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An Act
ENROLLED HOUSE
BILL NO. 4338 By: Moore, Newton, and Bashore
of the House
and
Green of the Senate
An Act relating to Oklahoma Brine Development Act;
making provisions applicable after certain date;
amending 17 O.S. 2021, Section 501, which relates to
purpose; modifying legislative intent; amending 17
O.S. 2021, Section 502, which relates to definitions;
updating definitions; defining terms; amending 17
O.S. 2021, Section 503, which relates to Corporation
Commission jurisdiction; modifying certain exception;
providing limitation of liability; construing
provisions; amending 17 O.S. 2021, Section 504, which
relates to unitization of brine rights; requiring the
filing of certain application; updating statutory
references; modifying description of certain unit;
amending 17 O.S. 2021, Section 506, which relates to
findings of the Commission; modifying description of
evidential findings; modifying description of certain
unit; requiring orders remain applicable and serve as
guidelines; amending 17 O.S. 2021, Section 507, which
relates to delineation of unit area; modifying
certain description; removing single source of supply
requirement; authorizing produced water unit to be
certain size; limiting the source of supply;
authorizing Corporation Commission to make certain
determination; providing for the sharing and
allocation of extracted elements; requiring operator
maintain certain records; authorizing the commingling
of produced water; providing for determination of
gross production of extracted elements; amending 17
O.S. 2021, Section 508, which relates to plan of
unitization; modifying description of certain unit;
modifying plan requirements; modifying description of
certain owners; stating certain provisions to be
inapplicable to formation of a produced water unit;
ENR. H. B. NO. 4338 Page 2
authorizing possession and processing of produced
water if certain conditions are met; requiring filing
of application within specific time frame;
authorizing proposed operator to seek emergency
relief; requiring granting of relief upon certain
showing; granting proposed applicant right to collect
certain proceeds; requiring set royalty be held in
suspense until final order establishes unit;
detailing requirements for royalty rate; amending 17
O.S. 2021, Section 510, which relates to increase or
decrease of unit area size; modifying description of
certain unit; modifying required showing for increase
in existing unit size; amending 17 O.S. 2021, Section
516, which relates to pre-existing brine, solution
gas or brine and solution gas units; updating
statutory references; amending 17 O.S. 2021, Section
517, which relates to payment of proceeds; modifying
language to include produced water; modifying
information to be included with certain payments;
modifying time frame for which certain proceeds shall
be paid; modifying certain interest rate for which
operator is liable; authorizing certain forms of
payment; amending 17 O.S. 2021, Section 519, which
relates to notice to surface owner of intent to
drill; stating certain provisions to be inapplicable
to formation of a produced water unit; providing for
codification; and declaring an emergency.
SUBJECT: Oklahoma Brine Development Act
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 526 of Title 17, unless there is
created a duplication in numbering, reads as follows:
The amendatory provisions of this act shall apply to all brine
unitization applications filed with the Corporation Commission on or
after the effective date of this act, but not otherwise.
SECTION 2. AMENDATORY 17 O.S. 2021, Section 501, is
amended to read as follows:
ENR. H. B. NO. 4338 Page 3
Section 501. The Legislature finds that it is desirable and
necessary to authorize and provide for unitized management,
operation, and further development of brine and associated solution
gas, to the end that a greater ultimate recovery of brine and
solution gas may be had, waste prevented, and the correlative rights
of owners therein be protected. In addition, the Legislature also
finds that it is a desirable public policy and necessity to reduce
disposal of brine water, also referred to as produced water, from
oil and gas operations, defined as oil and gas produced water and
waste by Section 86.7 of Title 52 of the Oklahoma Statutes, and
encourages reusing, recycling, and reclaiming such water and
extraction of its constituent elements included therein. It is
further found to be in the public interest to foster, encourage and
promote the development and production in the State of Oklahoma of
brine, produced water, and solution gas and to authorize and provide
for the operation and development of unitized brine, produced water,
and solution gas properties, and to authorize the Corporation
Commission to regulate brine, produced water utilized for the
purpose of extracting its constituent elements included therein, and
solution gas production. Produced water subject to the jurisdiction
of the Oil and Gas Produced Water and Waste Recycling and Reuse Act,
Section 86.6 et seq. of Title 52 of the Oklahoma Statutes, shall not
be governed by the Oklahoma Brine Development Act unless the
produced water is intended to be or is processed for the commercial
extraction and sale of constituent elements, or any one of them as
set forth in Section 86.8 of Title 52 of the Oklahoma Statutes.
SECTION 3. AMENDATORY 17 O.S. 2021, Section 502, is
amended to read as follows:
Section 502. As used in this act:
1. “Commission” shall mean means the Corporation Commission of
Oklahoma;
2. “Person” shall include means any individual, partnership,
corporation or association of whatever character;
3. “Common source of supply Brine common source of supply”
shall include that means the area which that is underlain, or which,
from geological or other scientific data, or from drilling
operations, or other evidence, appears to be underlain by a common
accumulation of brine; provided, that, if. If any such area is
underlain or appears from geologic or other scientific data, or from
drilling operations, or from other evidence to be underlain by more
ENR. H. B. NO. 4338 Page 4
than one common accumulation of brine separated from each other by a
strata of earth and not connected with each other, then such the
area, as to each said common accumulation of brine, shall be deemed
a separate brine common source of supply. In either circumstance of
a brine production unit or produced water unit, brine may be
produced from multiple common sources of supply from one or more oil
and gas wells or one or more brine wells, which shall all be
considered the common source of supply for purposes of this act.
Brine common source of supply specifically does not include or mean
“common source of supply” as that term is defined by Section 86.1 of
Title 52 of the Oklahoma Statutes;
4. “Brine” shall mean means subterranean saltwater and all of
its constituent parts and chemical substances therein contained,
including, but not limited to bromine, magnesium, potassium,
lithium, boron, chlorine, iodine, calcium, strontium, sodium,
sulphur, barium or other chemical substances produced with or
separated from such the saltwater, and prior to its extraction from
the ground, is the property of the owner of the surface estate, as
defined in paragraph 9 of Section 802 of Title 52 of the Oklahoma
Statutes. Brine produced as an incident to the production of oil or
gas, unless such brine is saved or sold for the purposes of removing
chemical substances therefrom, shall not be considered brine for the
purposes of this act. Gas, whether found in solution or otherwise,
shall not be included within the meaning of the term “brine”;
5. “Brine owner” shall mean means any person entitled to share
in the proceeds from the sale of brine production or produced water,
or the constituent elements or reclaimed water which are recovered
from the brine production or produced water, or the effluent.
Pursuant to subsection C of Section 86.7 of Title 52 of the Oklahoma
Statutes, nothing contained in the Oil and Gas Produced Water and
Waste Recycling and Reuse Act shall be construed to prevent the
owner of the surface estate from being considered the brine owner;
6. “Brine well” means a well specifically drilled or operated
for the primary purpose of extracting brine and shall not include a
well drilled or operated for the primary purpose of producing oil or
gas;
7. “Solution gas” shall mean means all gas produced from brine
wells from the brine common source of supply within the brine
production unit area;
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7. 8. “Solution gas owner” shall mean means any person entitled
to share in the proceeds from the sale of solution gas;
8. 9. “Owner” or “owners” means, unless a more specific term is
used, shall mean any person or entity who qualifies as either a
brine owner or a solution gas owner;
9. 10. “Operator” shall mean means a person who:
a. has the right to drill into and produce from any brine
common source of supply and to appropriate that
production, either for himself, the operator or for
himself the operator and others,
b. has the right to extract one or more of the
constituent elements of brine or produced water
produced as an incident to the production of oil and
gas, and
c. is authorized by the Commission to drill or extract
such constituent elements;
10. 11. “Effluent” shall mean the liquid remaining after
extraction of the chemical substances from brine means the liquid
remaining after extraction of the chemical substances from brine or
produced water. Notwithstanding any other provision in this act, no
contract or arrangement for further extraction of constituent
elements or reclamation of the effluent into reclaimed water or any
other commercial usage of the effluent shall result in additional
costs or delays to the rights of the oil and gas operator to extract
and dispose of subterranean water for, or incident to, the
exploration, exploitation, or extraction of hydrocarbons. To the
extent the oil and gas operator determines at its sole discretion
that any such contract or arrangement will result in additional
costs or delays to its rights to extract and dispose of subterranean
water, such effluent shall be considered oil and gas produced water
and waste, subject to the provisions of the Oil and Gas Produced
Water and Waste Recycling and Reuse Act;
11. 12. “Brine production unit” or “unit” shall mean means each
separate specific area of land so designated by order of the
Commission for production of brine and associated solution gas and
the from brine wells, including the related injection of effluent;
ENR. H. B. NO. 4338 Page 6
13. “Produced water unit” means the specific area of land so
designated by order of the Commission for the commercial extraction
and sale of constituent elements, or any one of the elements, or
reclaimed water, from produced water. The Commission, based upon
the facts and circumstances, shall determine the size and shape of
any produced water unit. Unless a larger size unit is determined to
be appropriate under the facts and circumstances, the produced water
unit shall be the same size and cover the same geographical area as
the spacing or drilling unit or horizontal spacing unit created
pursuant to Section 87.1 of Title 52 of the Oklahoma Statutes, the
horizontal well unitization created pursuant to Section 87.9 of
Title 52 of the Oklahoma Statutes, or the unitized management area
created pursuant to Sections 287.1 through 287.15 of Title 52 of the
Oklahoma Statutes, of the associated oil or gas well or wells from
which the produced water is derived. Each such produced water unit
shall be limited to the equivalent same brine common source or
sources of supply as the oil and gas common source or sources of
supply of the associated oil or gas well from which produced water
is being received for the extraction of constituent elements of such
brine, unless a different size unit is determined to be appropriate
under the facts and circumstances. A produced water unit may be
created for and limited to the extraction of a single constituent
element or multiple constituent elements. Multiple produced water
units may be created and exist for the produced water from the same
associated oil and gas well or wells, provided that the applicant
for each unit meets the definition of operator provided in this
section for the rights to each constituent element sought to be
unitized. Furthermore, an applicant may seek to create two or more
produced water units by and through the filing of a single
Commission cause. Where multiple proposed produced water units are
encompassed in a single cause, the applicant may prepare a single
form plan of unitization, which if approved by the Commission, shall
collectively apply to each individual produced water unit
encompassed by the single cause.
If the Commission has not previously established a drilling or
spacing unit for the oil or gas well or wells from which the
produced water is derived, the Commission shall in its discretion
determine the size and shape of the produced water unit, taking into
consideration all facts and circumstances including, but not limited
to, the economics of collection, transportation, and processing
produced water to recover any extracted constituent element;
12. 14. “Injection well” shall mean means a well authorized by
the Commission for the injection of effluent or other solutions; and
ENR. H. B. NO. 4338 Page 7
13. 15. “Manufacture” shall mean means the complete process of
drilling, completing, equipping and operating production and
injection wells and of extracting and packaging brine;
16. “Oil or gas well” means a well drilled or operated for the
primary purpose of extracting oil or gas as those terms are defined
in Title 52 of the Oklahoma Statutes;
17. “Associated oil or gas production” means the oil or gas
produced from an oil and gas well from which produced water is
extracted as an incident to the production of the oil or gas and the
produced water is utilized for the purpose of extracting its
constituent elements therefrom;
18. “Constituent elements” means salts, metals, elements, and
other mineralized substances that are naturally occurring and
dissolved, entrained, or suspended in subterranean water in situ
and, after extraction from the ground, suspended in the brine or
produced water, but specifically does not include skim oil or
hydraulic fracturing fluid;
19. “Extracted constituent element” means any constituent
element extracted from the produced water through reconditioning or
treating of the produced water by mechanical or chemical processes
that is saved and commercially utilized or sold;
20. “Produced water” means the subterranean salt water, and the
other liquid waste associated with, incidental to, or extracted
during oil and gas drilling, completion, or production process.
Produced water subject to the jurisdiction of the Oil and Gas
Produced Water and Waste Recycling and Reuse Act shall not be
governed by the Oklahoma Brine Development Act, unless the produced
water is intended to be or is processed for the commercial
extraction and sale of the constituent elements, or any one of them;
21. “Reclaimed water” means produced water that has been
reconditioned or treated by mechanical or chemical processes after
the extraction of one or more constituent elements for commercial
purposes. Reclaimed water specifically does not include recycled
water as that term is defined by Section 86.7 of Title 52 of the
Oklahoma Statutes for purposes of the Oil and Gas Produced Water and
Waste Recycling and Reuse Act. A party who, for commercial
purposes, treats produced water by mechanical or chemical process
for the extraction of one or more constituent elements such that the
ENR. H. B. NO. 4338 Page 8
produced water becomes reclaimed water as defined herein shall not
be liable in tort or otherwise, before or after custody transfer,
for the use, handling, treatment, or processing by another party of
such produced water or reclaimed water;
22. “Recycler” means a person approved and authorized by the
Commission who receives produced water, for the purpose of saving,
extracting, reconditioning, or treating the same by mechanical or
chemical processes into a reusable form; and
23. “Recycling waste” means the noncommercial by-products or
residual liquids or solid materials that remain after the recycling
or extraction process.
SECTION 4. AMENDATORY 17 O.S. 2021, Section 503, is
amended to read as follows:
Section 503. A. The Corporation Commission is hereby vested
with jurisdiction over the following:
1. The drilling for and or production of brine for commercial
purposes;
2. Class V injection wells used for the injection or disposal
of mineral brines as defined in the federal Safe Drinking Water Act
and 40 CFR Part 146; and
3. Class V wells used to inject spent brine into the same
formation from which it was withdrawn after extraction of halogens
or their salts as defined in 40 CFR Part 146.
B. The Commission may promulgate such rules that:
1. As are Are reasonably necessary to effectuate the purposes
of this act, including rules governing the drilling of production,
injection or disposal wells and the injection of effluent into
underground formations; and
2. To ensure Ensure that the drilling, casing and plugging of
wells is done in such a manner as to prevent the escape of brine and
effluent from one formation to another and to prevent the pollution
of fresh water supplies throughout the state.
C. The enforcement and adherence to the Oklahoma Brine
Development Act shall not apply to nor shall the Corporation
ENR. H. B. NO. 4338 Page 9
Commission have jurisdiction over Class I, III, IV or V wells
regulated by the Department of Environmental Quality pursuant to the
federal Safe Drinking Water Act and 40 CFR Parts 144 through 148,
inclusive, and the Oklahoma Environmental Quality Act.
D. Nothing herein shall be construed to obligate the oil and
gas operator to engage in constituent mineral extraction.
E. A party who transfers produced water to another party for
the commercial extraction and sale of one or more constituent
elements, or to a recycler as defined in paragraph 22 of Section 502
of this title, shall not be liable in tort or otherwise, before or
after custody transfer, for the use, handling, treatment,
processing, or disposition by the receiving party or any subsequent
party of such produced water or of any byproducts, residual
materials, or waste derived therefrom. This limitation of liability
shall apply regardless of whether the transferring party is the
operator of the produced water unit, operator of the oil or gas well
from which the produced water is derived, a transporter, or a
disposal operator. Nothing in this subsection shall be construed to
relieve the transferring party of liability for its own acts or
omissions occurring prior to the point of custody transfer,
including any obligation to comply with applicable environmental
laws and regulations governing the handling, storage, and
transportation of produced water prior to transfer.
SECTION 5. AMENDATORY 17 O.S. 2021, Section 504, is
amended to read as follows:
Section 504. A. A party desiring to unitize brine or produced
water rights shall file with the Corporation Commission an
application setting forth a description of the proposed brine
production unit or produced water unit area with a map or plat
thereof attached. The application shall allege the existence of the
facts required to be found by the Commission as provided in Section
7 506 of this act title and allege that the party desiring to
unitize the brine or produced water rights meets the criteria of
subparagraphs a and b of paragraph 10 of Section 502 of this title.
The application shall set forth the name and address of each brine
owner within the area affected by the application. Each such person
shall be a respondent to the application. In an application to
enlarge the brine production unit or produced water unit area, brine
owners within the existing unit and brine owners in the area to be
added to the unit shall be respondents to the application.
ENR. H. B. NO. 4338 Page 10
B. In the event the brine sought to be unitized in a proposed
brine production unit is found in association with solution gas, the
application shall set forth the name and address of each solution
gas owner within the area affected by the application. Each such
person shall be a respondent to the application. In an application
to enlarge the brine production unit area, solution gas owners
within the existing brine production unit and solution gas owners in
the area to be added to the brine production unit shall be
respondents to the application.
C. Every application to establish a brine production unit or
produced water unit shall have attached thereto a recommended plan
of unitization applicable to the proposed unit area.
SECTION 6. AMENDATORY 17 O.S. 2021, Section 506, is
amended to read as follows:
Section 506. A. If, after proper application and notice, the
Corporation Commission in its hearing shall find by substantial
evidence that:
1. There exists a brine common source of supply or prospective
brine common source of supply for brine or produced water;
2. Unitized management, operation and further development of
the brine common source of supply for brine or produced water from
oil or gas wells is reasonably necessary in order to effectively
develop the brine common source of supply and allow for the
extraction of its constituent elements;
3. Unitized operation as applied to such brine common source of
supply or produced water is feasible and will prevent waste and,
with reasonable probability, will result in greater ultimate
recovery of brine and its constituent parts;
4. Such unitization is for the common good and will result in
the general advantage of the owners of the brine rights within the
proposed brine production unit or produced water unit and will
protect the correlative rights of the owners within the brine common
source of supply or produced water; and
5. The creation of a brine production unit or produced water
unit will accomplish one or more of the following:
a. avoid the drilling of unnecessary wells,
ENR. H. B. NO. 4338 Page 11
b. prevent waste,
c. protect correlative rights, or
d. increase the ultimate recovery of brine from the brine
common source of supply and unit covered by the
application, or
e. allow recovery and extraction of constituent elements
from produced water,
the Commission shall make a finding to that effect and enter an
order creating the brine production unit or produced water unit, and
requiring unitized operation of the prospective brine common source
of supply or portion thereof described in the order.
B. If the Commission in its hearing shall find by substantial
evidence that:
1. The proposed unit is a brine production unit, and not a
produced water unit;
2. Solution gas exists within the brine common source of supply
or prospective brine common source of supply;
2. 3. The production of brine is impossible or impractical
without also producing the solution gas; and
3. 4. The unitization of the brine common source of supply is
impractical or impossible without also unitizing the associated
solution gas,
the Commission shall make a finding to that effect and shall further
provide in its order for the unitization of the solution gas within
the brine production unit area.
C. Orders of the Commission entered pursuant to Section 87.1 of
Title 52 of the Oklahoma Statutes establishing drilling and spacing
units for the production of oil, gas or oil and gas shall not be
applicable to the drilling of brine wells and or the production of
solution gas from a brine production unit established by an order
issued pursuant to this act. However, such drilling and spacing
orders shall remain applicable to oil or gas wells and associated
oil and gas production, and shall serve as general nonmandatory
ENR. H. B. NO. 4338 Page 12
guidelines for establishing the size, shape, and common source of
supply of any produced water unit established under this act.
SECTION 7. AMENDATORY 17 O.S. 2021, Section 507, is
amended to read as follows:
Section 507. A. The order of the Corporation Commission shall
define the area of the brine common source or sources of supply or
portion thereof to be included within the brine production unit or
the produced water unit area. Each unit and unit area shall be
limited to all or a portion of a single common source of supply
Unless a larger size unit is determined to be appropriate under the
facts and circumstances, a produced water unit may be the same size
and cover the same geographical area as the spacing or drilling unit
or horizontal spacing unit created pursuant to Section 87.1 of Title
52 of the Oklahoma Statutes, the horizontal well unitization created
pursuant to Section 87.9 of Title 52 of the Oklahoma Statutes, or
unitized management area created pursuant to Sections 287.1 through
287.15 of Title 52 of the Oklahoma Statutes, of the associated oil
or gas well or wells from which the produced water is derived. Each
such produced water unit shall be limited to the equivalent common
source or sources of supply as the oil and gas common source or
sources of supply in the associated oil or gas well from which
produced water is being received for the extraction of constituent
elements of such produced water, unless the Commission determines
that the unitization of multiple brine common sources of supply is
necessary to prevent waste or protect correlative rights.
B. Brine owners within the brine production unit shall share in
the production of brine in the proportion that their acreage bears
to total acreage within the unit, unless the Commission, after
notice and hearing, shall provide for another method in the unit
plan. Solution gas owners within the brine production unit shall
share in production of solution gas in the proportion that their
acreage bears to total acreage in the unit, unless the Commission,
after notice and hearing, shall provide for another method in the
unit plan.
C. Brine owners within the produced water unit shall share in
the extracted constituent element or elements and any reclaimed
water derived from the production of produced water in the
proportion that their acreage bears to total acreage within the
unit, subject to any applicable lease royalty or if unleased, the
royalty set forth in the Commission order creating the produced
water unit. In the event a produced water unit consists solely of
ENR. H. B. NO. 4338 Page 13
lands situated within a single Corporation Commission-approved
multiunit horizontal well created pursuant to Section 87.8 of Title
52 of the Oklahoma Statutes, the produced water from such multiunit
horizontal well shall be allocated and shared by the brine owners in
each unit utilizing the same allocation factors approved by the
Commission for allocating the associated oil and gas production to
the individual units. The operator shall maintain records
reflecting the total number of barrels of produced water received
for processing from each oil and gas well and produced water unit.
Produced water received from a produced water unit may be commingled
with produced water from other produced water units or brine
production units for the purpose of extracting constituent elements
or reclaimed water. The gross production of constituent elements or
reclaimed water obtained from each produced water unit shall be
determined by the total volume of comingled produced water received
from the associated produced water unit prior to the extraction of
any constituent elements, and not by any other metric unless so
ordered by the Commission for good cause shown.
SECTION 8. AMENDATORY 17 O.S. 2021, Section 508, is
amended to read as follows:
Section 508. A. The plan of unitization for each such brine
production unit or produced water unit and unit area shall be one
suited to the needs and requirements of the particular unit
dependent upon the facts and conditions found to exist with respect
thereto. In addition to such other terms, provisions, conditions
and requirements found by the Corporation Commission to be
reasonably necessary or proper to effectuate or accomplish the
purpose of this act, and subject to the further requirements hereof,
each such plan of unitization shall contain fair, reasonable and
equitable provisions for:
1. The efficient unitized management or control of further
development and operation of the brine production unit or produced
water unit area. Under such the plan the actual operations of the
unit shall be carried on by one of the owners of the right to drill
for and produce brine within the unit area as unit operator or in
the case of produced water associated with oil and gas production,
by the operator of the produced water unit approved by the
Commission. The designation of unit operator shall be by majority
vote of the owners of the right to drill for and produce brine in
the unit in accordance with their acreage ownership in the unit or
as designated by the Commission in the case of produced water
associated with oil and gas production;
ENR. H. B. NO. 4338 Page 14
2. The method and circumstances under which brine or effluent
from the unit, or from any other source, may be injected into the
brine common source of supply under the unit area or into other
formations;
3. The fair, just and reasonable compensation to be awarded to
any owner within the brine production unit or produced water unit
who does not wish to participate in development of the unit by
paying such owner’s share of unit costs;
4. The fair, just and reasonable manner of participation for
any owner desiring to participate in the development of the brine
production unit or produced water unit by paying such owners share
of unit costs;
5. The fair, just and reasonable allocation and distribution to
each owner and the value of such owner’s share of the brine,
including the usable resources extracted from the brine, and
solution gas, if any, produced from the unit;
6. The procedure and basis upon which wells, equipment and
other properties of the owners within the brine production unit or
produced water unit area are to be taken over and used for unit
operations, including the method of arriving at the compensation
therefor, or for otherwise proportionately equalizing the investment
of the several owners in the unit;
7. The method of apportioning costs of development and
operation between owners of brine and owners of solution gas, if
solution gas has also been unitized;
8. The time when the plan of unitization shall become
effective; and
9. The time when and conditions under which the unit shall or
may be dissolved and all affairs concluded.
B. No order of the Commission creating a brine production unit
and prescribing the plan of unitization applicable thereto to the
brine production unit shall become effective unless and until the
plan of unitization has been signed, or in writing ratified or
approved by record owners of the right to drill of not less than
fifty-five percent (55%) of the brine production unit area affected
thereby and by owners of record of not less than fifty-five percent
ENR. H. B. NO. 4338 Page 15
(55%) (exclusive of royalty interest owned by lessees or
subsidiaries of any lessee) of the royalty interest in and to the
brine production unit area and the Commission has made a finding
either in the order creating the unit or in a supplemental order
that the plan of unitization has been so signed, ratified or
approved by lessees and royalty brine owners of record owning the
required percentage interest in and to the brine production unit
area. Provided, however, in any instance where a royalty brine
owner has, through lease or other agreement, previously authorized
pooling or unitization of a size equal to or larger than the size
specified in the Commission order, said lease or other agreement
shall be deemed to be such royalty the brine owner’s authorization
to unitize, and no additional signature, ratification or approval
shall be necessary from such owner, unless the lease provides for a
different production sharing formula than set out in the plan of
unitization. Further provided, however, in any instance where a
royalty owner has the brine owners of record have, through lease or
other agreement, previously consented to have the unit boundaries
and the allocation formula established by the Commission, said lease
or other agreement shall be deemed to be such royalty the brine
owner’s authorization to unitize, and no additional signature,
ratification or approval shall be necessary from such owner. Where
the plan of unitization has not been so signed, ratified or approved
by lessees and royalty brine owners of record owning the required
percentage interest in and to the brine production unit area at the
time the order creating the unit is made, the Commission shall hold
such additional and supplemental hearings as may be requested or
required to determine if and when the plan of unitization has been
so signed, ratified or approved by lessees and royalty brine owners
of record owning the required percentage interest in and to the
brine production unit area and shall, in respect to such hearings,
make and enter a finding of its determination in such regard. In
the event lessees or royalty brine owners, or either of record,
owning the required percentage interest in and to the brine
production unit area have not so signed, ratified or approved the
plan of unitization within a period of six (6) months from and after
the date on which the order creating the brine production unit is
made, the order creating the unit shall be deemed vacated and of no
force and effect. The provisions of this subsection are hereby
expressly made inapplicable to the formation of a produced water
unit.
C. A participating brine owner shall have a one-time election
to sell, and any brine owner in the unit with brine refining
equipment shall have the obligation to buy, the brine produced from
ENR. H. B. NO. 4338 Page 16
the unit at the value determined by the Commission; provided
however, nothing herein shall require the purchasing brine owner to
purchase brine when it is not producing brine from the unit for its
own account.
D. A party that meets the requirements of subparagraphs a and b
of paragraph 10 of Section 502 of this title may take possession of,
and process, produced water for the extraction of consistent
elements that is otherwise destined for disposal, prior to obtaining
an order from the Commission creating the produced water unit, but
in that event, the applicant shall file an application for the
establishment of a produced water unit within sixty (60) days from
the initial acceptance of the produced water. Upon the filing of an
application for the establishment of a produced water unit and prior
to the adjudication of the Commission of such application, the
applicant may, or shall in the instance where the applicant has
accepted produced water prior to the approval of a produced water
unit, seek emergency relief from the Commission for the immediate
production, commercial extraction and sale of constituent elements
or reclaimed water from produced water derived from the associated
oil or gas well, and the Commission shall grant such relief upon a
showing that such emergency relief is reasonable and necessary under
the established facts and circumstances to prevent waste.
The applicant shall have the right to collect all proceeds from
the sale of brine or its constituent elements and reclaimed water
prior to the entry of a final order establishing the produced water
unit, provided that, unless otherwise provided by a written lease or
contract with the brine owner, a set royalty share of the gross
sales proceeds of the constituent elements and reclaimed water
extracted, saved and sold, shall be held in suspense by the
applicant for the benefit of any unleased brine owners within the
proposed produced water unit until the Commission enters a final
order establishing the produced water unit. Such royalty share and
the royalty options set forth in the order of the Commission
approving the produced water unit shall be set by the Commission at
prevailing fair market value rate and may be adjusted based upon all
reasonable evidence introduced including, but not limited to,
evidence of the highest royalty paid for any arm’s length negotiated
brine leases within the produced water unit and any adjoining
produced water unit.
SECTION 9. AMENDATORY 17 O.S. 2021, Section 510, is
amended to read as follows:
ENR. H. B. NO. 4338 Page 17
Section 510. A. The Corporation Commission shall have
jurisdiction to increase the size of an existing brine production
unit or produced water unit area where it is shown, upon proper
application, notice and hearing that:
1. Land adjacent to the existing unit is underlain by the same
brine common source of supply as that found within the unit area;
and
2. Inclusion of the additional land will either:
a. increase unit efficiency, or
b. result in greater ultimate recovery of brine or
produced water, or
c. prevent waste; and
3. Inclusion of the additional land is fair, just and
reasonable, both to parties owning brine or produced water interests
in the additional land and to parties owning interests in the
existing unit; and
4. The requirements of Section 9 508 of this act title have
been met.
B. The Commission shall have jurisdiction to decrease the size
of an existing brine production unit or produced water unit where it
is shown, upon proper application, notice and hearing, that the land
to be excluded is of no value to the unit because:
1. It is not underlain by the brine common source of supply;
and
2. Its presence does not contribute to more efficient unit
operations, by providing the site for an injection well or wells, or
by assisting in the conduct of waterflood operations, or by
otherwise increasing unit efficiency; and
3. Exclusion of the land is fair, just and reasonable.
SECTION 10. AMENDATORY 17 O.S. 2021, Section 516, is
amended to read as follows:
ENR. H. B. NO. 4338 Page 18
Section 516. Sections 2 501 through 16 515 of this act title
shall not have any effect on any existing brine, solution gas or
brine and solution gas units which have been created voluntarily or
by a judicial decree to the extent such unit was established as of
the date of this act September 1, 1990. Any existing brine or brine
and solution gas unit may be expanded using the provisions of this
act.
SECTION 11. AMENDATORY 17 O.S. 2021, Section 517, is
amended to read as follows:
Section 517. A. The proceeds derived from the sale of brine,
produced water, solution gas, or brine and solution gas production
shall be paid to persons legally entitled thereto, commencing no
later than six (6) months after the date of first sale, and
thereafter no later than sixty (60) days the last day of the second
succeeding month after the end of the calendar month within which
proceeds are received for subsequent production such production is
sold. In those instances where proceeds are not received for
disposition of brine, produced water, solution gas, or brine and
solution gas production due to venting, flaring, use for operations,
nonpayment from purchasers, or any other cause, the time periods
previously specified within which any required payment shall be paid
to the persons legally entitled thereto shall be measured from the
date on which such venting, flaring, use for operations, nonpayment
or other event occurred. Provided, proceeds from the sale of brine,
produced water, and solution gas from lands covered by a pending
application for unitization pursuant to this act shall be paid to
persons legally entitled thereto within six (6) months from the
entry of a final order of unitization, together with interest
thereon at the rate of six percent (6%) per annum to be compounded
annually, calculated from the date of first sale after the filing of
the application for unitization. Such payment is to be made to
persons entitled thereto by the operator of such production.
Provided, such operator may remit proceeds from production may be
remitted to the persons entitled to such proceeds from production
semiannually for the aggregate of six (6) months’ accumulation of
monthly proceeds of amounts less than Twenty-five Dollars ($25.00)
annually for the twelve (12) months’ accumulation of proceeds
totaling at least Ten Dollars ($10.00) but less than One Hundred
Dollars ($100.00). Amounts less than Ten Dollars ($10.00) may be
held but shall be remitted when production ceases or by the payor
upon relinquishment of payment responsibility. Proceeds totaling
less than One Hundred Dollars ($100.00) but more than Twenty-five
Dollars ($25.00) shall be remitted monthly if requested by the
ENR. H. B. NO. 4338 Page 19
person entitled to the proceeds. Amounts less than Ten Dollars
($10.00) shall be remitted annually if requested by the person
entitled to the proceeds. Further provided, that any delay in
determining the persons legally entitled to an interest in such
proceeds from production caused by unmarketable title to such
interest shall not affect payments to persons whose title is
marketable. Provided, however, that in those instances where such
proceeds cannot be paid because the title thereto is not marketable,
the operator of such production shall cause all proceeds due such
interest to earn interest at the rate of six percent (6%) per annum
to be compounded annually, calculated from the last day of the
production month, until such time as the title to such interest has
been perfected. Marketability of title shall be determined in
accordance with the then current title examination standards of the
Oklahoma Bar Association.
B. The following information shall be included with each
payment made to a brine owner from the sale of brine:
1. Unit identification;
2. Month and year of sales included in the payment;
3. Total volume of production from the unit of brine, produced
water, or solution gas and in the case of a brine production unit,
the concentration of chemical substances contained therein and
volumes extracted therefrom;
4. Owner’s interest, expressed as a decimal, in production from
the unit;
5. Total value of extracted chemical substances and solution
gas, including the price per unit of measurement at which the
products were sold;
6. Owner’s share of the total value of sales prior to any
deductions;
7. Owner’s share of the total value of sales after any
deductions; and
8. A specific detailed listing of the amount and purpose of any
deductions, including, but not limited to BTU adjustments and taxes,
from the gross proceeds due to the owner.
ENR. H. B. NO. 4338 Page 20
C. Any operator that violates this section shall be liable to
the persons legally entitled to the proceeds from production for the
unpaid amount of such proceeds with interest thereon at the rate of
twelve percent (12%) fifteen percent (15%) per annum to be
compounded annually, calculated from the last day of the production
month.
D. The district court for the county in which the unit is
located shall have jurisdiction over all proceedings brought
pursuant to this section. The prevailing party in any proceeding
brought pursuant to this section shall be entitled to recover any
court costs and reasonable expert witness and attorney’s attorney
fees.
E. All payments under this section to owners or any other
person or governmental entity legally entitled to the payment may be
made by electronic means including, but not limited to, electronic
funds transfer, Automated Clearing House (ACH), direct deposit, wire
transfer, or any other similar form of transfer, upon the mutual
written consent of the payor and payee.
SECTION 12. AMENDATORY 17 O.S. 2021, Section 519, is
amended to read as follows:
Section 519. Before entering upon a site for brine well
drilling, except in instances where there are non-state resident
surface owners, non-state resident surface tenants, unknown heirs,
imperfect titles, surface owners, or surface tenants whose
whereabouts cannot be ascertained with reasonable diligence, the
operator shall give to the surface owner a written notice of his or
her intent to drill containing a designation of the proposed
location and the approximate date that the operator proposes to
commence drilling.
Such notice shall be given in writing by certified mail to the
surface owner. If the operator makes an affidavit that he or she
has conducted a search with reasonable diligence and the whereabouts
of the surface owner cannot be ascertained or such notice cannot be
delivered, then constructive notice of the intent to drill may be
given in the same manner as provided for the notice of proceedings
to appoint appraisers set forth in Section 22 521 of this act title.
Within five (5) days of the date of delivery or service of the
notice of intent to drill, it shall be the duty of the operator and
ENR. H. B. NO. 4338 Page 21
the surface owner to enter into good faith good-faith negotiations
to determine the surface damages.
The provisions of Sections 519 through 522 of this title are
hereby expressly made inapplicable to the formation of a produced
water unit.
SECTION 13. It being immediately necessary for the preservation
of the public peace, health or safety, an emergency is hereby
declared to exist, by reason whereof this act shall take effect and
be in full force from and after its passage and approval.
ENR. H. B. NO. 4338 Page 22
Passed the House of Representatives the 6th day of May, 2026.
Presiding Officer of the House
of Representatives
Passed the Senate the 4th day of May, 2026.
Presiding Officer of the Senate
OFFICE OF THE GOVERNOR
Received by the Office of the Governor this ____________________
day of ___________________, 20_______, at _______ o'clock _______ M.
By: _________________________________
Approved by the Governor of the State of Oklahoma this _________
day of ___________________, 20_______, at _______ o'clock _______ M.
_________________________________
Governor of the State of Oklahoma
OFFICE OF THE SECRETARY OF STATE
Received by the Office of the Secretary of State this __________
day of ___________________, 20_______, at _______ o'clock _______ M.
By: _________________________________