of the Code which requires that a Commission order under the MIPA describe
the land included in the unit, identify the reservoir to which it applies, and “designate the location of the well.”
6 The proviso that Comstock shall be permitted voluntarily to add other acreage from the Waldrop Gas Unit
1 to the force pooled unit sufficient to make the unit equal in size to the standard proration unit for the field is fair and
reasonable. Nowak proposed a force pooled unit roughly equal in size to the standard proration unit for the field,
plus 10% tolerance. Section 102.011 of the Code provides that if the requirements of MIPA are satisfied, the
Commission shall establish and pool all interests in a unit containing the approximate acreage of the proration unit.
See also Buttes Resources Co. v. Railroad Com’n, supra, where the Commission’s forced pooling order had pooled
only 22 acres of the 55 acres proposed for forced pooling, but had left Buttes the option to voluntarily pool an
additional 33 originally productive acres that had watered out, so that Buttes might obtain a better allowable.