36.25.405    TERM OF LEASE, EXTENSION BY DRILLING OPERATIONS AT END OF TENTH YEAR

(1) Each geothermal resources lease issued shall be for a primary term of 10 years and so long thereafter as geothermal resources in paying quantities are produced, on condition that all obligations and provisions of the lease are fully performed and complied with by the lessee.

(a) If geothermal resources are not being produced in paying quantities from the leased premises at the expiration of the primary term of the lease but the owner of the lease is then engaged in drilling on the premises for geothermal resources, then the lease continues in force so long as such drilling operations are being diligently prosecuted. The board reserves the right to decide whether such drilling operations, which may extend a lease beyond the primary term, are being diligently prosecuted.

(b) If geothermal resources are recovered from any well drilled after the expiration of the primary term, the lease shall continue in force so long as geothermal resources in paying quantities are produced from the leased premises.

(c) If construction of a geothermal generating facility is under way at the expiration of the primary term of the lease or if a contract for construction has been let, the lease shall continue in force as long as construction diligently continues. Following completion of construction the lease shall continue in force as long as geothermal resources are produced in paying quantities.

(2) The lessee may shut-in a well upon approval by the department pending confirmation of the existence of geothermal resources in commercial quantities and/or the construction of a facility to utilize said resources.

(a) The lessee must notify the department, in writing, prior to shutting-in any well of intent to shut-in said well. The notification must include the exact location of the well proposed to be shut-in, the exact reasons why the well must be shut-in, and the proposed length of time the well will remain shut-in.

(b) A shut-in well will not be grounds for continuance of the primary term of the lease unless the conditions of (1) (a) , (b) , and (c) are complied with.

History: 77-4-103, MCA; IMP, 77-4-122 and 77-4-123, MCA; NEW, Eff. 12/31/72; AMD, Eff. 3/7/75; TRANS, 1996 MAR p. 2384.