Louisiana Production and Storage Unit Agreement

• Category: Oil Gas and Minerals - Agreements
• State: Multi-State
• Control #: US-OG-1092
• Format: Word; Rich Text

Description

This form of Agreement may be used to create a Unit for the purposes of producing oil and gas on a pooled unit basis, from existing producing leases. Louisiana Production and Storage Unit Agreement (LP SUA) is a legal contract that governs the operation, production, and storage of oil and gas resources in the state of Louisiana. This agreement is established between the parties involved in oil and gas exploration, production, and storage operations, including operators, working interest owners, and royalty owners. With several types of Louisiana Production and Storage Unit Agreements, it is important to understand their distinctions. The most common types are: 1. Unitization Agreement: A unitization agreement is formed when multiple owners or operators combine their leasehold interests within a specific geographical area to enhance production efficiency. This agreement establishes a unified approach to production, storage, and revenue distribution, ensuring optimal resource recovery and reducing operational costs. 2. Pooling Agreement: A pooling agreement is executed when multiple leaseholders combine their undivided interests in mineral rights to create a single production unit. The pooling agreement enables efficient resource extraction by consolidating scattered oil and gas leases, thereby reducing drilling and infrastructure costs. 3. Commoditization Agreement: A commoditization agreement is entered into when separate oil and gas leases exist within a single subsurface hydrocarbon reservoir. This agreement facilitates the integration of diverse leasehold interests within a reservoir, promoting effective reservoir management, production, and storage practices. The Louisiana Production and Storage Unit Agreement typically includes provisions related to the following aspects: 1. Unit Formation and Boundaries: It defines the area covered by the production and storage unit, including the well(s) and supporting infrastructure within its boundaries. 2. Unit Operations: This section outlines the procedures for drilling, development, production, and maintenance of wells within the unit, ensuring compliance with regulatory standards and best practices. 3. Working Interests and Royalties: The agreement specifies the percentage of working interest owned by each party involved, determining their share of production revenues and expenses. 4. Unit Expenses and Cost Allocation: It establishes the mechanism for allocating the unit's collective expenses, such as drilling costs, operating expenses, and storage facilities, among the working interest owners. 5. Production and Storage Allocation: This provision details how oil, gas, and other hydrocarbon resources produced within the unit will be allocated and distributed among the working interest owners and royalty owners. 6. Royalty Payments: The agreement defines the royalty rates and stipulations for royalty payments to the mineral rights owners, ensuring accurate and timely distribution of royalties. 7. Unitization Amendments: It allows for modifications and amendments to the agreement as necessary to accommodate changes in the unit's operations, boundaries, or ownership. In summary, the Louisiana Production and Storage Unit Agreement (LP SUA) serves as a critical legal instrument for effective and efficient oil and gas production and storage operations in Louisiana. By promoting collaboration, shared costs, and unified management, these agreements facilitate optimized resource recovery, reduce operational redundancies, and ensure fair revenue distribution among the parties involved.

Louisiana Production and Storage Unit Agreement (LP SUA) is a legal contract that governs the operation, production, and storage of oil and gas resources in the state of Louisiana. This agreement is established between the parties involved in oil and gas exploration, production, and storage operations, including operators, working interest owners, and royalty owners. With several types of Louisiana Production and Storage Unit Agreements, it is important to understand their distinctions. The most common types are: 1. Unitization Agreement: A unitization agreement is formed when multiple owners or operators combine their leasehold interests within a specific geographical area to enhance production efficiency. This agreement establishes a unified approach to production, storage, and revenue distribution, ensuring optimal resource recovery and reducing operational costs. 2. Pooling Agreement: A pooling agreement is executed when multiple leaseholders combine their undivided interests in mineral rights to create a single production unit. The pooling agreement enables efficient resource extraction by consolidating scattered oil and gas leases, thereby reducing drilling and infrastructure costs. 3. Commoditization Agreement: A commoditization agreement is entered into when separate oil and gas leases exist within a single subsurface hydrocarbon reservoir. This agreement facilitates the integration of diverse leasehold interests within a reservoir, promoting effective reservoir management, production, and storage practices. The Louisiana Production and Storage Unit Agreement typically includes provisions related to the following aspects: 1. Unit Formation and Boundaries: It defines the area covered by the production and storage unit, including the well(s) and supporting infrastructure within its boundaries. 2. Unit Operations: This section outlines the procedures for drilling, development, production, and maintenance of wells within the unit, ensuring compliance with regulatory standards and best practices. 3. Working Interests and Royalties: The agreement specifies the percentage of working interest owned by each party involved, determining their share of production revenues and expenses. 4. Unit Expenses and Cost Allocation: It establishes the mechanism for allocating the unit's collective expenses, such as drilling costs, operating expenses, and storage facilities, among the working interest owners. 5. Production and Storage Allocation: This provision details how oil, gas, and other hydrocarbon resources produced within the unit will be allocated and distributed among the working interest owners and royalty owners. 6. Royalty Payments: The agreement defines the royalty rates and stipulations for royalty payments to the mineral rights owners, ensuring accurate and timely distribution of royalties. 7. Unitization Amendments: It allows for modifications and amendments to the agreement as necessary to accommodate changes in the unit's operations, boundaries, or ownership. In summary, the Louisiana Production and Storage Unit Agreement (LP SUA) serves as a critical legal instrument for effective and efficient oil and gas production and storage operations in Louisiana. By promoting collaboration, shared costs, and unified management, these agreements facilitate optimized resource recovery, reduce operational redundancies, and ensure fair revenue distribution among the parties involved.