Miss. Code Ann. § 53-3-1 Definitions for certain sections.
Unless the context otherwise requires, words and terms appearing in Sections 53-3-3 through 53-3-21, inclusive, shall have the meaning attributed to them in Section 53-1-3.
MCA Chapter 3
MCA Chapter 3
in effectMiss. Code Ann. § 53-3-3 Waste unlawful.
Waste of oil or gas as defined in Section 53-1-3 is hereby made unlawful.
Miss. Code Ann. § 53-3-5 Drilling and production regulated.
The state oil and gas board shall have the power and authority and it shall be its duty, after due notice and a hearing, to regulate the drilling and location of wells in any pool and the production therefrom so as to prevent reasonably avoidable net drainage from each developed unit (that is, drainage which is not equalized by counterdrainage) so that each owner in a pool shall have the right and opportunity to recover his fair and equitable share of the recoverable oil and gas in such pool.
For the prevention of waste, to protect and enforce the correlative rights of the owners in a pool, and to avoid the augmenting and accumulation of risks arising from the drilling of an excessive number of wells, or the reduced recovery which might result from too small a number of wells, the board shall, after a hearing, establish a drilling unit or units for each pool. The establishment of a unit for gas shall be limited and apply only to the production of gas and not oil.
Each well permitted to be drilled upon any drilling unit shall be drilled in accordance with the rules and regulations promulgated by the board and in accordance with a spacing pattern fixed by the board for the pool in which the well is located with such exceptions as may be reasonably necessary where it is shown, after notice and upon hearing, that the unit is partly outside the pool or, for some other reason, a well otherwise located on the unit would be nonproductive, or topographical conditions are such as to make the drilling at such location unduly burdensome. Whenever an exception is granted, the board shall take such action as will offset any advantage which the person securing the exception may have over other producers by reason of the drilling of the well as an exception, but no well drilled and completed as an exception to prescribed footage limitations for the reason that a portion of the drilling unit upon which such well is located is partly outside the pool or productive horizon shall be allocated a reduced daily production allowable whenever it shall be demonstrated to the satisfaction of the board that the productive acreage underlying such drilling unit is equal to, or more than, the reasonable minimum amount of productive acreage which would underlie such drilling unit under the minimum conditions which would permit the drilling of a well thereon so located as to comply with all applicable footage limitations. Each well drilled and completed as an exception to prescribed footage limitations for the reason that a portion of such drilling unit is partly outside the pool or productive horizon shall be allocated a reduced daily production allowable whenever it cannot be demonstrated to the satisfaction of the board that the productive acreage underlying such drilling unit is equal to, or more than, the minimum amount of productive acreage which would underlie such drilling unit under the minimum conditions which would permit the drilling of a well thereon so located as to comply with all applicable footage limitations. Such reduced allowable shall be allocated in proportion to the relationship which the productive acreage, as determined by the board, bears to the reasonable minimum amount of productive acreage which would underlie such drilling unit under the minimum conditions which would permit the drilling of a well thereon so located as to comply with all footage limitations applicable to such drilling unit. The reasonable minimum amount of productive acreage shall be determined for all purposes as if each oil well drilling unit were a regular governmental quarter-quarter section, comprising forty acres, more or less, and as if each gas well drilling unit were a regular governmental one half section, comprising three hundred twenty acres, more or less, and shall be calculated for the purpose of each oil well drilling unit as being the total acreage which would be encompassed within a triangular shaped area bounded on two sides by the exterior boundaries of such forty-acre drilling unit meeting at a 90° angle corner and on the third side by a straight line running on a 45° angle through a location point situated at the minimum distance out of such corner as shall be in accordance with prescribed oil well drilling unit footage limitations and intersecting each of such two exterior boundaries at 45° angles, and shall be calculated for the purposes of each gas well drilling unit as being the total acreage which would be encompassed within a triangular shaped area bounded on two sides by the exterior boundaries of such three hundred twenty-acre drilling unit meeting at a 90° angle corner and on the third side by a straight line running on a 45° angle through a location point situated at the minimum distance out of such corner as shall be in accordance with prescribed gas well drilling unit footage limitations and intersecting each of such two exterior boundaries at 45° angles. Should drilling units for any field or area be established so as to permit the drilling of oil or gas wells on smaller or larger units than 40 acre or 320 acre drilling units then, in such event, the same method of determining the reasonable minimum amount of productive acreage shall be applied to the consideration of such oil or gas drilling units with respect to the size of, and the prescribed footage limitations applicable to, such drilling units.
Except where otherwise provided, any allocation or apportionment of production shall be made on the basis of and in proportion to the surface acreage content of the drilling units prescribed for the producing horizons for the pools so that each such prescribed unit shall have equal opportunity to produce the same daily allowable, and any special unit of less than the prescribed amount of surface acreage shall be allowed to produce only in the proportion that the surface acreage content of any such special unit bears to the surface acreage content of the regular prescribed unit. In the event any well in attempting to make its allowable should be operated in a way that would commit waste as herein defined, or to the detriment of the field as a whole, the allowable for any such well shall be subject to adjustment.
Miss. Code Ann. § 53-3-7 Integration of interests; pooling agreements and orders.
When two (2) or more separately owned tracts of land are embraced within an established drilling unit or when there are separately owned interests in all or part of an established drilling unit the persons owning the drilling rights therein and the rights to share in the production therefrom may validly agree to integrate their interests and to develop their lands as a drilling unit. Where, however, such persons have not agreed to integrate their interests the board may, for the prevention of waste or to avoid the drilling of unnecessary wells, require such persons to integrate their interests and to develop their lands as a drilling unit. All orders requiring such pooling shall be made after notice and hearing, and shall be upon terms and conditions that are just and reasonable, and will afford to the owner of each tract the opportunity to recover or receive his just and equitable share of the oil and gas in the pool without unnecessary expense. The portion of the production allocated to the owner of each tract included in a drilling unit formed by a pooling order shall, when produced, be considered as if it had been produced from such tract by a well drilled thereon. Except as otherwise provided for in this section, in the event such pooling is required, the cost of development and operation of the pooled unit chargeable by the operator to the other interested owner or owners shall be limited to the actual expenditures required for such purpose not in excess of what are reasonable including a reasonable charge for supervision. In the event that the operator elects to proceed under the provisions of this subsection (1)(b), and does not elect to seek alternate charges as provided for in this section, the notice procedure followed shall be in accordance with Section 53-1-21, Mississippi Code of 1972. For the purposes of this section, as to a drilling unit, the term “nonconsenting owner” shall mean an owner of drilling rights which the owner has not agreed, in writing, to integrate in the drilling unit. The owner may own other drilling rights in the unit which the owner has agreed, in writing, to integrate in the unit and thereby also be a “consenting owner” as to the interest which the owner has agreed to integrate in the unit. In the event that one or more owners owning not less than thirty-three percent (33%) of the drilling rights in a drilling unit voluntarily consent to the drilling of a unit well thereon, and the operator has made a good faith effort to (i) negotiate with each nonconsenting owner to have said owner’s interest voluntarily integrated into the unit, (ii) notify each nonconsenting owner of the names of all owners of drilling rights who have agreed to integrate any interests in the unit, (iii) ascertain the address of each nonconsenting owner, (iv) give each nonconsenting owner written notice of the proposed operation, specifying the work to be performed, the location, proposed depth, objective formation and the estimated cost of the proposed operation, and (v) offer each nonconsenting owner the opportunity to lease or farm out on reasonable terms or to participate in the cost and risk of developing and operating the unit well involved on reasonable terms, by agreeing in writing, then the operator may petition the board to allow it to charge alternate charges (alternate to and in lieu of the charges provided for in subsection (1)(b) of this section). Any such petition on which alternate charges may be ordered by the board shall include a statement which shall name all nonconsenting real parties in interest in said proposed drilling unit, as of a date not more than ninety (90) days prior to the filing of the petition, giving each such person’s name, and address if known; and if any owner’s address is not known, the operator shall state in its petition that such person’s address is unknown after diligent search and inquiry. Only those parties served with actual or constructive notice as set forth hereinbelow will be subject to any alternate charges allowed by the board. Upon the filing of a petition on which alternate charges may be ordered, the petitioner shall have prepared, and furnish to the board with said petition, a notice to each and all nonconsenting real parties in interest whose address is unknown, whether such person be a resident of the State of Mississippi or not, which the board shall have published, noticing each such person to appear before a regular meeting of the board sufficiently distant in time to allow thirty (30) days to elapse between the date of the last publication of said notice as hereinafter provided, and the date of the regular meeting of the board to which each such person is noticed. Said notice shall also notice all unknown heirs or devisees of deceased owners, if any there be, and all unknown persons owning drilling rights in said proposed drilling unit. The notice shall be substantially in the following form, to wit: Click to view The publication of notice to nonconsenting real parties in interest whose address is unknown after diligent search and inquiry shall be made once in each week during three (3) successive weeks in a public newspaper of the county or counties in which the proposed drilling unit is located, if there be such a newspaper. If there is not such a county newspaper, then the said publication of notice shall be published in a newspaper having general circulation in the State of Mississippi. The period of publication shall be deemed to be completed at the end of twenty-one (21) days from the date of the first publication, provided there have been three (3) publications made as hereinabove required. Upon the filing of a petition on which alternate charges may be ordered, the petitioner shall also have prepared, and shall furnish to the board, a notice which shall be substantially in the form set out above, to each nonconsenting real party in interest whose address is known, together with addressed and stamped envelopes, and the board shall mail each notice by certified mail, return receipt requested, sufficiently distant in time to allow thirty (30) days to elapse between the date of the mailing of said notice and the date of the regular meeting of the board at which said petition will be first scheduled to be heard. Petitioner shall also advance to the board at the time of the filing of said petition the cost of publication and mailing of notices as set out above which shall be established by the board. Said costs of publication and mailing of notices shall be considered as part of the costs of operation which are chargeable to the nonconsenting owner’s nonconsenting share of production as set forth in paragraph (g) of this subsection (2). In the event a pooling order is issued by the board, and any nonconsenting owner does not subsequently agree in writing as provided for herein, and if the operations on the existing or proposed well which are described in the pooling order are actually commenced within one (1) year after the pooling order is issued by the board, and thereafter with due diligence and without undue delay, the existing or proposed well is actually completed as a well capable of producing oil, gas and/or other minerals in quantities sufficient to yield a return in excess of monthly operating costs, then, subject to the limitations set out in this section, the operator and/or the appropriate consenting owners shall be entitled to receive as alternate charges (alternate to and in lieu of the charges provided for in subsection (1)(b) of this section; provided, however, that in no event shall the operator and/or the appropriate consenting owners be entitled to recover less than such charges provided in subsection (1)(b) of this section) the share of production from the well attributable to the nonconsenting owner’s nonconsenting interests in the unit established or subsequently reformed for production therefrom, until the point in time when the proceeds from the sale of such share, calculated at the well, or the market value thereof if such share is not sold, after deducting production and excise taxes, which operator will pay or cause to be paid, and the payment required by this paragraph (g) shall equal the sum of: One hundred percent (100%) of the nonconsenting owner’s nonconsenting share of the cost of any newly acquired surface equipment beyond the wellhead connections including, but not limited to, stock tanks, separators, treaters, pumping equipment and piping; and Two hundred fifty percent (250%) of that portion of the costs and expenses of the operations provided for in the pooling order, and two hundred fifty percent (250%) of that portion of the cost of newly acquired equipment in the well, including wellhead connections, which would have been chargeable to the nonconsenting owner’s nonconsenting share thereof; provided, however, when a mineral interest that is severed from the surface estate is owned by a nonconsenting owner or when a mineral interest is subject to an oil and gas lease that is owned by a nonconsenting owner, the payment under this subparagraph (ii) shall be three hundred percent (300%); and One hundred percent (100%) of the nonconsenting owner’s nonconsenting share of the cost of operation of the well commencing with first production and continuing to such point in time. Whenever a drilling unit established by a pooling order issued by the board under subsection (2) of this section is to be reformed or altered by the board for good cause, after notice and hearing, then the interest of any nonconsenting owner listed in the pooling order who received notice of the application to reform or alter the unit and had not agreed in writing as provided for herein shall remain subject to the charges set forth in this subsection (2)(g) with respect to its interest in the reformed or altered unit. If there is any nonconsenting owner within a proposed reformed or altered unit who has not been previously provided the information and offers set forth in subparagraphs (ii) through (v) of subsection (2)(a) of this section which was sent to the owners, and if the applicant for an order of reformation or alteration of such unit provides to the nonconsenting owner the information and offers set forth in subparagraphs (ii) through (v) of subsection (2)(a) of this section at the same time and in the same manner as such nonconsenting owners receive notice of the application to reform or alter the drilling unit, then the interest of any nonconsenting owner listed in the pooling order for the reformed or altered unit who does not agree in writing as provided for herein shall be subject to the charges set forth in this subsection (2)(g) with respect to its interest in the reformed or altered unit. Whenever any one (1) operator has filed for alternate charges on two (2) drilling units, which units are direct, partially direct or diagonal offsets one to the other, such operator may not file a petition for alternate charges, as distinguished from the charges provided by subsection (1)(b), as to any additional units which are direct, partially direct or diagonal offsets to the said first two (2) units of that operator until said operator has drilled, tested and completed the first two (2) such wells, as wells capable of production or completed as dry holes or either, and has filed completion reports on said first two (2) wells with the board, or the permits for such well or wells have expired if one or both of them be not drilled. The pooling order if issued shall provide that each nonconsenting owner shall be afforded the opportunity to participate in the development and operation of the well in the pooled unit as to all or any part of said owner’s interest on the same costs basis as the consenting owners by agreeing in writing to pay that part of the costs of such development and operation chargeable to said nonconsenting owner’s interest, or to enter into such other written agreement with the operator as the parties may contract, provided such acceptance in writing is filed with the board within twenty (20) days after the pooling order is filed for record with the board. The pooling order shall provide that the well be drilled on a competitive contract, arms length, basis; provided, however, that the operator may employ its own tools or those of affiliates, but charges therefor shall not exceed the prevailing rates in the area. Within sixty (60) days after the completion of any operation on which alternate charges have been ordered, the operator shall furnish any nonconsenting owner who may request same an inventory of the equipment in and connected to the well, and an itemized statement of the cost of drilling, deepening, plugging back, testing, completing and equipping the well for production; or, at its option, the operator, in lieu of an itemized statement of such costs of operation, may submit detailed monthly statements of said costs. Each month thereafter, during the time the operator and/or consenting parties are being reimbursed, the operator shall furnish any nonconsenting owner who may request same with an itemized statement of all costs and liabilities incurred in the operation of the well, together with a statement of the quantity of oil and gas produced from it and the amount of proceeds realized from the sale of the well’s production during the preceding month. Any amount realized from the sale or other disposition of equipment acquired in connection with any such operation which would have been owned by a nonconsenting owner had it participated therein as to its nonconsenting interest shall be credited against the total unreturned costs of the work done and of the equipment purchased in determining when the interest of such nonconsenting owner shall be owned by said nonconsenting owner as above provided; and if there is a credit balance, it shall be paid to such nonconsenting owner. From the point in time provided for in paragraph (g) of this subsection (2), each nonconsenting owner shall own the same interest in such well, the material and equipment in or pertaining thereto, and the production therefrom as such nonconsenting owner would have been entitled to had it participated in the drilling, reworking, deepening and/or plugging back of said well. Thereafter, except as otherwise provided in this section, the operator shall be entitled to charge each nonconsenting owner such nonconsenting owner’s proportionate part of all reasonable costs incurred by the operator in operating the unit well and the unit, including a reasonable charge for supervision, and in the event such nonconsenting owner fails to pay such proportionate share of such costs within thirty (30) days after receipt by the nonconsenting owner of a valid invoice, the operator shall be entitled to receive such nonconsenting owner’s share of production until such time as such unpaid share of costs shall have been recovered by the operator. In the event that a leased interest is subject to an order of pooling and integration, and the operator and/or the appropriate consenting owners are entitled to alternate charges as provided by paragraph (g) of this subsection (2), and if there be no reasonable question as to good and merchantable title to the royalty interest, the lessor of said lease shall be paid, by the operator or purchaser of production, the proceeds attributable to said lessor’s contracted royalty, not to exceed an amount of three-sixteenths (3/16) of the proceeds attributable to the nonconsenting owner’s proportionate share of production. Nothing herein contained shall affect or diminish in any way the responsibility of the nonconsenting owner to account for the payment of any royalty or other payment, not paid as herein provided, which may burden or be attributable to the interest owned by such nonconsenting owner. When production of oil or gas is not secured in paying quantities as a result of such integration or pooling of interests, there shall be no charge payable by the nonconsenting owner or owners as to such owner’s nonconsenting interest. In the event of any dispute relative to costs, the board shall determine the proper costs, after due notice to all interested parties and a hearing thereon. Appeals may be taken from such determination as from any other order of the board. The State Oil and Gas Board shall in all instances where a unit has been formed out of lands or areas of more than one (1) ownership, require the operator when so requested by an owner, to deliver to such owner or his assigns his proportionate share of the production from the well common to such drilling unit; but where necessary, such owner receiving same shall provide at his own expense proper receptacles for the receipt or storage of such oil, gas or distillate. Should the persons owning the drilling or other rights in separate tracts embraced within a drilling unit fail to agree upon the integration of the tracts and the drilling of a well on the unit, and should it be established that the board is without authority to require integration as provided in this section, then, subject to all other applicable provisions of this chapter, and of Chapter 1 of this title, the owner of each tract embraced within the drilling unit may drill on his tract; but the allowable production from such tract shall be such proportion of the allowable production for the full drilling unit as the area of such separately owned tract bears to the full drilling unit. The State Oil and Gas Board in order to prevent waste and avoid the drilling of unnecessary wells may permit (i) the cycling of gas in any pool or portion thereof or (ii) the introduction of gas or other substance into an oil or gas reservoir for the purpose of repressuring such reservoir, maintaining pressure or carrying on secondary recovery operations. The board shall permit the pooling or integration of separate tracts or separately owned interests when reasonably necessary in connection with such operations. Agreements made in the interests of conservation of oil or gas, or both, or for the prevention of waste, between and among owners or operators, or both, owning separate holdings in the same field or pool or in any area that appears from geologic or other data to be underlaid by a common accumulation of oil or gas, or both, and agreements between and among such owners or operators, or both, and royalty owners therein, for the purpose of bringing about the development and operation of the field, pool or area, or any part thereof, as a unit, and for establishing and carrying out a plan for the cooperative development and operation thereof, when such agreements are approved by the board, are hereby authorized and shall not be held or construed to violate any of the statutes of this state relating to trusts, monopolies or contracts and combinations in restraint of trade.
NOTICE TO APPEAR BEFORE THE STATE OIL AND GAS BOARD You are noticed to appear before the State Oil and Gas Board at its regular term, being on the day of , 20 to show cause if you can why the petition of (Operator) being Petition No. in said board and seeking to force to integrate and pool all interests in (description of Unit by legal description)
should not be granted. To (inserting the name of such person or persons, whose address is unknown), and all such unknown heirs or devisees and all such unknown owners, whose names and addresses remain unknown after diligent search and inquiry. Said meeting of said board shall be held at (the then hearing room of said Oil and Gas Board) on the above date at .(the time) This day of , A.D.. supervisor
Miss. Code Ann. § 53-3-9 Allowable production; meters.
Whenever the state oil and gas board has fixed for the purpose of preventing waste, as defined in Section 53-1-3, the total amount of oil or gas which may be produced in any pool in this state at an amount less than that amount which the pool can produce, the board shall allocate or apportion the allowable production among the producers in the pool on a reasonable basis so as to prevent reasonably avoidable drainage from each developed unit which is not equalized by counter-drainage, and so that each producer will have the opportunity to produce or receive his just and equitable share, as above set forth.
After the effective date of any rule, regulation, or order of the state oil and gas board fixing the allowable production of oil or gas, or both, for any pool, no person shall produce from any well, lease, or property more than the allowable production which is applicable; nor shall such amount be produced in a different manner than that which may be authorized.
The state oil and gas board shall require interested persons, firms or corporations to place uniform meters of a type approved by the board wherever the board may designate on all pipe lines, flow lines, gathering systems, barge terminals, loading racks, refineries, or other places deemed necessary or proper to prevent waste and the transportation of illegally produced oil or gas; such meters at all times shall be under the supervision and control of the board, and it shall be a violation of Sections 53-1-1 through 53-1-47, inclusive, and Sections 53-3-1 through 53-3-21, inclusive, for any person, firm or corporation to refuse to attach or install such meter when ordered to do so by the board.
Miss. Code Ann. § 53-3-11 Well drilling notice; permit; surety or cash bond for nonresidents; Secretary of State as service agent for nonresidents; taxpayer notice for new wells; board spacing pattern requirements.
Any person desiring or proposing to drill any well in search of oil or gas, before commencing the drilling of any such well, shall notify the oil and gas supervisor upon such form as the board may prescribe. The drilling of any well for oil or gas is hereby prohibited until such notice is given and a permit therefor is issued. Before any nonresident not qualified to do business in this state is issued a permit pursuant to subsection (1) of this section, such nonresident shall file with the Secretary of State, on a form prescribed by him, a surety or cash bond in a sum of not less than Ten Thousand Dollars ($10,000.00), or in a greater amount if so approved by the Secretary of State, conditioned that such sum be paid to the State of Mississippi for the benefit of all persons interested, their legal representatives, attorneys or assigns, in the event the operator of such well shall fail to reasonably restore the land and improvements of the surface estate as a result of mineral exploration and/or production, or in the event the operator shall fail to properly plug a dry or abandoned well in the manner prescribed by the rules of the board. Such bond shall be executed by the operator listed in the drilling permit and, in case of a surety bond, by a corporate surety licensed to do business in the State of Mississippi. Such bond shall cover all subsequent drilling permits issued to such nonresident operator and shall be for a term co-extensive with the terms of the permits. The Secretary of State is hereby designated as the agent upon whom process may be served in any action against such nonresident operator to recover damages to the surface estate arising from mineral exploration and/or production. Any such action for damages shall be commenced within six (6) years next after the closing of the well. A person issued a permit to drill an oil or gas well under this section is required to provide notice of the intended drill site location prior to commencing operations. The notice shall be sent by United States certified mail to the taxpayer shown on the most recent county ad valorem tax receipt available in the office of the tax collector of the county in which the well site is located, and shall be posted to the mailing address shown on that ad valorem tax receipt. The notice shall include a copy of the unit plat showing the proposed well location. The notification requirement of this subsection (3) shall apply only to permits to drill new wells and shall not apply to well reentries, recompletions or reworking operations on existing or previously permitted wells. Failure to give the notice provided for in this subsection (3) shall not invalidate the well permit. The drilling of any well, which is not in accordance with a spacing pattern fixed by the board, is hereby prohibited until and unless a permit is issued by the board after notice and hearing.
Miss. Code Ann. § 53-3-13 Permit fee; disposition of fees.
Any person securing a permit to drill a well in search of oil or gas under the provisions of Section 53-3-11 shall pay to the Oil and Gas Supervisor a fee of Six Hundred Dollars ($600.00) upon and for the issuance of the permit. A lesser sum may be paid if the State Oil and Gas Board shall adopt a rule fixing the amount to be paid at a sum less than Six Hundred Dollars ($600.00). Any such permit, when issued and the fee paid thereon, shall be good for a period of one (1) year from the date thereof; and in the event drilling has commenced within one (1) year, the permit shall be good for the life of the well commenced, unless during the course of drilling or production the operator is changed. In the event a change of operators from that listed in the drilling permit is desired, the operator listed and the proposed new operator shall apply to the State Oil and Gas Board for authority to change operators on forms to be prescribed by order of the State Oil and Gas Board. The fee for such change of operators shall be One Hundred Dollars ($100.00) per change, or some lesser sum as may be fixed by order of the board. The State Oil and Gas Supervisor, as ex officio Secretary of the State Oil and Gas Board, shall remit to the State Treasurer all monies collected by reason of the assessments made, fixed and authorized under the provisions of subsection (1) of this section, and the State Treasurer shall deposit all such monies in a special fund known as the “Oil and Gas Conservation Fund.”
Miss. Code Ann. § 53-3-15 Certificate of compliance required before connection with pipe lines; cancellation.
Owners or operators of oil or gas wells shall, before connecting with any oil or gas pipe line, secure from the state oil and gas board a certificate showing compliance with the conservation laws of the state and conservation rules, regulations and orders of the board. No operator of a pipe line shall connect with any well until the owner or operator of such well shall furnish a certificate from the board that such conservation laws and such rules, regulations and orders have been complied with. This section shall not prevent a temporary connection of not more than seven days’ duration with any well in order to take care of production and prevent waste until opportunity shall have been given the owner or operator of such well to secure such certificate.
The state oil and gas board shall have the power to cancel any certificate of compliance issued under the provisions of this section when it appears, after due notice and hearing, that the owner or operator of a well covered by the provisions of same has violated or is violating, in connection with the operation of said well or the production of oil or gas therefrom, any of the oil or gas conservation laws of this state or any of the rules, regulations or orders of the board promulgated thereunder. Upon notice from the board to the operator of any pipe line connected to any such oil or gas well that the certificate of compliance with reference to such well has been cancelled by the board, the operator of such pipe line shall disconnect from such well and it shall be unlawful for the operator of such pipe line to transport oil or gas therefrom until a new certificate of compliance has been issued by the board. It shall be unlawful for the owner or operator of any well to produce oil or gas therefrom (except as to a temporary connection as hereinabove provided), unless there is in effect a certificate of compliance covering such well.
Miss. Code Ann. § 53-3-17 Illegal transactions.
The sale, purchase, or acquisition, or the transportation, refining, processing, or handling in any other way of illegal oil, illegal gas, or illegal product is hereby prohibited.
Unless and until the state oil and gas board provides for certificates of clearance, or some other method, so that any person may have an opportunity to determine whether any contemplated transaction of sale, purchase, or acquisition, or of transportation, refining, processing, or handling in any other way, involves illegal oil, illegal gas, or illegal product, no penalty shall be imposed for the sale, purchase or acquisition, or the transportation, refining, processing, or handling in any other way, of illegal oil, illegal gas, or illegal product, except under circumstances hereinafter stated. Penalties shall be imposed by the board for each transaction prohibited in this section when the person committing the same knows that illegal oil, illegal gas, or illegal product is involved in such transaction or when such person could have known or determined such fact by the exercise of reasonable diligence or from facts within his knowledge. However, regardless of lack of actual notice or knowledge, penalties as provided in Section 53-1-47 shall apply to any sale, purchase, or acquisition, and to the transportation, refining, processing, or handling in any other way, without a certificate of clearance, of illegal oil, illegal gas, or illegal product, where administrative provision is made for identifying the character of the commodity as to its legality. It shall likewise be a violation for which penalties shall be imposed for any person to sell, purchase, or acquire, or to transport, refine, process, or handle in any other way any oil, gas or any product without complying with any rule, regulation, or order of the board relating thereto.
Miss. Code Ann. § 53-3-19 Procedure for seizure and sale of illegal gas and oil as contraband.
Apart from, and in addition to, any other remedy or procedure which may be available to the state oil and gas board, or any penalty which may be sought against or imposed upon any person with respect to violations relating to illegal oil, illegal gas, or illegal product, all illegal oil, illegal gas and illegal product shall, except under such circumstances as are stated herein, be contraband and shall be seized and sold, and the proceeds applied as herein provided. Such sale shall not take place unless the court shall find, in the proceeding provided for in this paragraph, that the commodity involved is contraband. Whenever the board believes that illegal oil, illegal gas or illegal product is subject to seizure and sale, as provided herein, it shall, through the attorney general, bring a civil action in rem for that purpose in the circuit court of the county where the commodity is found, or the action may be maintained in connection with any suit or cross-action for injunction or for penalty relating to any prohibited transaction involving such illegal oil, illegal gas or illegal product. Any interested person who may show himself to be adversely affected by any such seizure and sale shall have the right to intervene in such suit to protect his rights.
The action referred to above shall be strictly in rem and shall proceed in the name of the state as plaintiff against the illegal oil, illegal gas or illegal product mentioned in the complaint, as defendant, and no bond or bonds shall be required of the plaintiff in connection therewith. Upon the filing of the complaint, the clerk of the court shall issue a summons directed to the sheriff of the county, or to such officer or person as the court may authorize to serve process, requiring him to summon any and all persons (without undertaking to name them) who may be interested in the illegal oil, illegal gas, or illegal product mentioned in the complaint to appear and answer within thirty days after the issuance and service of such summons. The summons shall contain the style and number of the suit and a very brief statement of the nature of the cause of action. It shall be served by posting one copy thereof at the courthouse door of the county where the commodity involved in the suit is alleged to be located and by posting another copy thereof near the place where the commodity is alleged to be located. Copy of such summons shall be posted at least five days before the return day stated therein, and the posting of such copy shall constitute constructive possession of such commodity by the state. A copy of the summons shall also be published once each week for three weeks in some newspaper published in the county where the suit is pending or having a bona fide circulation therein. No judgment shall be pronounced by any court condemning such commodity as contraband until after the lapse of five days from the last publication of said summons. Proof of service of said summons, and the manner thereof, shall be as provided by general law.
Where it appears by a verified pleading on the part of the plaintiff, or by affidavit, or affidavits, that grounds for the seizure and sale exist, the clerk, in addition to the summons, shall issue an order of seizure, which shall be signed by the clerk and bear the seal of the court. Such order of seizure shall specifically describe the illegal oil, illegal gas, or illegal product, so that the same may be identified with reasonable certainty. It shall direct the sheriff to whom it is addressed to take into his custody, actual or constructive, the illegal oil, illegal gas or illegal product, described therein, and to hold the same subject to the orders of the court. Said order of seizure shall be executed as a writ of attachment is executed. No bond shall be required before the issuance of such order of seizure, and the sheriff shall be responsible upon his official bond for the proper execution thereof. For his service hereunder, the sheriff shall receive a fee as in like cases of seizure of personal property and to be assessed as other cost in the cause.
Sales of illegal oil, illegal gas or illegal product, seized under the authority of this section, and notice of such sales, shall be in accordance with the laws of this state relating to the sale of personal property under execution. For his services hereunder the sheriff shall receive a fee and expenses in like sales of personal property to be paid out of the proceeds of the sale or sales to be fixed by the court ordering such sale.
The court may order that the commodity be sold in specified lots or portions, and at specified intervals, instead of being sold at one time. Title to the amount sold shall pass as of the date of the act which is found by the court to make the commodity contraband. The judgment shall provide for payment of the proceeds of the sale into the state oil and gas fund, after first deducting the costs in connection with the proceedings and sale, and after paying to any royalty owner intervening as an interested party in the suit, the value of his interest in the said oil or gas, provided he has established his title to the said oil or gas royalty interest. The amount sold shall be treated as legal oil, legal gas or legal product, as the case may be, in the hands of the purchaser, but the purchaser and the commodity shall be subject to all applicable laws, and rules, regulations and orders with respect to further sale or purchase or acquisition, and with respect to the transportation, refining, processing, or handling in any other way, of the commodity purchased.
The producer, owner, or any other party contesting the validity of any such seizure and having an interest in securing the release of the seized oil, gas or other product, may obtain the release thereof upon furnishing a bond issued by a corporate surety company, duly qualified to do business in the state in an amount double the current market value of the oil, gas or other product held under seizure, which bond shall be conditioned and approved in the same manner as a replevin bond.
Nothing in this section shall deny or abridge any cause of action a royalty owner, or a lien holder, or any other claimant, may have, because of the forfeiture of the illegal oil, illegal gas, or illegal product, against the person whose act resulted in such forfeiture. All oil, gas or other illegal product sold as provided in this section shall be sold in like cases of personal property sold under execution.
Miss. Code Ann. § 53-3-21 Penalties for violations of Sections 53-3-3 through 53-3-19.
Any person who violates any of the provisions of Sections 53-3-3 through 53-3-19, inclusive, or any rule, regulation or order made thereunder, shall be subject to the penalties and punishment set forth in Section 53-1-47.
Miss. Code Ann. § 53-3-23 Flexible oil or gas drilling units.
Whenever a drilling unit for oil or gas is formed comprised entirely of lands within the State of Mississippi, with one or more unit boundaries being the center of the main navigable channel of the Mississippi River or any other navigable river constituting the boundary between the State of Mississippi and another state, such unit shall be a flexible unit. The size and shape of such unit shall change as the boundary line between the states changes. Subsequent changes in the acreage content of such unit occasioned by the shifting of the state boundary line shall not occasion a reduction in the allowable acreage allocated to such unit. This section shall cover and include oil and gas units which have been heretofore formed or which may be hereafter formed.
Miss. Code Ann. § 53-3-25 Application for permit to drill in search of oil or gas.
Before any person shall commence the drilling of any well in search of oil or gas, the person shall file with the board his application for a permit to drill, accompanied by a certified plat and by a fee of Six Hundred Dollars ($600.00), payable to the State Oil and Gas Board. When two (2) or more separately owned tracts of land are embraced within the unit for which the permit is sought, the application shall affirmatively state whether there are separately owned tracts in the drilling unit for which the permit is sought, and if so, whether the person owning the drilling rights therein and the rights to share in the production therefrom have agreed to develop their lands as a drilling unit and to the drilling of the well, as contemplated by Section 53-3-7. If drilling operations have not commenced within one (1) year after date of issuance, the permit shall become void. If the application complies in all respects with the rules and regulations of the board relating thereto, a permit shall be issued promptly by the supervisor. The issuance of the permit shall constitute the establishment of the drilling unit as designated in the application and shall likewise constitute the approval of the well location set out in the permit. On good cause shown, the unit may be altered by the board after notice and hearing.
If the application for permit does not comply in all respects with the rules and regulations of the board relating thereto, the application shall be disallowed and the supervisor shall promptly notify the applicant of the reason or reasons for the disallowance.
Miss. Code Ann. § 53-3-27 Application to commence drilling of stratigraphic test or well below freshwater level; duration of permit.
Before any person shall commence the drilling of a stratigraphic test or any well below the freshwater level (other than an oil or gas well or injection well), such person shall file with the board his application for a permit to drill, accompanied by a fee of Six Hundred Dollars ($600.00), or some lesser sum as may be fixed by order of the board, payable to the State Oil and Gas Board. If the application complies in all respects with the rules and regulations of the board relating thereto, a permit shall be issued promptly by the supervisor. Any such permit, when issued and the fee paid thereon, shall be good for a period of one (1) year from the date thereof; and in the event drilling has commenced within one (1) year, the permit shall be good for the life of the well commenced, unless during the course of drilling or production the operator is changed.
If the application for a permit does not comply in all respects with the rules and regulations of the board relating thereto, said application shall be disallowed, and the supervisor shall promptly notify the applicant of the reason or reasons for the disallowance.
Miss. Code Ann. § 53-3-29 Application to commence drilling injection well; duration of permit.
Before any person shall commence the drilling of an injection well, such person shall file with the board his application for a permit to drill, accompanied by a fee of Six Hundred Dollars ($600.00), or some lesser sum as may be fixed by order of the board, payable to the State Oil and Gas Board. If the application complies in all respects with the rules and regulations of the board relating thereto, a permit shall be issued by the supervisor upon approval by the State Oil and Gas Board, after notice and hearing. Any such permit, when issued and the fee paid thereon, shall be good for a period of one (1) year from the date thereof; and in the event drilling has commenced within one (1) year, the permit shall be good for the life of the well commenced, unless during the course of drilling or production the operator is changed.
Miss. Code Ann. § 53-3-31 Application to rework abandoned well to injection well; duration of permit.
Before any person shall commence operations to rework an abandoned well to an injection well, such person shall file with the board his application to rework, accompanied by a fee of Six Hundred Dollars ($600.00), or some lesser sum as may be fixed by order of the board, payable to the State Oil and Gas Board. If the application complies in all respects with the rules and regulations of the board relating thereto, a permit shall be issued by the supervisor upon approval by the State Oil and Gas Board, after notice and hearing. Any such permit, when issued and the fee paid thereon, shall be good for a period of one (1) year from the date thereof; and in the event drilling has commenced within one (1) year, the permit shall be good for the life of the well commenced, unless during the course of drilling or production the operator is changed.
Miss. Code Ann. § 53-3-33 Application to rework operating well or injection well.
Before any person shall commence operations to rework an operating well or injection well to recomplete to another zone, formation or reservoir, such person shall file with the board his application to rework, accompanied by a fee of One Hundred Dollars ($100.00), or some lesser sum as may be fixed by order of the board, payable to the State Oil and Gas Board. If the application complies in all respects with the rules and regulations of the board relating thereto, a permit shall be issued by the supervisor.
Miss. Code Ann. § 53-3-35 Reports by producer or operator of oil or gas well; monthly individual well status report; producer’s monthly report; deliverability test; calibrated stock tank.
Each producer or operator of an oil or gas well shall furnish for each month a “monthly individual well status report,” setting forth complete information and data indicated thereon. Such report for each month shall be prepared and filed according to the instructions on a form published by the board for such reports, on or before the first day of the second month following the month during which the production was made. Each operator or producer of oil or gas shall furnish for each month a “producer’s monthly report,” setting forth complete information and data indicated thereon. Such report for each month shall be prepared and filed with the board on a form published by the board for such reports, according to the instructions on said form, on or before the first day of the second month following the month during which the production was made. A deliverability test of each producing gas well shall be made in conformity with schedules issued by the board. Such test shall be an actual test to determine whether or not the well is capable of producing efficiently any allowable that may reasonably be expected to be assigned to it, and, if the well is not found to be capable, then the test shall determine the maximum rate at which the well may efficiently be produced. The method of testing used shall be one acceptable to the board. A report of each test so required shall be promptly furnished to the board on a form published by the board for such reports. Any operator may make such additional deliverability tests at any time and report such tests to the board in the same manner as required tests are reported. Deliverability shall be determined by the latest test information furnished to the board. Each oil well and each oil completion of a multiply-completed well shall be tested by the operator once during each calendar month during each calendar year in a calibrated stock tank. The result of such tests shall be reported in writing within thirty (30) days after the end of each month to the state oil and gas board on a form published by the board for such test results.
Miss. Code Ann. § 53-3-37 Penalties for violations concerning reports.
Any person who shall violate any of the provisions of Section 53-3-35 regarding the filing of reports by failing to file such reports on a timely basis, or by the willful, knowing or fraudulent execution of a report which contains a false entry or statement of fact, or an omission of fact, shall be subject to a penalty of not more than One Thousand Dollars ($1,000.00) for each violation. Provided, however, the same procedure for notice and hearing as that found in subsection (b) of Section 53-1-47 shall be followed in cases of violations of Section 53-3-35.
Miss. Code Ann. § 53-3-39 Payment of interest on royalty proceeds which have not been disbursed.
Purchasers of oil or gas production from any oil or gas well shall be liable for the payment of interest on royalty proceeds which have not been disbursed to the royalty owners from and after one hundred twenty (120) days following the date of the first sale of oil or gas.
The rate of interest shall be eight percent (8%) per annum and shall be computed from the date of one hundred twenty (120) days after such first sale; however, from and after July 1, 1992, the rate of interest shall be the greater of eight percent (8%) per annum or two percent (2%) above the federal discount rate in effect as of the second day of January of each year during which interest on such royalty proceeds is payable, except in those instances where the royalty proceeds cannot be paid because the title thereto is not marketable, in which case the rate of interest on a per annum basis shall be equal to the federal reserve discount rate in effect as of the second day of January of each year during which interest on the royalty proceeds is payable. The accrued interest shall be paid to the royalty owners at the time of the payment of the accrued royalty proceeds, such rate of interest to be displayed on the disbursement document. As used herein, “first sale” shall mean the first commercial sale of production after completion of the well and shall not include sales of oil or gas during initial testing prior to completion of the well.
Whenever the disbursal of royalty proceeds is suspended for any reason whatsoever, the purchasers of production shall be liable for the payment of interest on the royalty proceeds which have been suspended. Except as otherwise provided, the rate of interest shall be eight percent (8%) per annum and shall be computed from the date that the royalty payments were halted or suspended; provided, however, that if such date is less than one hundred twenty (120) days after the first sale of oil or gas, then such interest shall be computed from the date of one hundred twenty (120) days after such first sale. From and after July 1, 1992, the rate of interest shall be the greater of eight percent (8%) per annum or two percent (2%) above the federal discount rate in effect as of the second day of January of each year during which interest on such royalty proceeds is payable, except in those instances where the royalty proceeds are suspended because the title thereto is not marketable, in which case the rate of interest on a per annum basis shall be equal to the federal reserve discount rate in effect as of the second day of January of each year during which interest on such proceeds is payable. The accrued interest shall be paid to the royalty owners at the time of the payment of the suspended royalty proceeds, such rate of interest to be displayed on the disbursement document.
The purchaser of production from a well shall be exempt from the provisions of this section and the operator and/or the owner of the right to drill and to produce under an oil and/or gas lease shall be substituted for the purchaser herein where the operator and/or the owner and purchaser have entered into an arrangement where the royalty proceeds are paid by the purchaser to the operator and/or the owner who assumes responsibility of paying the proceeds to the royalty owners legally entitled thereto. Where the operator and/or the owner of the drilling rights are substituted herein for the purchaser, the interest provided for hereinabove shall accrue from the date set forth hereinabove or from the date of such operator and/or owner’s receipt of the proceeds of such production, whichever is the later date.
Provided further, that as to royalty payments regularly disbursed in the normal course of business, nothing in this section shall be construed to require the payment of interest on royalty payments disbursed to the royalty owners no later than sixty (60) days after the end of the calendar month within which such royalty production was sold. Provided further, that whenever the aggregate of one hundred twenty (120) days’ accumulation of monthly proceeds payable to any royalty owner does not exceed One Hundred Dollars ($100.00), no interest shall accrue or be payable thereon, provided that the disbursement of such accumulated proceeds be made to the royalty owner no later than once each one-hundred-twenty-day period.
For the purposes of this section, marketability of title shall be determined in accordance with real property law governing title to oil and gas interests as recognized at the time the royalty payments were suspended or not paid.
The provisions of this section which require payment of interest on royalty proceeds which have not been disbursed may not be waived or reduced by a royalty owner entitled to such interest payment unless said royalty owner shall attest to a statement which shall be typed in bold print on a separate form and attached to the relevant division order contract as to the royalty owner’s interest. Such statement shall be set out as follows:
I, (royalty owner’s name) hereby agree to waive the statutory right given me to receive interest on royalty proceeds as provided by Section 53-3-39, Mississippi Code of 1972, from (purchaser or operator and/or owner of right to drill), which is due me as evidenced from the attached division order contract. This is the day of , 20. (royalty owner’s signature)
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The words “owner,” “oil,” “gas” and “royalty owner” used in this section shall have the meanings attributed to them in Section 53-1-3, Mississippi Code of 1972.
Miss. Code Ann. § 53-3-41 Definitions.
For the purposes of this section, the following terms shall have the meanings ascribed herein: “Oil and gas production” means any oil, natural gas, condensate of either, natural gas liquids, other gaseous, liquid or dissolved hydrocarbons, sulfur or helium, or other substance produced as a by-product or adjunct to their production, or any combination of these, which is severed, extracted or produced from the ground, the seabed or other submerged lands within the jurisdiction of the State of Mississippi. Any such substance, including recoverable or recovered natural gas liquids, which is transported to or in a natural gas pipeline or natural gas gathering system, or otherwise transported or sold for use as natural gas, or is transported or sold for the extraction of helium or natural gas liquids is gas production. Any such substance which is transported or sold to persons and for purposes not included in the foregoing natural gas definition is oil production. “Interest owner” means a person owning an entire or fractional interest of any kind or nature in oil or gas production at the time of severance, or a person who has an express, implied or constructive right to receive a monetary payment determined by the value of oil or gas production or by the amount of production. “Royalty owner” means any person who possesses an interest in the production, but who is not an owner as defined in Section 53-1-3(g). “Disbursing agent” shall mean that person who, pursuant to an oil and gas lease, operating agreement, purchase contract, or otherwise, assumes the responsibility of paying royalty proceeds derived from a well’s oil and gas production to the royalty owner or owners legally entitled thereto. A first purchaser shall not be deemed to be the disbursing agent unless the first purchaser expressly assumes such responsibility in the purchase contract. “First purchaser” means the first person who purchases oil or gas production from the interest owners after the production is severed and may include the operator if the operator acts as a purchaser of production attributable to other interest owners. An “operator” is a person engaged in the business of severing oil or gas production from the ground, whether for himself alone, for other persons alone or for himself and others. Whenever a disbursing agent has not disbursed the royalty proceeds derived from the well’s production to the royalty owner within one hundred twenty (120) days following the date of first sale of oil or gas in the event the disbursing agent is a first purchaser of oil or gas, or within one hundred twenty (120) days following the date the disbursing agent receives the proceeds from such production if the disbursing agent is not the first purchaser, such royalty owner shall have a lien to secure the payment of the royalty proceeds. The lien shall attach to the proceeds from such production received by the disbursing agent attributable to the royalty owner’s interest. The lien provided by this section shall be effective against a third party only from the time a financing statement evidencing such lien is filed in the same manner as financing statements evidencing security interests in minerals are filed in accordance with the provisions of Section 75-9-501. The lien provided by this section shall expire one (1) year after it becomes effective against a third party, unless judicial proceedings have been commenced to assert it or unless insolvency proceedings have been commenced by or against the disbursing agent, in which event the lien shall remain effective until termination of the insolvency proceedings or until expiration of the one-year period, whichever occurs later. Whenever there is a conflict between a lien under this section and a security interest under Title 75, Chapter 9, the lien or security interest first to be filed has priority. Liens provided for in this section shall have priorities among themselves according to priority in time of filing of such liens. The filing required by this section shall be a financing statement as provided for in Section 75-9-310 and shall be subject to the provisions of Part 5 of Article 9 of the Uniform Commercial Code, except that in order for the filing to be sufficient, it shall not be necessary for the debtor to sign the financing statement, and the filing shall be effective for a period of only one (1) year from the date of filing. This section does not impair an operator’s right to set off or withhold funds from other interest owners as security for or in satisfaction of any debt or security interest. This section does not impair a disbursing agent’s right to withhold funds in the event a question is raised concerning the title or ownership of, or right to sell, the oil or gas production. In case of a dispute between interest owners, a good-faith tender by the disbursing agent of funds to the person the interest owners shall agree on, or to a court of competent jurisdiction in the event of litigation or bankruptcy, shall operate as a tender of the funds to both. Nothing in this section shall be construed to enlarge or diminish the rights and obligations provided to or imposed on interest owners, royalty owners, disbursing agents, first purchasers, or operators by contract or otherwise by law. The sole purpose of this section is to provide royalty owners a lien under the conditions provided herein.
Miss. Code Ann. § 53-3-51 Agreements for cooperative development and operation under leases by public officers.
The state mineral lease commission, the county boards of supervisors, the mayors and boards of aldermen, the mayor and councilmen, the trustees of agricultural high schools and junior colleges, the trustees of any common school districts, consolidated school districts, special consolidated school districts and separate school districts, and all other state boards, state officers, state agents, and the boards and officers of all political subdivisions of the State of Mississippi, who manage and control mineral and royalty interests, and are authorized by law to execute oil, gas or mineral leases thereon, are hereby authorized and empowered to execute, on behalf of the state or of such political, municipal, or other subdivision or agency thereof, agreements covering any lease or leases now in effect or which may hereafter be granted, and the mineral and royalty interests thereunder, for establishing and carrying out the co-operative development and operation of common accumulations of oil and gas, or both, in all or any portion of a field or area which appears from geological or other data to contain such common accumulations of oil or gas, or both, including the right and power to pool, consolidate and unitize the land covered by any lease or leases, now in effect or which may hereafter be granted, in its entirety or as to any stratum or strata or any portion or portions thereof, with other lands and leases in the immediate vicinity thereof, for the purpose of joint development and operation of the entire consolidated premises as a unit. Such agreements include, but are not limited to, all types of secondary recovery methods and operations, and operations known as cycling, recycling, pressure maintenance, repressuring, and water flooding, and the storage, processing and marketing of gas and all by-products of such operations. When any mineral or royalty interest belonging to the state, or to any political subdivision or agency thereof, is included within the provisions of such unitization or other agreement, as authorized in subsection (1) hereof, the oil, gas and mineral lease on such interest shall be considered to be amended thereby to conform to such agreement, and such lease shall not terminate as long as the agreement continues in force. No such agreement shall provide for the payment of royalty on any basis which is less favorable to the state, or any such subdivision thereof, than the basis on which royalty is computed to other royalty owners. The agreements herein authorized as to field-wide unitization shall not become effective until approved by the state oil and gas board by an order duly entered on the minutes of said board, and when so approved shall become fully valid and binding. The provisions of this section shall be cumulative of other existing laws not in conflict herewith.
Miss. Code Ann. § 53-3-71 Construction, operation and maintenance of facilities for exploration, production, or transportation of oil or gas in navigable waters.
Any person, firm or corporation duly authorized to engage in the exploration or production of oil, gas or other minerals under the provisions of Chapter 7, Title 29, Mississippi Code of 1972, and any person, firm or corporation duly authorized to engage in the transportation of oil, gas and other minerals under the provisions of Sections 29-1-101 through 29-1-105, Mississippi Code of 1972, shall have the right to construct, operate and maintain facilities incident to such operations in any of the navigable waters of the state upon obtaining from the state oil and gas board a permit for the construction, operation and maintenance of such facilities.
Miss. Code Ann. § 53-3-73 Fee for permit.
Any person, firm or corporation applying for a permit to construct a facility under Sections 53-3-71 through 53-3-75 shall pay to the state oil and gas supervisor a fee of five hundred dollars ($500.00).
Miss. Code Ann. § 53-3-75 Restrictions and prohibitions.
The right to construct, operate and maintain any facility as described in Section 53-3-71 in, on, under or across land which is submerged or wherever the tide may ebb and flow shall be subject to the following:
The paramount right of the United States to control commerce and navigation;
The right of the public to make free use of the waters; and
The restrictions and prohibitions contained in Section 81 of the Mississippi Constitution of 1890, as same may be amended.
Miss. Code Ann. § 53-3-101 Applications; hearings.
The State Oil and Gas Board upon the application of any interested person shall, after notice as herein provided, hold a hearing to consider the need for the operation as a unit of an entire field, or of an entire pool or pools, or of any portion or portions or combinations thereof, within a field, for the production of oil or gas or both, in order to increase the ultimate recovery thereof or to prevent waste. The board may reopen the hearing provided in this section at any time prior to the final order adjudicating that the requirements of section 53-3-107 have been satisfied.
Miss. Code Ann. § 53-3-103 Oil and Gas Board may order unit operation.
The State Oil and Gas Board may issue an order requiring such unit operation, if it finds that:
Unit operation of the field or of any pool or pools, or of any portion or portions or combinations thereof within the field, is reasonably necessary in order to effectively carry on secondary recovery, pressure maintenance, repressuring operations, cycling operations, water flooding operations, or any combination thereof, or any other form of joint effort calculated to substantially increase the ultimate recovery of oil or gas or both, from the unit so formed, or to prevent waste as defined in Section 53-1-3; and
One or more method of unitized operation as applied to such common source of supply or portion thereof is feasible and will prevent waste or will with reasonable probability result in the recovery of substantially more oil or gas, or both, from the unit so formed than would otherwise be recovered; and
The plan of unitization and the agreements effectuating same are fair and reasonable under all of the circumstances and protect the rights of all interested parties; and
The correlative rights of interested parties will be protected; and
The estimated additional cost incident to conducting such operation will not exceed the value of the estimated additional recovery of oil and gas and such cost of unit operation shall not be borne by the royalty owners.
The operators of such unit shall have drilled a sufficient number of wells to a sufficient depth and at such locations as may be necessary for the board to approve the boundaries of the unit and determine that the field, pool or pools have been reasonably developed according to a spacing pattern approved by the board. No field unitization shall be approved by the board until each drilling unit of the field has been drilled; however, the board is hereby authorized to waive the requirement that each and every drilling unit be drilled upon a finding of fact that it is not economically feasible for a specific drilling unit to be drilled.
Miss. Code Ann. § 53-3-105 Provisions and requirements of board’s order.
The order issued by the State Oil and Gas Board shall be fair and reasonable under all of the circumstances and shall protect the rights of interested parties and shall include:
A description of the geographical area and a description of the pool or pools, or of any portion or portions or combinations thereof affected which together constitute and are herein termed the “unit area.”
A statement of the nature of the operations contemplated.
A formula for the allocation among the separately owned tracts in the unit area of all the oil or gas, or both, produced and saved from the unit area, and not required in the conduct of such operation, which formula must expressly be found reasonably to permit persons otherwise entitled to share in or benefit by the production from such separately owned tracts to receive, in lieu thereof, their fair, equitable and reasonable share of the unit production or other benefits thereof. A separately owned tract’s fair, equitable and reasonable share of the unit production shall be that proportionate part of unit production that the contributing value of such tract for oil and gas purposes in the unit area and its contributing value to the unit bears to the total of all like values of all tracts in the unit, taking into account all pertinent engineering, geological and operating factors that are reasonably susceptible of determination.
A provision for adjustment among the owners of the unit area (not including royalty owners) of their respective investment in wells, tanks, pumps, machinery, materials, equipment and other things and services of value attributable to the unit operations. The amount to be charged unit operations for any such item shall be determined by the owners of the unit area (not including royalty owners), but if said owners of the unit area are unable to agree upon the amount of such charges, or to agree upon the correctness thereof, the board shall determine them after due notice and hearing thereon, upon the application of any interested party. The amount charged against the owner of a separately owned tract shall be considered expense of unit operation chargeable against such tract. The adjustments provided for herein may be treated separately and handled by agreements separate from the unitization agreement. The expense of dry holes drilled within the unit area prior to the effective date of an order of the board, as determined by Section 53-3-107, shall not be chargeable as investment under subsection (c) of Section 53-3-109, unless such dry hole is used in the unit operation, in which event its value to the unit shall be charged as investment.
A provision that the costs and expenses of unit operation, including investment past and prospective, shall be borne by the owner or owners (not entitled to share in production free of operating costs and who in the absence of unit operation would be responsible for the expenses of developing and operating) of each tract in the same proportion that such tracts share in unit production. Each owner’s interest in the unit area shall be responsible for his proportionate share thereof, and the unit operator shall have a lien thereon to secure payment of such share. When any owner fails to pay his part thereof when due and interest thereon at the legal rate, then all of such owner’s interest in the unit production and equipment may be foreclosed in the same manner and under the same procedures provided for the foreclosure of mortgages in chancery court.
A transfer or conversion of any owner’s interest or any portion thereof, however accomplished after the effective date of the order creating the unit, shall not relieve the transferred interest of said operator’s lien on said interest for the cost and expense of unit operations, past or prospective.
The designation of, or a provision for the selection of a successor to the unit operator. The conduct of all unit operations by the unit operator, and the selection of a successor to the unit operator, shall be governed by the terms and provisions of the unitization agreements.
The time the unit operation shall become effective and the manner in which, and the circumstances under which, the unit operation shall terminate.
A requirement that all oil and/or gas contained in a unit area shall be produced and sold as rapidly as possible without decreasing the ultimate recovery of such oil and/or gas or causing damage to the reservoir.
Miss. Code Ann. § 53-3-107 When order becomes effective.
An order requiring unit operations pursuant to Section 53-3-103, Mississippi Code of 1972, shall not be effective unless and until the plan of unitization and the agreements incorporating the provisions of Section 53-3-105 have been signed or, in writing, ratified, adopted or approved by the owners or lessees of at least seventy-five percent (75%) interest on the basis of and in proportion to the surface acreage content of the unit area under the terms of the order and the agreement incorporating the provisions of Section 53-3-105 has been signed or, in writing, ratified, adopted or approved by at least seventy-five percent (75%) (exclusive of royalty interests owned by lessees or by subsidiaries or successors in title of any lessee) in interest of the royalty owners on the basis of and in proportion to the surface acreage content of the unit area and the board has made a finding to that effect, either in the order or in a supplemental order. In the event the required percentages have not signed, ratified or approved the respective agreements within twelve (12) months from and after the date of such order, it shall be automatically revoked.
Miss. Code Ann. § 53-3-109 Amendment of orders; extension of units and inclusion of additional pools.
The State Oil and Gas Board, after notice and hearing, by entry of new or amending orders, may from time to time enlarge the unit area by approving agreements adding to the unit operation a pool or pools or any portion or portions or combinations thereof not theretofore included, and extensions of existing pools. Any such agreement, in providing for allocation of production from the unit area, shall first allocate to each pool or portion thereof so added a portion of the total production of oil or gas, or both, from all pools affected within the unit area, as enlarged, such allocation to be based on the relative contribution which such added pool or portion or extensions thereof are expected to make, during the remaining course of unit operations, to the total production of oil or gas, or both, to the unit as enlarged. The production so allocated to each added pool or portion thereof shall be allocated to the separately owned tracts in the added unit area on the basis of the relative contribution of each such tract, as provided in paragraph (c) of Section 53-3-105. The remaining portion of unit production shall be allocated among the separately owned tracts within the previously established unit area in the manner provided by the unitization agreement. Orders promulgated under this paragraph shall become operative at 7:00 a.m. on the first day of the month next following the day on which the order becomes effective under the provisions of paragraph (b) of this section.
An order promulgated by the board under paragraph (a) of this section shall not become effective unless and until (1) all of the terms and provisions of the plan of unitization and the unitization agreement relating to the extension or enlargement of the unit area or to the addition of a pool or portions thereof or extensions of existing pools to unit operations have been fulfilled and satisfied and evidence thereof has been submitted to the board, and (2) the extension or addition effected by such order has been agreed to in writing by the owners or lessees of at least seventy-five percent (75%) in interest on the basis of and in proportion to the surface acreage content of the area or pools or portions thereof or extensions of existing pools to be added to the unit operation by such order and also by at least seventy-five percent (75%) (exclusive of royalty interests owned by lessees or by subsidiaries or successors in title of any lessee) in interest of the royalty owners on the basis of and in proportion to the surface acreage content in the area or pools or portions thereof or extensions of existing pools to be added to the unit operation by such order, and evidence thereof has been submitted to the board, and (3) the owners of the existing unit have agreed in the manner provided in Section 53-3-107 or in accordance with the terms of the unitization agreement, to the extension or addition. In the event all of the above requirements are not fulfilled within twelve months from and after the date of such order, it shall be automatically revoked.
After the operative date of an order promulgated under this section, costs and expenses of operation of the unit, as enlarged, shall be governed by paragraph (e) of Section 53-3-105. Adjustment among the owners of the unit area, as enlarged, (not including royalty owners) of their respective investments in wells, tanks, pumps, machinery, materials, equipment and other things and services of value attributable to the operation of the unit area, as enlarged, shall be governed by paragraph (d) of Section 53-3-105.
Miss. Code Ann. § 53-3-111 How production allocated.
The portion of unit production allocated to a separately owned tract within the unit area shall be deemed, for all purposes, to have been actually produced from such tract, and operations with respect to any tract within the unit area shall be deemed for all purposes to be the conduct of operations for the production of oil or gas, or both, from each separately owned tract in the unit area. However, when an oil, gas and mineral lease contains land partially within and partially without said unit area, the unit agreement and production from the unit shall have no force and effect on lands lying outside of such unit area and failure of the lessee or lessees thereof to drill and develop such lands lying outside said unit area within one (1) year or during the term of the lease, whichever is a longer period of time, from the date of determination of the unit area by the state oil and gas board shall render such lease or leases on lands lying outside said unit area void and of no force and effect, unless otherwise held by production other than from unit production.
Miss. Code Ann. § 53-3-113 Authority of unit operator; production by others prohibited.
From and after the effective date of an order of the board entered under the provisions of Sections 53-3-101 through 53-3-119, the operation of any well producing from the unit area defined in the order by persons other than the unit operator or persons acting under the unit operator’s authority, or except in the manner and to the extent provided in such plan of unitization, shall be unlawful and is hereby prohibited.
Miss. Code Ann. § 53-3-115 Time and manner of giving notice.
The notice provided for in Sections 53-3-101 through 53-3-119 shall be given in the time and manner as required by law and the rules and regulations of the oil and gas board for hearings by said board and shall be completed at least thirty days before the date set for the hearing.
The secretary of the board shall, in addition thereto, mail a notice not less than thirty days prior to the date set for the hearing to all persons owning the interests in the land within the unit area which said secretary by due diligence can ascertain. The failure of said secretary, however, to mail said notice to any such owner shall not affect the validity of any hearing held pursuant to the notice published in accordance with the preceding paragraph, or any rule, regulation, or order issued pursuant to such hearing.
Miss. Code Ann. § 53-3-117 Administration of Sections 53-3-101 through 53-3-119.
In administering Sections 53-3-101 through 53-3-119, the oil and gas board shall be governed and controlled by the declaration of policy set out in Section 53-1-1 et seq., and except as otherwise herein expressly provided, all proceedings held under Sections 53-3-101 through 53-3-119, including the filing of petitions, the giving of notices, the conduct of hearings and the entry of orders and appeals therefrom, shall be governed and controlled by the procedure provided for by Sections 53-1-1 through 53-1-47, inclusive, and Sections 53-3-1 through 53-3-21, inclusive, and the rules and regulations promulgated by the oil and gas board pursuant to said sections. The definition of the terms used in Sections 53-3-101 through 53-3-119 shall be controlled by definitions contained in Section 53-1-3, and the rules and regulations promulgated by the oil and gas board pursuant to Sections 53-1-1 through 53-1-47, inclusive, and Sections 53-3-1 through 53-3-21, inclusive, unless a definition appearing in Section 53-1-3 is entirely inconsistent with the meaning and purpose of the term as used in Sections 53-3-101 through 53-3-119, in which event such term shall be given that meaning that is harmonious with and tends to effectuate the purposes of Sections 53-3-101 through 53-3-119.
Miss. Code Ann. § 53-3-119 Court review of order of oil and gas board by appeal to the chancery court.
Any interested person adversely affected by any provision of Sections 53-3-101 through 53-3-119 or by any rule, regulation or order made by the state oil and gas board thereunder, or by any act done or threatened thereunder, may obtain court review and seek relief by appeal, which appeal shall be to the chancery court of the county wherein the land involved, or any part thereof, is situated. The term “interested person” as used herein shall be interpreted broadly and liberally and shall include all mineral and royalty owners. Any interested party may appeal to the chancery court of the county wherein the land involved or any part thereof is situated, if appeal be demanded within thirty (30) days from the date that such rule, regulation or order of the board is filed for record in the office of the board.
Such appeal may be taken by filing notice of the appeal with the state oil and gas board, whereupon the board shall, under its certificate, transmit to the court appealed to all documents and papers on file in the matter, together with a transcript of the record, which documents and papers together with said transcript of the record shall be transmitted to the clerk of the chancery court of the county to which the appeal is taken.
Except as hereinabove provided, such appeal shall be made in accordance with the provisions of Sections 53-1-39 and 53-1-41.
Miss. Code Ann. § 53-3-151 Definitions.
As used in Sections 53-3-151 through 53-3-165: (a) “underground storage” shall mean storage in an underground reservoir, stratum or formation of the earth; (b) “natural gas” shall mean gas of sufficient purity to be capable of use for residential purposes; (c) “native gas” shall mean gas which previously has not been withdrawn from the earth, or which, having been withdrawn, is injected into a reservoir for purposes other than underground storage; (d) “compressed air” shall mean any nonhydrocarbon gas; and (e) “State Oil and Gas Board” or “board” shall mean the State Oil and Gas Board of Mississippi.
Miss. Code Ann. § 53-3-153 Legislative declaration.
The underground storage of natural gas or compressed air which promotes the conservation thereof, which permits the building of large quantities of natural gas or compressed air in reserve for orderly withdrawal in periods of peak demand, making natural gas or compressed air more readily available to the consumer, or which provides more uniform withdrawal from various gas or oil fields, is in the public interest and welfare of this state and is for a public purpose.
Miss. Code Ann. § 53-3-155 Underground storage authorized pursuant to board’s order.
The use of an underground reservoir, stratum or formation as a reservoir for the storage of natural gas or compressed air as an appliance or appurtenance in connection with the conveying, transmission or distribution of natural gas or compressed air is hereby authorized, provided that the State Oil and Gas Board shall first enter an order, after notice and hearing pursuant to the provisions of Sections 53-1-19 through 53-1-31, inclusive, approving any such proposed underground storage of natural gas or compressed air upon finding as follows:
That the underground stratum or formation sought to be used as a reservoir for the injection, storage and withdrawal of natural gas or compressed air is suitable and feasible for such use and in the public interest, and is not an oil reservoir capable of commercial production;
That a majority interest of all rights of the surface interest and a majority interest of all interests in the underground stratum or formation have consented to such use in writing;
That the use of the underground stratum as a reservoir for the storage of natural gas or compressed air will not contaminate other formations containing fresh water, oil, gas or other commercial mineral deposits; and
That the proposed storage will not endanger lives or property.
Miss. Code Ann. § 53-3-157 Protection against pollution or against escape of natural gas or compressed air; property rights.
The State Oil and Gas Board shall issue such orders, rules and regulations as may be necessary for the purpose of protecting any such underground storage reservoir, stratum or formation against pollution or against the escape of natural gas or compressed air therefrom, including such necessary rules and regulations as may pertain to the drilling into or through such underground storage reservoir, stratum or formation.
All natural gas or compressed air which has previously been reduced to possession and which is subsequently injected into an underground storage reservoir, stratum or formation shall at all times be deemed the property of the injector, his successors and assigns, and in no event shall such natural gas or compressed air be subject to the right of the owner of the surface of the lands or of any mineral interest therein under which such underground storage reservoir, stratum or formation shall lie or be adjacent to or of any person other than the injector, his successors and assigns, to produce, take, reduce to possession, waste or otherwise interfere with or exercise any control thereover; provided, that the State Oil and Gas Board shall have entered an order, either before or after the enactment hereof, approving such underground storage reservoir, stratum or formation.
Miss. Code Ann. § 53-3-159 Right of eminent domain.
Any company, person or association of persons, municipality, association of municipalities, public utility district, or natural gas district, incorporated or organized for the purpose of building or constructing pipelines and appliances for the conveying and distribution of oil or gas and authorized by law in Section 11-27-47, Mississippi Code of 1972, to exercise eminent domain rights with respect thereto, is hereby empowered, after obtaining approval of the State Oil and Gas Board as herein required, to exercise the right of eminent domain, in the manner provided by law, to acquire all surface and subsurface rights necessary and useful for the purpose of storing natural gas or compressed air in any underground reservoir, stratum or formation, pursuant to the provisions hereof. Such power shall be exercised under the procedure provided by Chapter 27, Title 11, Mississippi Code of 1972, provided that:
No gas-bearing sand, stratum or formation shall be subject to appropriation by eminent domain unless the condemnor shall show, to the satisfaction of the board, that such sand, stratum or formation has a greater value or utility as a natural gas or compressed air storage reservoir for the purpose of ensuring an adequate supply of natural gas or compressed air for consumers, or for the conservation of natural gas or compressed air, than for the production of the native gas which remains therein;
Adequate and fair compensation for any native gas which is appropriated by eminent domain and which is otherwise capable of being commercially produced shall be included in that hereinabove provided for; and
No rights or interests in underground reservoirs, strata or formations acquired for the injection, storage and withdrawal of natural gas or compressed air by a party who has eminent domain rights under Section 11-27-47, Mississippi Code of 1972, and who has obtained an order from the Oil and Gas Board under the provisions of Section 53-3-155, shall be subject to appropriation hereunder.
Miss. Code Ann. § 53-3-161 Right of landowner to drill and make other use of land.
The right of condemnation granted by Section 53-3-159, shall be without prejudice to the right of the owner of said land or of other rights or interests therein to drill or bore through the underground reservoir, stratum or formation so appropriated in such manner as shall comply with orders, rules and regulations of the State Oil and Gas Board issued for the purpose of protecting underground storage reservoirs, strata or formations against pollution and against the escape of natural gas or compressed air therefrom, and shall be without prejudice to the rights of the owners of said lands or other rights or interests therein as to all other uses thereof.
Miss. Code Ann. § 53-3-163 Action for provable damages.
If any property owner whose interest has been acquired under the provisions of Sections 53-3-151 through 53-3-165, either through negotiation or through eminent domain proceedings, shall file a legal action for provable damages as a result of alleged negligent use of the property acquired by the condemnor, the proof of said damages shall constitute a prima facie case of negligence on the part of the condemnor.
Miss. Code Ann. § 53-3-165 Storage in offshore waters prohibited.
No provisions of Sections 53-3-151 through 53-3-165 shall operate so as to authorize the establishment of underground storage of natural gas or compressed air in the offshore waters of the State of Mississippi.
Miss. Code Ann. § 53-3-201 Required documentation for transportation of crude oil.
The State Oil and Gas Board shall adopt regulations to require any corporation, association, partnership or person in possession of crude petroleum oil or any substance containing any quantity of crude oil or any sediment, water or brine produced in association with the exploration and/or production of oil or gas, or both, being transported or for transportation from or to any storage, disposal, processing, or refining facility to possess specific documentation which substantiates the right to be in possession of such substance. The regulations shall require such documentation to include:
The identity of the operator and the location of the lease from which originated the crude petroleum oil or any substance including any sediment, water or brine produced in association with the exploration or production of oil or gas, or both, if it is purportedly being or to be transported from a lease;
The identity of the operator and the location of the storage facility from which or to which the crude petroleum oil or any substance, including any sediment, water or brine produced in association with the exploration or production of oil or gas, or both, is being or is to be transported;
The identity of the operator and the location of the disposal, processing or refining facility to which the crude petroleum oil or any substance, including any sediment, water or brine produced in association with the exploration and production of oil or gas, or both, is being or is to be transported;
The estimated percentage of crude petroleum oil in the substance, sediment, water or brine produced in association with the exploration or production of oil or gas, or both, which is being or is to be transported;
The volume of crude petroleum oil being or to be transported; and
Any additional information the supervisor of the state oil and gas board finds necessary or appropriate.
Miss. Code Ann. § 53-3-203 Enforcement; penalty.
Any law enforcement officer or the supervisor of the State Oil and Gas Board or his designated employees may at any time inspect and for probable cause impound oil or any substance as defined in Section 53-3-201 and the vehicle transporting it, pending being furnished with the documentation as required by Section 53-3-201 or other proof of ownership or right to possession, whenever (a) he has reasonable cause to examine the documentation, (b) the transporter lacks such documentation or the documentation is substantially at variance with the fact, or (c) the lawful severance and maintenance tax has not been paid on any part of such product. Furthermore, any transporter who does not possess the documentation as required by Section 53-3-201 or other proof of ownership or right to possession shall be fined an amount equal to the market value of the substance being transported but not less than two thousand dollars ($2,000.00), the market value of such substance to be determined by the State Oil and Gas Board. Any such fine paid or collected shall be paid to the state treasurer for credit to the special oil and gas board fund.