Pooling and Unitization: Unitization Order Surface Use: Unit Operations

摘要

In 2001, the North Dakota Industrial Commission (NDIC) issues an order to unitize the Cedar Hills North Red River "B" Unit at the request of Continental. The Unit covers approximately 50,000 acres. A sufficient number of owners ratify the unit agreement. As production from the Unit continues, the amount of salt water being produced with the oil increases. In 2011, Continental sends out a notice to Fisher of its intent to drill a saltwater disposal (SWD) well on the 80-acre tract of land owned by the Fishers. It also offers a $7,779 payment for surface damages. The lump sum offer is increased in $10,779 over the course of a year's worth of correspondence with the Fishers. In May 2013, Continental receives a permit for the SWD well. The Fishers then bring an action seeking to enjoin the disposal of salt water into the pore space underneath their land. The case is removed to federal court. The principal issue is the scope of the implied easement of surface use and access that accompanies the severance of the surface and mineral estates as it is impacted by the NDIC unitization order. The order which incorporates the unit agreement contains a specific provision authorizing the unit operator to use the surface of the individual tracts contained within the unit for unit operations. Continental argues that the SWD well is reasonable and necessary for unit operations. The court initially concludes that the disposal of saltwater is included within the implied easement of surface use because it is an indispensable part of the production process. While the implied easement of surface use and access is normally restricted to leasehold operations, where there has been a unitization, the implied easement is expanded to cover not just leasehold operations, but unit operations. Relying on a compulsory pooling case, Continental Resources, Inc. v. Farrar Oil Co., 1997 ND 31,559 N.W.2d 841,136 O.G.R. 67, the court concludes that the leasehold implied easement is expanded to include unit operations because such operations are deemed to have occurred on all tracts within the unit. The unit agreement does not specifically mention SWD wells as falling within unit operations, but does contain sufficient authority for the unit operator to engage in production activities that would include disposal and/or injection operations. Thus, the court grants Continental's motion for summary judgment.