Section 408 - Integration of interests in spacing units(a) When two or more separately owned tracts are embraced within a spacing unit, or when there are separately owned interests in all or a part of a spacing unit, the interested persons may integrate their tracts or interests for the development and operation of the spacing unit. In the absence of voluntary integration, the commission, upon the application of any operator having an interest in the spacing unit, shall make an order integrating all tracts or interests in the spacing unit for the development and operation thereof and for the sharing of production therefrom. The commission as part of the order establishing a spacing unit or units shall prescribe the terms and conditions upon which the royalty interests in the unit or units shall, in the absence of voluntary agreement, be deemed to be integrated without the necessity of a subsequent separate order integrating the royalty interests. Each such integration order shall be upon terms and conditions that are just and reasonable, and shall be made only after a public hearing after notice by certified mail to all other operators and royalty owners within the unit whose interests are of record, at least fifteen days prior to the day of the hearing, or in the alternative by personal service in the manner set out in subsection (d) of section 10 . If such persons or their addresses are unknown to the applicant, notice may be given by the commission by publication for two successive weeks in a newspaper of general circulation in the county, or in each county if there be more than one, in which the lands embraced within the unit are situated. The first publication shall be at least fifteen days prior to the date of the hearing. Should the aforesaid notice fail to be given to any operator of record or royalty owner or should an attempt to give notice be held to be invalid, such defect shall not invalidate the proceedings at the hearing or any orders issued: Provided, however, That any such order shall not be effective as to the interest of the person whose interest is of record who was not notified or to whom notice is held to be invalid.(b) All operations, including, but not limited to, the commencement, drilling, or operation of a well upon any portion of a spacing unit for which an integration order has been entered, shall be deemed for all purposes the conduct of such operations upon each separately owned tract in the spacing unit by the several owners thereof. That portion of the production allocated to a separately owned tract included in a spacing unit shall, when produced, be deemed, for all purposes, to have been actually produced from such tract by a well drilled thereon.(c) Each such integration order shall authorize the drilling, equipping, and operation, or operation, of a well on the spacing unit; shall provide who may drill and operate the well; shall prescribe the time and manner in which all the operators in the spacing unit may elect to participate therein; and shall make provision for the payment by all those who elect to participate therein of the reasonable actual cost thereof, plus a reasonable charge for supervision and for interest on past due accounts. If requested, each such integration order shall provide just and equitable alternatives whereby an operator who does not elect to participate in the risk and cost of the drilling and operation, or operation, of a well may elect to surrender his leasehold interest to the participating operators on some reasonable basis and for a reasonable consideration which, if not agreed upon, shall be determined by the commission, or may elect to participate in the drilling and operation, or operation, of the well on a limited or carried basis upon terms and conditions determined by the commission to be just and reasonable. If one or more of the operators shall drill, equip, and operate, or pay the costs of drilling, equipping or operating a well for the benefit of a nonparticipating operator, as provided for in an order of integration, then such operator or operators shall be entitled to the share of production from the spacing unit accruing to the interest of such nonparticipating operator, exclusive of one-eighth of the production, until the market value of such nonparticipating operator's share of the production, exclusive of such one-eighth of production equals double the share of such costs payable by or charged to the interest of such nonparticipating operator. If there is a dispute as to the costs of drilling, equipping or operating a well, the commission shall determine such costs. In instances where a well is completed prior to the integration of interests in a spacing unit, the sharing of production shall be from the effective date of the integration, except that, in calculating costs, credit shall be given for the value of each operator's share of any prior production from the well.1961, July 25, P.L. 825, § 8.