What is unitization and why is it important?
A1. Unitization is an accepted and normal business practice among oil and gas jurisdictions both in Canada and internationally and is generally acknowledged as the best method for efficiently and fairly producing an oil or gas field. It requires multiple interest owners of a single oil or gas field to develop the field as if they were a single entity. In so doing, unitization: • promotes joint production arrangements to avoid economic waste from unnecessary well drilling and infrastructure construction; • lowers resource production costs through capital and infrastructure sharing; • maximizes the ultimate recovery from an oil or gas field; • offers all interest owners in a pool the best opportunity to realize their fair share of production; • maximizes royalty returns to resource owners; and • minimizes the environmental footprint to the land by avoiding unnecessary wells and infrastructure construction.
