Title 27 — Minerals, Oil and Gas

In this article, unless the context otherwise requires: 1. "Certificate of clearance" means a permit approved and issued or registered by the commission for transportation or delivery of oil, gas or oil and gas products. 2. "Certificate of compliance" means a certificate issued b…

A. It is the public policy of the state to: 1. Conserve the natural resources of oil and gas and products thereof. 2. Prevent waste of oil and gas resources. 3. Provide for protection and adjustment of correlative rights of owners of land wherein the natural resources lie and of …

A. Waste of oil or gas is unlawful and is prohibited. B. The commissioner shall make inquiries he deems proper to determine whether waste exists or is imminent. In the exercise of such power the commissioner may: 1. Collect data. 2. Make investigations and inspections. 3. Examine…

A. For the prevention of waste, to protect and enforce the correlative rights of owners in a pool, and to avoid augmentation and accumulation of risks arising from drilling an excessive number of wells, or reduced recovery which might result from too small a number of wells, the …

A. When two or more separately owned tracts of land are embraced within an established drilling unit, persons owning the drilling rights therein and the right to share in the production therefrom may agree to pool their interests and develop their lands as a drilling unit. If the…

A. The commissioner shall, upon notice and hearing, regulate drilling and location of wells in any pool and the production therefrom to prevent reasonably avoidable net drainage from each developed unit so that each owner in a pool shall have the right and opportunity to recover …

A. Every person as defined in this article which may now, or hereafter, purchase crude oil or petroleum in this state, whether they be common carriers or affiliated with common carriers or not, shall be a common purchaser of such crude oil or petroleum, and shall purchase crude o…

A. Every person as defined in this article now or hereafter engaged in purchasing from one or more producers, gas produced from gas wells shall be a common purchaser thereof within each pool from which it purchases, and as such it shall purchase gas lawfully produced from gas wel…

A. An owner or operator of an oil or gas well shall, before connecting with an oil or gas pipe line, secure from the commissioner a certificate showing compliance with the conservation laws of the state and the conservation rules, regulations and orders of the commissioner. No op…

A. The sale, purchase or acquisition, or the transportation, refining, processing or handling of illegal oil or gas or illegal product is unlawful, but until the commissioner provides for certificates of clearance or some other method affording an opportunity to determine whether…

A. Illegal oil and gas and illegal products shall be seized and sold as contraband. The sale shall not take place unless the court finds in a proceeding held as provided by this section, that the commodity involved is contraband. B. If the commissioner believes that illegal oil o…

A. Sale and notice of sale of illegal oil or gas or illegal product seized under the authority of this article shall be in accordance with the laws of the state relating to the sale of personal property under execution. For his services at the sale the sheriff shall receive a fee…

A person desiring to drill a well in search of oil or gas shall notify the commissioner on a form prescribed by the commissioner, and shall pay a fee of twenty-five dollars for each well. Upon receipt of notification and the fee, the commissioner shall promptly issue the person a…

A. The acceptance of a permit to drill under section 27-513 shall be deemed to constitute and be the appointment of the commission by the permittee as his true and lawful attorney upon whom may be served all legal process in an action against such permittee growing out of or in a…

A. The oil and gas conservation commission is established in the department of environmental quality. The department of environmental quality shall provide staff support to the commission to administer this chapter. B. The commission shall consist of the state land commissioner e…

A. The commission shall administer and enforce this article and other laws relating to conservation of oil and gas. The commission and administrative staff, at any time, may enter property and inspect wells drilled for oil or gas and well records, and shall control property, mach…

A. The commission shall make rules and amend them as deemed necessary for the proper administration and enforcement of this article, including the following rules and orders: 1. Requiring the drilling, casing and plugging of wells in a manner to prevent: (a) Escape of oil and gas…

A. Any interested person shall, by written request, have the right to have the commissioner call a hearing for the purpose of taking action in respect to any matter within the jurisdiction of the commissioner. Hearings shall be held at the time and place the commissioner directs,…

A. If a person fails or refuses to comply with a subpoena issued by the commissioner, or if a witness refuses to testify or answer to a matter regarding which he may be lawfully interrogated, the judge of the superior court of the county where such person resides, if a resident o…

A. Except as provided in subsection B of this section and section 41-1092.08, subsection H, any party aggrieved by any final action of the commission is entitled to judicial review pursuant to title 12, chapter 7, article 6. B. An action involving a test of the validity of this a…

The attorney general shall be attorney for the commissioner. The commissioner may in cases of emergency or in special cases, upon request of the attorney general, retain additional counsel to assist the attorney general, and for such purpose may expend funds available under this …

A. All rules and orders made by the commission shall be in writing and entered in full in a book kept by the commission. The book shall be a public record open to inspection at all reasonable times during office hours. A copy of any rule, order or other document on file in the of…

A. Monies collected by the commissioner under this article shall be deposited, pursuant to sections 35-146 and 35-147, in the fund. B. Expenses incident to the administration of this article shall be paid from the fund, subject to legislative appropriation.

A. When it appears that a person is violating or threatening to violate any provision of this article, or a rule, regulation or order made pursuant to this article, and such person fails or refuses, on notice by the commissioner, to desist from such violation or threat of violati…

A. No temporary restraining order or injunction shall be granted against the commissioner or his agent, employee or representative to restrain enforcement of a statute relating to the conservation of oil and gas or any provision of this article, or rule, regulation or order made …

In an action brought under this article, or an action which involves any rule, regulation or order made under this article, any party to the action shall have the right to appeal from the superior court to the supreme court as provided by law or rules of court relating to appeals…

A. Any person who violates any provision of this article, or any rule, regulation or order of the commission, is subject to a civil penalty of not more than one thousand dollars for each violation and for each day the violation continues. B. Any person who, with the intent to eva…

A. To prevent or to assist in preventing waste, to insure a greater recovery of oil and gas, and to protect the correlative rights of persons owning interests in the tracts of lands affected, such persons may validly integrate their interests to provide for the unitized managemen…

The order of the commission shall define the area of the pool or portion thereof to be included within the unit area and prescribe with reasonable detail the plan of unitization applicable thereto. Each unit and unit area shall be limited to all or a portion of a single pool. Onl…

A. No order of the commission creating a unit and prescribing the plan of unitization applicable thereto shall become effective unless and until the plan of unitization has been signed, or in writing ratified or approved by lessees of record of not less than sixty-three per cent …

From and after the effective date of an order of the commission creating a unit and prescribing the plan of unitization applicable thereto, the operation of any well producing from the pool or portion thereof within the unit area defined in the order by persons other than the uni…

A. The obligation or liability of the lessees or other owners of the oil and gas rights in the several separately owned tracts for the payment of unit expense shall at all times be several and not joint or collective and in no event shall a lessee or other owner of the oil and ga…

A. Property rights, leases, contracts and all other rights and obligations shall be regarded as amended and modified to the extent necessary to conform to the provisions and requirements of this article, and to any valid and applicable plan of unitization or order of the commissi…

The unit area of a unit may be enlarged to include adjoining portions of the same pool, including the unit area of another unit, and a new unit created for the unitized management, operation and further development of such enlarged unit area, or the plan of unitization may be oth…

Any unit agreement approved by the commission shall contain language suggested by the internal revenue service under I.T. 3930 and I.T. 3948 so that owners in the unitized area will not be held taxable as a corporation.

An agreement for the unit or cooperative development and operation of a field, pool, or part thereof, may be submitted to the commission for approval as being in the public interest or reasonably necessary to prevent waste. Such approval shall constitute a complete defense to any…

In this article, unless the context otherwise requires: 1. "Arizona refinery business" means a firm which markets in this state the product refined from royalty oil purchased under this article and which either owns and controls an oil refinery located within this state or is an …

The department may prescribe rules and regulations necessary and appropriate to carry out the purposes of this article.

The department may lease state lands for oil and gas and issue oil and gas leases as provided in this article.

A. The department shall from time to time determine and designate the known geological structures of producing oil and gas fields. The determinations and designations shall be published twice in a newspaper of general circulation in the state, the last publication to be not less …

A. When state lands are not located within any known geological structure of a producing oil and gas field, as determined pursuant to section 27-554, the person making the first application for the lease shall be issued a lease covering the lands without competitive bidding. B. T…

A. When the owner of an oil and gas lease issued pursuant to this chapter has discovered oil or gas on the leased premises or on lands joined therewith in a cooperative or pooled unit, while the lease is in full force and effect, but is unable to produce oil or gas in paying quan…

When state lands are located within a known geological structure of a producing oil or gas field, as determined pursuant to section 27-554, the lands shall be leased only by sealed bids, as follows: 1. Upon receipt of an application to lease any of such lands or whenever, in the …

A. Each lease issued under the provisions of this article shall provide that the lessee, insofar as its interest in the lease is affected, may join in cooperative or unit plans for the exploration, development and operation of oil and gas pools with the United States, its agencie…

The development of oil and gas leases issued pursuant to this article shall be in accordance with the laws of the state relating to the conservation of oil and gas.

A. A lessee shall have the right to develop water for use in its operations subject to the applicable laws of the state pertaining to drilling water wells and using water produced therefrom. B. If any well drilled for oil or gas on a lease issued pursuant to this article fails to…

The lessee shall have the right to use as much of the surface of the lands as reasonably necessary for its operations under the lease. The lessee shall be liable for damage caused by it to the state's interest in the surface or to the interest of the surface lessee, if any, and m…

A. In event of the assignment of a lease as to a segregated portion of the land covered thereby, the rentals payable thereunder shall be apportionable between the several leasehold owners ratably according to the surface area of each. Default in rental payment by one shall not af…

A lessee may surrender any part or all of the lands covered by the lease at any time upon payment to the department of all amounts then due as to the lands surrendered, but no refund of any part of the cash consideration or rental theretofore paid shall be made to the lessee upon…

Royalties payable to this state under section 27-555, subsection B are payable in kind or in cash at the option and demand of the department. The lessee shall pay royalties in cash unless the department elects to receive royalty oil in kind pursuant to this article. The commissio…