KRS 349.070: Powers of Coalbed Methane Well Review Board to take actions necessary

to prevent waste and protect rights of owners -- Objections by holders, lessors,

and lessees -- Hearings.

(1) In order to prevent the waste of coalbed methane or to protect the corr elative rights

of the owners of coalbed methane, the review board on its own motion or upon

application of an operator of a coalbed methane well or owner of coalbed methane

shall have the power to establish or modify drilling units, establish or modify fie ld

rules, or unitize coalbed methane wells, pools or fields. Drilling units, to the extent

reasonably possible, shall be of uniform shape and size for an entire pool or field.

Any operator of a coalbed methane well or owner of coalbed methane may apply to

the review board for the creation or modification of drilling units, the establishment

or modification of field rules for a pool or field, and the unitization of any coalbed

methane wells, pools, or fields.

(2) With respect to any request for the creation or modification of drilling units,

establishment or modification of field rules for the pool or field, and the unitization

of any coalbed methane wells, pools, or fields, the review board shall grant or deny

the request and issue an order consistent with t he intent and purposes of KRS

Chapters 350 and 352 and this chapter, taking into consideration the following

factors that it considers applicable in the particular proceedings:

(a) The area which may be drained efficiently and economically by the proposed

coalbed methane well or wells and the spacing requirements of KRS 349.075;

(b) The plan of development for the coal, that drilling units conform to mine

development plans, and the need for proper ventilation of any mines or

degasification of any affected coal seams;

(c) The nature and character of any coal seam or seams which will be affected by

the coalbed methane well or wells;

(d) The surface topography and mineral boundaries of the lands underlaid by the

coal seams to be included in the unit;

(e) Evidence relevant to the proper boundary of the drilling unit;

(f) The nature and extent of ownership of each coalbed methane owner or

claimant and whether conflicting claims exist;

(g) Whether the applicant for the drilling unit proposes to be the operator of t he

coalbed methane well within the drilling unit; and if so, whether the applicant

has a lease or other agreement from the owners or claimants of a majority

interest in the proposed drilling unit;

(h) Whether a disagreement exists among the coalbed methane owners or

claimants over the designation of the operator for any coalbed methane well

within the drilling unit; and if so, relevant evidence to determine which

operator can properly and efficiently develop the coalbed methane within the

drilling unit for the benefit of the majority of the coalbed methane owners;

(i) If more than one person is interested in operating a coalbed methane well

within the drilling unit, the estimated cost of submitting by each such person

for drilling, completing, operating and marketing the coalbed methane from

any proposed coalbed methane well or wells;

(j) Any other available geological or scientific data pertaining to the pool which

is proposed to be developed;

(k) The correlative rights of the operators and owners of coalbed methane, so that

each operator and owner may obtain his or her just and equitable share of

production from the coalbed methane; and

(l) Any other factor the review board determines should be considered consistent

with KRS Chapters 350 and 352, and this chapter.

(3) Upon consideration of the matters raised at the hearing, the review board shall

render a decision based upon whether to establish or modify a drilling unit, establish

or modify field rules or establish or modify the unitization of coalbed methane

wells, po ols or fields. The review board shall enter a written order containing

findings of fact and conclusions which address any relevant considerations in

subsection (2) of this section and based thereon shall issue and file with the

department a written order:

(a) Establishing or modifying a drilling unit, field rules or unitizing coalbed

methane wells, pools or fields;

(b) Refusing to establish or modify a drilling unit, field rules or unitization of

coalbed methane wells, pools or fields; or

(c) Attaching certain conditions to the establishment or modification of a drilling

unit, field rules, or unitization of coalbed methane wells, pools or fields.

(4) In establishing or modifying a drilling unit for coalbed methane wells, and in order

to accommodate the uniqu e characteristics of coalbed methane development, the

review board may require that drilling units conform to the mine development plan,

if any. If requested by the coal interest holder, well locations and spacing shall

correspond with mine operations, including the drilling of multiple coalbed methane

wells on the same surface location of each drilling unit.

(5) If an order to establish or modify a drilling unit, field rules or unitization of coalbed

methane wells, pools or fields will allow a coalbed meth ane well to be drilled into

or through a workable coalbed, any coal interest holder and any record oil and gas

lessor and lessee within the area to be covered by the drilling unit, field rules or

unitization of coalbed methane wells, pools or fields may ob ject to the

establishment or modification of the drilling unit, field rules or unitization of

coalbed methane wells, pools or fields.

(6) The review board may continue a hearing to allow for further investigation and the

gathering and taking of additional data and evidence. If at any time during a hearing

there is not sufficient evidence for the review board to determine field boundaries,

or drilling unit size or shape, the review board may enter a temporary order

establishing provisional drilling units, an d field boundaries for the orderly

development of the pool or field, pending receipt of the information necessary to

determine the ultimate pool or field boundaries, and spacing of wells for the pool or

field. Upon additional findings of fact, the boundari es of a pool or field and drilling

units for the pool or field may be modified by the review board.

(7) Unless otherwise provided for by the review board, after an application for a

hearing to establish or modify drilling units or pool boundaries has been filed, no

additional wells shall be permitted in the pool or field until the review board's order

establishing or modifying the pool or field or unit has been entered.

(8) After the review board issues a field or pool spacing order which creates drilling

units or a pattern of drilling units for a pool or field, should an operator or owner of

coalbed methane apply for a permit or otherwise indicate a desire to drill a coalbed

methane well outside of such drilling units or pattern of drilling units and thereb y

potentially extend the pool or field, the review board may, on its own motion or the

motion of any interested person, require that the coalbed methane well be located

and drilled in compliance with the provisions of the order affecting the pool or field.