IDNR Revisions to Spacing and Location of Wells

By Craig R. Hedin

The Illinois Department of Natural Resources/Office of Oil & Gas Resource Management has made significant revisions as to how oil wells are spaced and located. The primary purpose is to increase the locations where wells can be drilled in hopes of spurring further development. The goal is to give operators more options as to how to develop a particular reservoir.

For many years, spacing regulations were static. They were based on standard governmental survey tracts and uniform density setback measurements. These methods were arbitrary and not based on any determination of drainage patterns. Spacing regulations were developed in the 1940s to prevent waste that resulted from over drilling and over production. The ability to drill unabated prevented the proper development of reservoirs to maximize the recovery of oil. The prevention of waste is the backbone of the Department’s regulations.

Historically, spacing and well location (density) regulations for oil wells were as follows:

• 10 acres of surface area lying within the quarter-quarter section of lands for wells drilled or deepened for the production of oil from a reservoir other than limestone/dolomite, the top of which lies less than 4,000 feet beneath the surface. The location of the well shall be not less than 330 feet from the nearest external boundary lines of the drilling unit nor less than 660 feet from the nearest location of a producing well, a well being drilled, or a well for which a permit has previously been issued but not yet drilled, for a well to the same individual reservoir.
• 20 acres of surface area lying within the east-west or north-south one-half of a quarter-quarter section of land for wells drilled or deepened for the production of oil from a limestone/dolomite reservoir, the top of which lies less than 4,000 feet beneath the surface. The location of the well shall be not less than 330 feet from the nearest external boundary lines of the drilling unit, nor less than 660 feet from the nearest location of a producing well, a well being drilled, or a well for which a permit has previously been issued but not yet drilled, for a well to the same individual reservoir.
• 40 acres of surface area lying within a quarter-quarter section of land for wells drilled or deepened for the production of oil from a reservoir, the top of which lies between 4,000 and 6,000 feet beneath the surface. The location of the well shall be not less than 330 feet from the nearest external boundary lines of the drilling unit, nor less than 660 feet from the nearest location of a producing well, a well being drilled, or a well for which a permit has previously been issued but not yet drilled, for a well to the same individual reservoir.

The historical regulations created a distinct pattern for the primary development of a reservoir. Spacing created drilling units with required setbacks from the boundaries of the unit and from other wells producing from the same reservoir. Exceptions to the spacing configuration and well locations could be granted but generally, a petition and hearing were required. The exceptions included horizontal wells, modified drilling units, special drilling units, and pool wide drilling units. This slowed development because of the time and expense necessary to obtain the exceptions.

A further variance to the spacing and location requirements was the initiation of secondary recovery operations. Once injection of water commenced for secondary operations, the location of wells in the reservoir within a lease boundary was waived. But, a setback of 330 feet from the lease boundary was still required.

Over the past two years, the regulations as to spacing and well locations have been revised. The revised regulations now provide as follows:

• 10 acres of surface area lying within the quarter-quarter-quarter section of land for wells drilled or deepened for the production of oil from a reservoir other than limestone/dolomite, the top of which lies less than 5000 feet beneath the surface or the top of the Trenton Formation, whichever depth is greater. The location of the well shall not be less than 330 feet from the nearest lease boundary line except any lease boundary line located within a pooled unit. The location shall be no less than 330 feet from the nearest location of a producing well, a well being drilled, or a well for which a permit has previously been issued but not yet drilled, for a well to the same individual reservoir. The location shall be no less than 10 feet from the nearest drilling unit boundary line.
• 20 acres of surface area lying within the east-west or north-south one-half of a quarter-quarter section of land for wells drilled or deepened for the production of oil from a limestone/dolomite reservoir, the top of which lies less than 5000 feet beneath the surface or the top of the Trenton Formation, whichever depth is greater. The location of the well shall not be not less than 330 feet from the nearest lease boundary line except any lease boundary line located within a pooled unit. The location shall be no less than 330 feet from the nearest location of a producing well, a well being drilled, or a well for which a permit has previously been issued but not yet drilled, for a well to the same individual reservoir. The location shall be no less than 10 feet from the nearest drilling unit boundary line.
• 40 acres of surface area lying within a quarter-quarter section of land for wells drilled or deepened for the production of oil from a reservoir, the top of which lies at or below 5,000 feet beneath the surface or the top of the Trenton Formation, whichever depth is greater. The location of the well shall be not less than 330 feet from the nearest lease boundary line except any lease boundary line located within a pooled unit. The location shall be no less than 330 feet from the nearest location of a producing well, a well being drilled, or a well for which a permit has previously been issued but not yet drilled, for a well to the same individual reservoir. The location shall be no less than 10 feet from the nearest drilling unit boundary line.

The revisions greatly enhance the ability of an operator to develop in the following respects:

• 20 acre spacing is now allowed for wells down to 5,000 feet or the top of the Trenton Formation, whichever is greater, as opposed to a limitation of 4,000 feet (with no reference to the Trenton Formation). This allows for more drilling units because of the reduction from 40 acres to 20 acres.
• Wells can be located as close as 10 feet to a drilling unit boundary line as opposed to the previous requirement of 330 feet. But, note that the well is still required to be at least 330 feet from the boundary line of the lease. This revision greatly increases where wells may be located and enhances the possibility of in-fill development of a reservoir.
• The density of well locations has been increased. A well may now be not less than 330 feet from a well producing from the same reservoir. Previously, the well was required to be at least 660 feet from a well producing from the same reservoir. This increases the number of wells that can be developed.

All of the foregoing have increased the ability of an operator to develop a reservoir. The trend continues as the Oil and Gas Advisory Board has recommended to the Department that the spacing for all wells be a uniform 10 acres within a quarter-quarter-quarter section. The Department has indicated agreement and it is contemplated that the regulatory revision process will begin.