Energy Law & Regulatory Compliance Flashcards
7 cards from real CPL practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Energy Law & Regulatory Compliance flashcards as text
Which provision in an oil and gas lease allows the lessee to maintain the lease beyond the primary term if operations are conducted in good faith but no production has yet been achieved?
Answer: Continuous operations clause
A continuous operations clause extends the lease term when drilling or reworking operations are being diligently pursued without interruption beyond a specified period.
In the context of pipeline regulation, what does an 'open access' or 'open carriage' requirement mandate?
Answer: Pipelines must transport third-party gas on a non-discriminatory basis
Open access requirements, mandated by FERC Order 636, require interstate pipelines to transport gas for any shipper on equal, non-discriminatory terms.
What is a 'farmout agreement' in oil and gas law?
Answer: An arrangement where a lessee assigns drilling rights to another party in exchange for well drilling and earning an interest
In a farmout, the farmor assigns all or part of a working interest to a farmee who agrees to drill a well, after which the farmee earns an interest in the lease.
The 'rule of capture' in oil and gas law holds that:
Answer: A landowner owns all oil and gas produced from wells on their land regardless of where it migrated from
The rule of capture provides that oil and gas produced from a well belong to the well owner, even if the hydrocarbons migrated from beneath a neighbor's land.
Under Section 8 of the Mineral Leasing Act, the maximum acreage a single entity may hold in oil and gas leases in any one state is:
Answer: 246,080 acres
The Mineral Leasing Act limits a lessee to a maximum of 246,080 acres of federal oil and gas leases in any one state.
Which of the following best describes the legal concept of 'correlative rights' in oil and gas law?
Answer: Each owner of a common reservoir has the right to produce a fair share of the oil and gas without waste
Correlative rights doctrine holds that each owner overlying a common reservoir is entitled to produce a proportionate share without waste or drainage of their neighbors' interests.
A 'Pugh clause' in an oil and gas lease is designed to:
Answer: Release non-producing portions of the leased acreage from being held by production elsewhere on the lease
A Pugh clause prevents a single producing well from holding all acreage in the lease beyond the primary term, releasing undeveloped areas not included in a producing unit.