SB212 Alabama 2017 Session

Under existing law, the State Oil and Gas Board may enter orders requiring owners in a proposed or existing drilling or production unit to pool or integrate their interests and to develop their interests and lands as a drilling or production unit and may under certain circumstances provide that, if a productive well is drilled on the unit, there may be deducted from any production or proceeds thereof due to a nonconsenting owner who did not pay a share of drilling costs for the well, a risk compensation fee equal to 150 percent of that owners share of those costs but that in all events a 3/16th share of production from the well must be treated as royalty and shall be free from any drilling costs or risk compensation fee. A risk compensation fee may not be imposed unless all affected parties are given notice and a public hearing is held by the State Oil and Gas Board and the board finds that all of the statutory requirements for imposing the fee have been met

This bill would clarify that although a risk compensation fee may not be charged against the interest of an owner who does not receive actual notice of the hearing on the petition requesting imposition of the fee, the fee is chargeable against the interests of other nonconsenting owners in the unit who were given actual notice of the hearing in compliance with applicable laws

To amend Section 9-17-13, Code of Alabama 1975, to allow forced pooling or integration of drilling and production units and a risk compensation fee for properly noticed owners.