What is a Proration Unit? A Comprehensive Legal Overview
Definition & Meaning
A proration unit is a designated area within a natural gas reservoir that can be efficiently drained by a single well. This term is defined by regulatory agencies at both state and federal levels. The proration unit can be identified in several ways:
- As a specific portion of a reservoir recognized by regulatory authorities.
- As a drilling or production unit that describes the area effectively drained by one well.
- As any voluntary agreement or local practice that outlines the area that can be drained by a single well when no specific designation exists.
Legal Use & context
The term "proration unit" is primarily used in the context of natural gas production and regulation. It plays a critical role in ensuring that resources are extracted efficiently while preventing overproduction. Legal professionals may encounter this term in cases related to energy law, resource management, and environmental regulations. Users can manage related forms and agreements through resources like US Legal Forms, which provide templates for various legal needs.
Real-world examples
Here are a couple of examples of abatement:
Example 1: A natural gas company operates in a state where the regulatory agency has defined a proration unit for a specific reservoir. The company must adhere to the guidelines set forth by the agency to ensure efficient extraction.
Example 2: In a situation where no specific proration unit is defined, a local drilling company may create a voluntary agreement among stakeholders to outline how they will share production rights from a reservoir. (hypothetical example)