Section 407 - Well spacingThe commission shall, to carry out the purpose of this act, and upon proper application and notice given as hereinafter provided, and after a hearing as provided in said notice, enter an order establishing well spacing and drilling units of a specified and an approximate uniform size and shape for each pool. The procedure for obtaining such an order shall be as follows:
(1) After one well has been drilled establishing a pool in a horizon covered by this act, an application may be filed by the operator of the discovery well or the operator of any lands directly and immediately affected by the drilling of the discovery well, or subsequent wells in said pool, and the commission shall promptly schedule a hearing on said application. Each application shall be accompanied by a plat indicating latitude and longitude of the pool and such information as the commission may request. No more than ten square miles shall be included in any single application for a spacing order.(2) Upon the filing of an application as above set out, notice of the hearing shall be given by the commission by publication for two successive weeks in a newspaper in general circulation in each county where any land which may be affected by such order is located, and by the commission mailing a copy of such notice to all persons who have specified to the commission an address to which all such notices may be mailed. The first publication and the mailing of such notice shall be at least fifteen days before the date fixed for hearing.(3) On the date specified in the notice, the commission shall hold a public hearing to determine the area to be included in the order and the acreage to be embraced within each unit and the shape thereof and the area within which wells may be drilled on such units. Evidence of the following facts may be considered by the commission in entering its order: (i) The surface topography and property lines of the lands underlaid by the pool.(ii) The plan of well spacing then being employed or proposed in such pool.(iii) The depth at which production from said pool has been found.(iv) The nature and character of the producing formation or formations, and whether the substances produced or sought to be produced are gas or oil.(v) The maximum area which may be drained efficiently and economically by one well.(vi) Any other available geological or scientific data pertaining to said pool, which may be of probative value to said commission in determining the proper spacing and well drilling unit therefor, with due and relative allowance for the correlative rights and obligations of the producers and royalty owners' interest therein.(4) The commission shall, within forty-five days after the application for spacing is filed, either enter an order establishing spacing units and specifying the size and shape of the units, which shall be such as will, in the opinion of the commission, result in the efficient and economic development of the pool as a whole or shall enter an order dismissing the application. The uniform size of the spacing units shall not be smaller than the maximum area that can efficiently and economically be drained by one well: Provided, That if at the time of a hearing to establish spacing units, there is not sufficient evidence from which to determine the area that can be efficiently and economically drained by one well, the commission may enter an order establishing temporary spacing units for the orderly development of the pool pending the obtaining of the information required to determine what the ultimate spacing should be.(5) Except where the circumstances reasonably require otherwise, spacing units shall be approximately uniform size and shape for the entire pool: Provided, however, That the commission shall have the power to vary the size and shape of any individual unit in order (i) to take account of wells already completed at the time the application is filed hereunder, or (ii) to make a unit conform to oil and gas property lines: Provided, however, That the units formed by the commission shall conform to the area which will be drained by the well located within the area permitted by the order, and the acreage included in each unit shall be contiguous. In the event that both oil wells and gas wells are found producing from the same pool, the commission shall have the power to create units of one size for oil wells and of a different size for gas wells.(6) An order establishing spacing units shall specify the minimum distance from the nearest boundary of the spacing unit at which a well may be drilled. The minimum distance provided shall be the same in all spacing units established under said order with necessary exceptions for wells drilled or drilling at the time of the filing of the application. If the commission finds that a well to be drilled at or more than the specified minimum distance from the boundary of the spacing unit would not be likely to produce in paying quantities or will encounter surface conditions which would substantially add to the burden or hazard of drilling such well, or because of objection by coal operators the division has prohibited a location within the area permitted by the order, the commission is authorized after notice and hearing to make an order permitting the well to be drilled at a location within the minimum distance prescribed by the spacing order. In granting exceptions to the spacing order, the commission may restrict the production from such well so that each person entitled thereto in such spacing unit shall not produce or receive more than his just and equitable share of the production.(7) An order establishing spacing units for a pool shall, subject to the limitation set by clause (1) of this section, cover all lands determined or believed to be underlaid by such pool, and may be modified by the commission, from time to time, to include additional lands determined to be underlaid by such pool or to exclude lands determined not to be underlaid by such pool. An order establishing spacing units may be modified by the commission to permit the drilling of additional wells on a reasonably uniform pattern at a uniform minimum distance from the nearest unit boundary as provided above. Any order modifying a prior order shall be made only after application by an interested operator and notice and hearing as prescribed above for the original order.(8) After the date of the notice of hearing called to establish spacing units, no additional well shall be commenced for production from the pool until the order establishing spacing units has been made, unless the commencement of the well is authorized by order of the commission.(9) In the event a permit to drill is refused because of a pending application for a spacing order, as provided in subsection (a) of section 6 , and the lease containing the location on which the permit has been refused is being drained of oil or gas by a well or wells on adjoining lands, the commission shall have the power, after notice to the operator of the well or wells affected, and hearing, to shut in such well or wells on adjoining lands if necessary to protect correlative rights, until, and only until, such time as applicant has had the opportunity to obtain a spacing order undersection 7 . 1961, July 25, P.L. 825, § 7.