## Facts

- Utah’s State Board of Oil, Gas & Mining created 640-acre drilling units in the early 1970s, limiting each unit to a single well and fixing the unit-well location.
- Sam H. Bennion owned an unleased mineral interest within a drilling unit in Duchesne County, Utah; the unit structure prevented him from drilling his own well.
- Other working-interest owners entered a voluntary pooling agreement; the unit’s first producing well (Tew 1-1B5) was completed in 1974.
- Bennion sought compulsory pooling, and in 1981 the Board entered a negotiated statutory pooling order governing Bennion’s rights and obligations for the first well (retroactive to 1979).
- In 1985 the Board authorized an increased-density second well in the same unit.
- The unit operator, ANR Production Company, offered Bennion the option to participate in the second well; Bennion declined.
- In 1990 ANR asked the Board to enter a new order or modify the 1981 pooling order to address cost and revenue allocation for the second well.
- The Board modified the pooling order to include the second well and required Bennion, as a nonconsenting owner, to bear a 175% cost-recovery charge on his proportionate share of drilling, completion, and equipment costs before receiving his full share of production.

## Issues

1. Whether the Oil and Gas Conservation Act authorized the Board to modify an existing forced pooling order to include an increased-density second well and impose a statutory nonconsent penalty.
2. Whether compelled inclusion of Bennion’s interest in the second well and a 175% nonconsent cost-recovery charge violated the Act’s “public interest” requirement.
3. Whether the modified pooling order effected an unconstitutional taking without just compensation.
4. Whether statutory amendments, including repeal and reenactment during the relevant period, limited the Board’s authority or created vested rights preventing application of later provisions to the second well.

## Decision

- The Utah Supreme Court affirmed the Board’s 1990 order modifying the prior pooling order.
- The court held the Board had statutory authority to extend forced pooling to an increased-density second well within an existing unit.
- The court upheld the 175% nonconsent cost-recovery charge as authorized and consistent with the statutory scheme.
- The court rejected claims that the order was contrary to the public interest or constituted a taking.
- The court concluded later statutory provisions could govern ongoing regulation of additional wells in existing units, absent a demonstrated vested-rights conflict.

## Legal Principles

- A conservation agency may modify a forced pooling order to address additional wells authorized within an existing drilling unit when the governing statute permits such regulation to prevent waste and protect correlative rights.
- Statutory nonconsent cost-recovery provisions may require a nonparticipating owner to satisfy a specified multiple of actual well costs from production attributable to that owner’s interest before receiving full proceeds.
- A nonconsent cost-recovery mechanism is treated as risk compensation to participating owners rather than a confiscation of the nonconsenting owner’s mineral interest.
- Compulsory pooling and related cost-allocation devices, when tied to conservation objectives and accompanied by notice and an opportunity to participate, are generally a valid exercise of the police power and not a per se taking.
- When conservation statutes are amended over time, current statutory provisions may apply to ongoing operations and subsequent wells within established units unless the challenger shows a protected vested right that would be impaired.

## Conclusion

The court upheld the agency’s modification of a prior forced pooling order to include an increased-density second well and to impose a 175% nonconsent cost-recovery charge on a mineral owner who declined to participate, finding the action authorized by statute, consistent with conservation policy and public interest, and not an unconstitutional taking.


Bennion v. ANR Prod. Co., 819 P.2d 343 (Utah 1991)