Texas Administrative Code
Title 16 - ECONOMIC REGULATION
Part 1 - RAILROAD COMMISSION OF TEXAS
Chapter 3 - OIL AND GAS DIVISION
Section 3.31 - Gas Reservoirs and Gas Well Allowable

(A) prior to the well's completion or reclassification date; or

(B) more than 15 days prior to the date all reports or information necessary to the assignment of an allowable are received in the appropriate commission office.

(A) Allowable month--The month during which allowables determined pursuant to this section will be effective.

(B) Adjusted reservoir market demand forecast--The sum of all operator reservoir market demand forecasts for a reservoir after any necessary downward adjustments have been made to individual operator reservoir market demand forecasts and optional operator forecasts so that no such forecast will exceed the total capability of the operator's wells for the reservoir during the allowable month.

(C) Operator reservoir market demand forecast--The sum of the operator's well forecasts for a reservoir determined by the commission pursuant to this subsection.

(D) Optional operator forecast--The commission designated operator may file an optional market demand forecast for all of the operator's wells in the reservoir that is equal to the anticipated market demand for the production from the operator's wells in the field during the allowable month. The optional operator forecast for the operator's wells in the reservoir can be no greater than the total capability of the operator's wells or less than zero. An optional operator forecast must be filed by the 10th day of the month preceding the allowable month.

(E) Forecast correction adjustment--

(F) Supplemental change adjustment--Any adjustment to the reservoir allowable that is necessary to account for an automatic allowable revision in a prior month, a change of well or well test status during a prior month, the provisions of a final order modifying field or well production status, or any other ministerial change.

(G) Commission adjustment--Any other adjustments to the adjusted reservoir market demand forecast that the commission determines are necessary.

(A) Except as provided in subparagraphs (B) and (C) of this paragraph, a well's capability is defined as the lesser of:

(B) If a well is a special or an administrative special allowable well, its capability is defined as the lesser of:

(C) If a well is new to a reservoir and has been active for less than six months, its capability shall be defined as the well's latest deliverability test on file with the commission.

(A) The determination may be made on the basis of a well test or other acceptable information by a registered professional engineer who certifies that the determination was made by the engineer or under the supervision of the engineer, and that the capability has been determined in accordance with generally accepted engineering practices. Alternatively, the substitute capability determination may be made by an independent tester on the basis of a well test conducted in accordance with § 3.28(c) of this title (relating to Potential and Deliverability of Gas Wells To Be Ascertained and Reported) (Statewide Rule 28). The request for a substitute capability must be submitted on the appropriate form.

(B) The commission or a commission designee may reject any substitute capability determination for good cause.

(C) The capability determined pursuant to this paragraph shall be used as the well's capability for a period of six months from the effective date of the determination unless:

(A) A statewide exempt field is any gas field in which no special field rules have been adopted and in which no well in the field has a current reported deliverability test of greater than 250 Mcf per day. Wells in statewide exempt fields shall be assigned allowables equal to their capacity to produce but in no event greater than 250 Mcf per day.

(B) In fields where special field rules exist and no well has a current deliverability test of greater than 250 Mcf per day, an operator may request statewide exempt field status. The request may be granted administratively by the commission or commission designee if the applicant provides the commission with a declaration, signed by all operators, subject to the false filing penalties provided for in the Texas Natural Resources Code, § 91.143, stating all operators in the field agree to exempt status. If declarations are not provided from all operators in the field or if the commission or commission designee declines to grant any request administratively, the applicant may request a hearing. If a notice of intent to appear in protest of the application has not been filed by five days before the date of the hearing, then there shall be a presumption that each well's first purchaser has a market for 100% of the well's deliverability as determined by the most recent deliverability tests on file with the Commission and that granting exempt status to the field will not harm correlative rights or cause waste and exempt status will be granted. Wells in exempt fields with special rules shall be assigned allowables equal to their capability to produce but in no event greater than 250 Mcf per day. If 250 Mcf per day is exceeded by any well, the field will be changed to the existing special field rule allocation. Reinstatement of allocation formula may be initiated by the commission designee, or by one of the operators in the field.

(A) the well's maximum allowable;

(B) the well's capability as determined by subsection (e) of this section.

(A) capability;

(B) its amount of production during the most recently reported production month; or

(C) the amount provided for by the allocation formula.

(A) If during the balancing period a prorated gas well or a limited well does not produce as much gas as is allocated to it by the commission, the operator of the well shall be permitted to carry such underproduction forward to the next succeeding balancing period as future allowable credit to be produced during that period.

(B) The amount of underproduction to be carried forward into any new balancing period as allowed production during such new balancing period shall consist of the actual underproduction that accrued in the balancing period immediately preceding such new balancing period; and the accumulative well status as to underproduction, will be adjusted on each balancing date accordingly. An operator may request that underproduction not balanced during a second balancing period be carried forward to subsequent balancing periods. The operator's request must include evidence of increased market demand that will allow underproduction to be produced in the subsequent balancing period. The request may be granted administratively by the commission or a commission designee if the request was filed no later than the last day of the balancing period following the date the underproduction is canceled, the operator has given at least 21 days notice to all other operators in the field and the first purchaser of gas from the subject well, and no protest to the request has been filed. The request may also be approved administratively if the operator provides written waivers of objection from all to whom notice would be given as an alternative to notice and absence of protest. If the commission or a commission designee declines to grant administratively the request, the operator may request a hearing.

(A) Subject to the following prescribed conditions, the operator of a gas well, may produce the well in excess of the monthly allowable allocated to the well. No well shall in any one month be produced at a rate in excess of its underproduction plus twice its monthly allowable without obtaining approval from the commission prior to the due date for the production report for the overproduced month. A well which is balanced or overproduced may not in any one month produce an amount in excess of twice its monthly allowable without obtaining approval from the commission prior to the due date for the production report for the overproduced month. A well which is balanced or overproduced will not be granted such authority for more than two months in any six month balancing period.

(B) A well overproduced as of a balancing date, which was also overproduced on the balancing date immediately preceding and remained overproduced for the entire period between the two balancing dates, shall be shut-in until the overproduction, existent as of the later of such two balancing dates, is made up. Upon request by an operator, the commission may grant authority to produce such a well at a fractional part of its monthly allowable (reduced rate) until its production and allowable are in balance. The commission or a commission designee may determine the permissible rate.

(C) If a protest is received or the commission declines to approve a request to produce at a reduced rate, the operator of a well which under the provisions of subparagraph (B) of this paragraph is required to be shut-in, may request a hearing before the commission to determine whether shutting-in the well would damage it. Notice of the hearing will be given to all operators in the field and the first purchaser of the subject well. If, after consideration of the evidence submitted at the hearing, the commission finds that the well would be damaged if shut-in, the commission may allow the overproduction charged against it to be made up at a lesser rate than it would be made up if the well were shut-in. The commission or a commission designee may determine the permissible rate pending the result of the hearing.

(D) Except where a well is shut-in to make up overproduction or is producing at a reduced rate, overproduction existent as of any balancing date shall be made up at any time during the next period; i.e., a specified fractional part of the overproduction need not be made up during each month of that balancing period, so long as all of such overproduction is made up during that balancing period.

(A) each operator from that field has a market, for 100% of the deliverability, as determined by the deliverability tests on file with the commission, for its respective wells; and

(B) all operators in the field consent to suspension of the formula.

(A) If, for any month, the market for gas production from a well in a field with a suspended allocation formula is less than 100% of the well's deliverability as determined by the deliverability tests on file with the commission, the operator of the field must inform the commission or a commission designee; upon such notification, the commission or commission designee will, with prior notice to the operators in the field, reinstate the allocation formula.

(B) The allocation formula will be reinstated at the request of an operator from a field with a suspended allocation formula or at any time the commission deems reinstatement necessary to protect correlative rights or prevent waste.

(A) they overproduce the top allowable available under the applicable allocation formula; or

(B) they receive a substitute capability pursuant to subsection (e) of this section; or

(C) the commission resets the cutoff percentage below the well's average production level for the last six consecutive months.