§ 23-0901. Compulsory integration and unitization in oil and natural gas\n pools and fields.\n 1. Compulsory integration and unitization in oil pools and fields and\nin natural gas pools and fields shall be subject to the provisions of\nthis section with subdivision 3 to be specifically applicable to\nintegration within individual spacing units, and subdivisions 4 through\n12 to be specifically applicable to unit operation of an entire pool or\npart thereof.\n 2. The department shall not make any order requiring the integration\nof interests in any spacing unit or requiring the development or\noperation of any field, pool or part thereof as a unit unless it finds,\nafter detailed study and analysis, notice and hearing, that the\nintegration of interests in spacing units, under conditions then\nexisting in this state, or in the field or pool to be affected, is\nnecessary to carry out the policy provisions of section 23-0301 of this\narticle.\n 3. In the absence of voluntary integration as permitted by section\n23-0701 of this article and after finding as required by subdivision 2\nof this section, the department shall make an order integrating all\ntracts or interests in the spacing unit for development and operation.\nEach such integration order shall be upon terms and conditions that are\njust and reasonable and subject to the following:\n a. As used in this section or otherwise in this article, to the extent\napplicable to oil and gas wells:\n (1) "Integrated non-participating owner" or "non-participating owner"\nmeans an owner who elects to reimburse the well operator, out of\nproduction proceeds, for such owner's proportionate share of the actual\nwell costs of the initial well in a spacing unit and be subject to a\nrisk penalty, and complies with all of the requirements for integration,\nincluding the terms of integration, as specified in an order of\nintegration issued pursuant to the compulsory integration provisions of\nthis section. The non-participating owner shall receive the full share\nof production attributable to such owner's proportionate interest in the\nspacing unit following the recoupment by the well operator of the\nowner's proportionate share of the actual well costs plus a risk penalty\nof two hundred percent of the share of the actual well costs allocable\nto such owner. In the case of a leased tract, a royalty shall be\ndeducted from the non-participating owner's share of production, which\nshall not be subject to charges or costs, but shall be separately\ncalculated and paid to the non-participating owner on behalf of the\nroyalty owner as follows:\n (i) During the recovery of the actual well costs, 1/16 or 6.25%,\n (ii) During the recovery of the first 100% of the risk penalty, 3/32\nor 9.38%,\n (iii) During the recovery of the second 100% of the risk penalty, the\nlowest royalty fraction set forth in an existing lease in the unit, but\nno less than 1/8 or 12.5%.\n Nothing in this subparagraph relieves any lessee of its obligation to\npay, from the commencement of production, any remaining royalty and\noverriding royalty owed under the terms of its lease.\n (2) "Integrated participating owner" or "participating owner" means an\nowner who elects to participate in the initial well in a spacing unit,\npays all costs associated with participation and complies with all of\nthe requirements for participation, including the terms of integration,\nspecified in an order of integration issued pursuant to the compulsory\nintegration provisions of this section.\n (3) "Integrated royalty owner" means an owner who has either elected\nto be an integrated royalty owner or who does not elect to become either\na participating owner or a non-participating owner. The integrated\nroyalty owner shall receive a royalty equal to the lowest royalty in an\nexisting lease in the spacing unit, but no less than one-eighth. The\nintegrated royalty owner shall have no obligation to the well operator\nor any
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