Current through Reg. 49, No. 12; March 22, 2024
(a) General.
(1) Allowables of gas wells not currently
assigned an allowable will not be made effective:
(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.
(2) If a report
or item of information necessary to the assignment of an allowable is not filed
on time, there shall be a one-day allowable reduction for each day the report
or information is late.
(b) Changes in gas well allowables.
(1) Changes in allowable of gas wells
currently assigned an allowable will be effective on the date of the test or
date of the change affecting the well's allowable (when the operator submits
special tests or information), provided this is not more than 15 days prior to
the date the special test or information is received in the appropriate
Commission office.
(2) With respect
to a multicompleted well, the allowable of the second and succeeding zones will
be made effective no earlier than the date the last report or item necessary
for the assignment of an allowable is received in the appropriate Commission
office.
(3) When a well is
recompleted as a gas well in a different field, any overproduction that has
occurred in the old field must be made up before an allowable will be assigned
in the new field.
(4) The maximum
daily allowable for a horizontal drainhole gas well or a gas well in a
designated unconventional fracture treated (UFT) field is set forth in §
RSA
3.86<subdiv>(d)(4) and
(5)</subdiv> of this title (relating to
Horizontal Drainhole Wells).
(c) Requirements for gas wells in a field for
which an allocation formula has been adopted.
(1) If acreage is a factor in the allocation
formula, a certified plat showing the acreage assigned to the well for
proration purposes shall be submitted. The plat must be accompanied by a
statement that all of the acreage claimed can reasonably be considered
productive of gas and that the distance limitations of the field rules have not
been exceeded. If all of the acreage claimed is not contained in a single
lease, a certificate of pooling authority must be submitted, on the appropriate
commission form. If the distance limitations of the field rules are shown to
have been exceeded, the plat must show the number of acres within and beyond
the distance limitations. An operator may request an exception to the distance
limitations which may be administratively approved by the commission or a
commission designee if all the acreage can be considered productive. If
approval of the request is declined or protest is received, the request may be
set for hearing. If all of the acreage cannot be considered productive, the
plat must also show the productive limit of the acreage. If a plat shows
acreage in the unit in excess of the maximum number of acres permitted by the
field rules, it will not be accepted.
(2) If bottom-hole or reservoir pressure is a
factor in the allocation formula, it shall be submitted on the appropriate
commission form and shall be measured at, or corrected to, the proper datum
plane.
(3) If any other
information, data or parameter is a factor in the allocation formula, it must
be submitted on the appropriate commission form.
(d) Determining prorated reservoir allowable
and lawful market demand.
(1) On or before
the 25th day of each month, the commission will determine the lawful market
demand for gas to be produced from each reservoir during the upcoming allowable
month. The monthly reservoir allowable shall be equal to the lawful market
demand for that reservoir. The lawful reservoir market demand for prorated
reservoirs shall be equal to the adjusted reservoir market demand forecast
adjusted by a forecast correction adjustment, and a commission adjustment
(i.e., lawful reservoir market demand = adjusted reservoir market demand
forecast + forecast correction adjustment + commission adjustment).
(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.
(i) The commission will determine a forecast
for each well that will be active during the allowable month that:
(I) for prorated and limited wells is equal
to the well's production during the same allowable month in the prior year;
and
(II) for special or
administrative special allowable wells is equal to the well's production during
the most recently reported production month.
(ii) If the well had no reported production
during the same allowable month in the prior year or if a special or
administrative special allowable well had no reported production in the most
recently reported production month, the forecast shall be equal to:
(I) the well's highest reported monthly
production during any of the three most recently reported production months;
or, if no production has been reported for those months;
(II) the well's capability.
(iii) Alternatively, the operator
reservoir market demand forecast may be determined by an optional operator
forecast.
(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--
(i) The February 1994 forecast
correction adjustment shall be the reservoir market demand for November 1993
for all wells in a reservoir that are not administrative special allowable
wells for February 1994, subtracted from the production reported for November
1993 for those wells;
(ii) The
March 1994 forecast correction adjustment shall be the reservoir market demand
for December 1993 for all wells in a reservoir that are not administrative
special allowable wells for March 1994, subtracted from the production reported
for December 1993 for those wells;
(iii) The April 1994 forecast correction
adjustment shall be the reservoir market demand for January 1994 for all wells
in a reservoir that are not administrative special allowable wells for April
1994, subtracted from the production reported for January 1994 for those
wells;
(iv) For May 1994 and
subsequent months, the forecast correction adjustment shall be equal to the
total reservoir production from the most recent reported month, minus (total
adjusted reservoir market demand forecast for the production month +
supplemental change adjustment for that month + commission adjustment for that
month), minus (production from all special and administrative special allowable
wells minus allowable assigned to those special wells for that
month).
(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.
(2) The commission may reject or modify any
optional operator forecast if it determines that the forecast is inaccurate or
being used to manipulate the allocation of gas rather than to determine the
reasonable market demand.
(e) Well capability.
(1) No gas well shall be given an initial
allowable in excess of its capability.
(A)
Except as provided in subparagraphs (B) and (C) of this paragraph, a well's
capability is defined as the lesser of:
(i)
the well's latest deliverability test on file with the commission; or
(ii) the well's highest monthly production
during any of the three most recently reported production months.
(B) If a well is a special or an
administrative special allowable well, its capability is defined as the lesser
of:
(i) the well's latest deliverability test
on file with the commission; or
(ii) the well's most recently reported
monthly production.
(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.
(2) An operator may submit a substitute
capability determination for any well in a prorated field that represents the
maximum monthly production capability of the well under normal operating
conditions for a specific six-month period.
(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
§
RSA
3.28<subdiv>(c)</subdiv> 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:
(i) the operator files a written request that
the substitute capability determination be cancelled. If such a request is
submitted, the substitute capability may be cancelled by the commission or
commission designee; or
(ii) an
affected person files a protest alleging, with specificity, the inaccuracy or
invalidity of the determination. If a protest is filed, the commission may set
the matter for hearing. A protested substitute capability determination shall
be effective on the intended effective date, unless the commission orders
otherwise. If the commission determines that the protested substitute
capability was incorrect, appropriate allowable or status adjustments will be
made for the affected well.
(f) Fields operating under statewide rules. A
statewide prorated field is any gas field in which no special field rules have
been adopted and in which at least one well in the field has a current reported
deliverability test of greater than 250 Mcf a day. Daily allowable production
of gas from individual wells in a statewide prorated field shall be determined
by allocating the allowable production among the individual wells in the
proportion that each well's deliverability (based on the latest deliverability
test of record) bears to the summation of the most recent reported
deliverability tests of all wells producing from the same field. Allocated
allowables shall be subject to the well capability provisions of this
section.
(g) Definitions of
prorated and nonprorated wells and fields.
(1) A prorated well is a well for which an
allowable is determined by an allocation formula.
(2) A nonprorated well is a well for which an
allowable is not determined by an allocation formula.
(3) A prorated field is a field that has two
or more wells one of which is a prorated well.
(4) A nonprorated field is any field that is
not a prorated field.
(5) Statewide
Exempt Fields:
(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, §
RSA
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.
(6) A limited well is a
nonprorated well in a prorated field (other than a special or administrative
special allowable well) with an allowable set below the maximum allowable it
would receive under the allocation formula. A limited well shall be assigned an
allowable at the rate that the well is capable of producing as determined by
subsection (e) of this section.
(7)
A special allowable well is a nonprorated well granted a fixed allowable by the
commission after notice and hearing.
(8) An administrative special allowable well
is a nonprorated well that has been granted an allowable pursuant to subsection
(k) of this section.
(9) The
maximum allowable for a well is the largest allowable that can be assigned
under applicable rules. For a limited well, the maximum allowable is the
allowable the well would receive under the allocation formula. For a special
allowable well, the maximum allowable is the allowable assigned pursuant to
paragraph (7) of this subsection. For administrative special allowable wells,
the maximum allowable is 100 Mcf/day for wells qualifying as administrative
special wells under subsection (k)(1) of this section and is the allowable the
well would receive under the allocation formula for wells qualifying as
administrative special allowable wells under subsection (k)(2) of this section.
Additionally, for administrative special allowable wells in prorated gas fields
without special field rules, the maximum allowable is 250 Mcf a day. For a well
in a one well field, the maximum allowable is the well's deliverability based
on the latest deliverability test of record. For an associated gas well, the
maximum allowable is the gas well allowable calculated by §
RSA 3.49<subdiv>(b)(1) or
(2)</subdiv> of this title (relating to Gas-Oil
Ratio) (Statewide Rule 49).
(h) Allowable adjustments and balancing
provisions for nonprorated wells.
(1) A
nonprorated well shall not be allowed to accumulate underproduction. However, a
limited well shall be entitled to accumulate underage up to the well's
capability each month.
(2) If the
most recent production figures reported to the commission show a nonprorated
well to be overproduced, the alllowable will be revised to cover overproduction
that is in excess of the well's accumulated underproduction, up to the maximum
allowable. A nonprorated well with accumulated overproduction will be assigned
a supplemental allowable that will balance the accumulated overproduction or a
supplemental allowable equal to the well's maximum allowable, whichever is
smaller.
(3) The allowable for
wells in nonprorated fields, except for special and administrative special
allowable wells, shall be limited to the lesser of:
(A) the well's maximum allowable;
(B) the well's capability as determined by
subsection (e) of this section.
(4) The initial allowable for special and
administrative special allowable wells shall be the least of the well's:
(A) capability;
(B) its amount of production during the most
recently reported production month; or
(C) the amount provided for by the allocation
formula.
(i)
Balancing provisions for overproduction and underproduction of gas for wells
completed in prorated gas fields.
(1)
Balancing provisions for prorated fields. Except as provided in subsection (h)
of this section or as necessary to prevent waste or protect correlative rights,
balancing provisions will be applied for wells completed in prorated gas
fields.
(2) Balancing periods. For
the purpose of computing and balancing overproduction and underproduction in
prorated gas fields, the dates 7 a.m., March 1, and 7 a.m., September 1, are to
be known as balancing dates; and the six-month periods beginning 7 a.m., March
1, and ending 7 a.m., September 1, and beginning 7 a.m., September 1, and
ending 7 a.m., March 1, will be considered as separate entities and will be
known as "balancing periods."
(3)
Balancing provision for 49(b) fields. The balancing provisions may be applied
by commission action after notice and hearing to fields where the well
allowables are determined by §
RSA
3.49<subdiv>(b)</subdiv> of this
title (relating to Gas-Oil Ratio) (Statewide Rule 49(b)).
(4) Underproduction.
(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.
(5) Overproduction.
(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.
(j) Suspension of
allocation formula.
(1) The commission or a
commission designee may administratively suspend the allocation formula for a
particular gas field if:
(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.
(2) Suspension of the allocation formula may
be initiated by the commission or a commission designee, or by one of the
operators in the field. The commission or a commission designee will determine
which fields are appropriate for suspension utilizing the criteria of paragraph
(1) of this subsection. The allocation formula may be administratively
suspended if the applicant provides the commission with a declaration, subject
to the false filing penalties provided for in the Natural Resources Code,
§
RSA
91.143, from all operators in the field
stating that they have a market for 100% of the deliverability of their wells.
If the commission or a commission designee declines to administratively suspend
the allocation formula, the applicant may request a hearing as provided for in
paragraph (4) of this subsection.
(3) Reinstatement of the allocation formula
may be initiated by the commission, commission designee, or by one of the
operators in the field.
(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.
(4) If the commission or a commission
designee reinstates the allocation formula or denies a request to suspend or
reinstate the allocation formula in a particular field, the applicant may
request a hearing. In addition to the criteria set forth in paragraph (1) of
this subsection, the commission will consider whether suspension or
reinstatement is necessary to prevent waste or protect correlative rights. An
applicant may also request a hearing when unable to obtain written consent from
all operators in a field pursuant to subparagraph (1)(B) of this
subsection.
(5) Suspension of the
allocation formula will balance the field's production status at zero, and
provide for a 100% capacity allowable.
(k) Administrative Special Allowable.
(1) A well which has a deliverability,
capability, and six consecutive months of production of 100 Mcf per day or
less, and the well is not producing in a 49(b) field, will be assigned an
administrative special allowable pursuant to subsection (h) of this section.
Additionally, a well which has a deliverability, capability, and six
consecutive months of production of 250 Mcf a day or less, and the well is
producing in a prorated field without special field rules, will be assigned an
administrative special allowable pursuant to subsection (h) of this
section.
(2) A well, other than an
administrative special allowable well defined in paragraph (1) of this
subsection, in a prorated field whose average monthly production during the
last six consecutive months falls below the cutoff percentage (determined by
the commission at the monthly statewide hearing) of the well's top allowable
averaged over that six-month period, will be assigned an administrative special
allowable pursuant to subsection (h) of this section. The initial cutoff
percentage is 70% and will remain at 70% until changed in accordance with this
subparagraph. Administrative special allowable wells under this subsection will
remain administrative special allowable wells until:
(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.