On September 25, 2018, the Petroleum Joint Venture Association (PJVA) and the Canadian Association of Petroleum Landmen (CAPL) released the final version of the Pad Site Sharing Agreement (PSSA). The PSSA responds to an accelerating phenomenon in the E&P space: increasingly, producers are using horizontal drilling technologies and shared well pads to conduct operations that may or may not be independent.
Multi-well, multi-owner pad sites can reduce the environmental footprint of oil and gas development and may lead to substantial cost savings. However, a number of legal and operational challenges arise where the mineral rights, wells, and facilities lack common ownership. Absent a custom agreement, these sites are governed by a multiplicity of independent agreements
among the various producers and associated third parties, creating a complex web of relationships that are unlikely to adequately govern joint operations, the use of shared and independent facilities, accident liability, and environmental obligations.
The PSSA seeks to resolve these issues, "blending" certain of the parties' interests and governing
those activities that are most easily captured within the scope of a single agreement. In doing so, the PSSA incorporates elements of the 1999 PJVA Construction, Ownership & Operating Agreement (CO&O), the 2015 CAPL Operating Procedure, and the PASC Accounting Guidelines. In terms of form, the PSSA follows the familiar Head Document / Appendix split.
Not all commercial relationships lend themselves to a Pad Site Sharing Agreement. In fact, the drafting committee has stated that the PSSA is intended to address 80% of cases in which parties may wish to make use of a shared pad site.
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