Current through Register Vol. 35, No. 18, September 24, 2024
A.
Daily tolerance.
(1) Oil wells located on
units capable of producing their allowables may overproduce one day and
underproduce another. No unit capable of producing its allowable, except for
the purpose of testing, in the process of completing or recompleting a well or
for tests made for the purpose of obtaining scientific data, shall produce any
day more than 125 percent of the daily top proration unit allowable for the
pool in which the well is located. (Subject to the foregoing, an
underproduction may be made up by production from the same unit within the same
month, and in like manner any overproduction shall be adjusted or balanced by
underproduction from the same unit, within the same proration
period).
(2) Certain wells must, as
a matter of practicality, be produced at daily rates in excess of 125 percent
of the daily top proration unit allowable for the pool in which the wells are
located. The director may grant exceptions to the provisions of Paragraph (1)
of Subsection A of 19.15.20.9 NMAC, without formal hearing, where an operator
has filed application setting out the reasons for the requested exception.
(a) Applicants for the exceptions shall, at
the time of filing, furnish each operator in the pool in which the well is
located a copy of the application.
(b) The applicant shall include in an
application for exception or attach to the application a formal written
statement that the applicant has served every operator in the pool in which the
well is located with a copy of the application.
(3) The director shall wait at least 10 days
after receipt before approving the application, and shall approve the
application only in absence of objection from an operator or interested party,
or in the director's discretion. In the event the director fails to approve the
application, the division after notice shall hear and determine the
matter.
B. Monthly
tolerance. No unit shall produce during any one proration period more than the
unit's allowable production for the proration period plus a tolerance of not to
exceed five days allowable production. This permissive tolerance of
overproduction from a unit is subject to all other provisions of 19.15.20.9
NMAC and particularly to the provisions of Subsection D of 19.15.20.9 NMAC. The
operator shall adjust or balance permissive tolerance of overproduction from a
unit by subsequent corresponding underproduction from the same unit. The
division shall consider overproduction within the permitted tolerance as oil
produced against the allowable production assigned to the unit for the
proration period during which the overproduction is adjusted or balanced by
underproduction.
C. Production in
excess of monthly allowable, plus tolerance.
(1) Oil produced from a unit in excess of the
assigned monthly allowable plus the permissive proration period tolerance shall
be "illegal oil" as defined in the Oil and Gas Act, unless the excess oil:
(a) is produced as a result of mistake or
error;
(b) results from mechanical
failure beyond the operator's immediate control; or
(c) results from essential tests of the unit
within the purview of division rules.
(2) Whenever production from a unit for a
proration period exceeds the assigned allowable, plus the permitted tolerance
authorized in Subsection B of 19.15.20.9 NMAC and the cause of the excess
reasonably falls within Subparagraphs (a), (b) or (c) of Paragraph (1) of
Subsection C of 19.15.20.9 NMAC, the producer or operator shall briefly set
forth the excess production's cause together with a proposed plan for
production adjustment in the comments area of form C-115 for the month in which
the excess production occurs. The excess production shall be considered as oil
produced against the allowable assigned to the unit for the following proration
period, and it may be transported from the lease tanks only as and when the
unit accrues daily allowable to offset the excess production.
D. General.
(1) The tolerance permitted on a daily or
monthly basis as provided in Subsections A and B of 19.15.20.9 NMAC does not
increase a producing unit's allowable or grant an operator authority to market
or a transporter authority to transport any quantity of oil in excess of the
unit's allowable.
(2) The
possession of a quantity of oil in lease storage at the end of a proration
period in excess of five days allowable plus any rerun allowable oil is a
violation of 19.15.20.9 NMAC, unless the operator reports the possession in the
manner and within the time provided in Subsection C of 19.15.20.9 NMAC for
filing form C-115.
E.
Storage records. Producers and transporters of oil shall maintain adequate
records showing unrun allowable oil in storage at the end of each proration
period. The storage oil shall be the amount of oil in tanks from which oil is
measured and delivered to the transporter.
