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Simple English definitions for legal terms
unitization
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A quick definition of unitization:
Unitization: In the oil and gas industry, unitization means bringing together all the wells in a particular area to work together for better production. This is usually done when the primary production starts to decrease, and it helps to make secondary recovery operations more efficient. It is also done to follow state laws about well-spacing. When unitization is done by order of a regulatory agency, it is called forced unitization, and when it is arranged by agreement of the owners of mineral interests, it is called voluntary unitization.
A more thorough explanation:
Definition: Unitization refers to the process of collecting producing wells over a reservoir for joint operations, especially for enhanced-recovery techniques in the oil and gas industry. It is usually carried out after primary production has declined significantly to allow efficient secondary-recovery operations. Unitization is also done to comply with well-spacing requirements established by state law or regulation. Unlike pooling, which is associated with drilling a single well and operating that well by primary-production techniques.
Examples:
- Compulsory Unitization: This is unitization done by order of a regulatory agency. For instance, if the owners of mineral interests in a reservoir cannot agree on how to operate the wells jointly, a regulatory agency may order compulsory unitization to ensure efficient recovery of the resources.
- Voluntary Unitization: This is unitization arranged by agreement of the owners of mineral interests. For example, if several companies own mineral rights in a reservoir, they may voluntarily agree to unitize their operations to reduce costs and increase efficiency.
The examples illustrate how unitization can be done either voluntarily or compulsorily to ensure efficient recovery of resources in a reservoir. It is a process that involves joint operations of producing wells to enhance recovery techniques and comply with state laws or regulations.