Current through Reg. 49, No. 12; March 22, 2024
(a) Distance
requirements.
(1) No well for oil, gas, or
geothermal resource shall hereafter be drilled nearer than 1,200 feet to any
well completed in or drilling to the same horizon on the same tract or farm,
and no well shall be drilled nearer than 467 feet to any property line, lease
line, or subdivision line; provided the commission, in order to prevent waste
or to prevent the confiscation of property, may grant exceptions to permit
drilling within shorter distances than prescribed in this paragraph when the
commission shall determine that such exceptions are necessary either to prevent
waste or to prevent the confiscation of property.
(2) When an exception to this section is
desired, application shall be made by filing the proper fee as provided in
§
RSA
3.78 of this title (relating to Fees and
Financial Security Requirements) and the appropriate form according to the
instructions on the form, accompanied by a plat as described in subsection (c)
of this section. A person acquainted with the facts pertinent to the
application shall certify that all facts stated in it are true and within the
knowledge of that person.
(A) When an
exception to only the minimum lease-line spacing requirement is desired, the
applicant shall file a list of the mailing addresses of all affected persons,
who, for tracts closer to the well than the greater of one-half of the
prescribed minimum between-well spacing distance or the minimum lease-line
spacing distance, include:
(i) the designated
operator;
(ii) all lessees of
record for tracts that have no designated operator; and
(iii) all owners of record of unleased
mineral interests.
(B)
When an exception to the minimum between-well spacing requirement of this
section is desired, the applicant is required to file the mailing addresses of
those persons identified in subparagraph (A)(i)-(iii) of this paragraph for
each adjacent tract and each tract nearer to the well than the greater of
one-half the prescribed minimum between-well spacing distance or the minimum
lease-line spacing.
(3)
An exception may be granted pursuant to subsection (h)(2) of this section, or
after a public hearing held after at least 10 days notice to all persons
described in paragraph (2) of this subsection. At any such hearing, the burden
shall be on the applicant to establish that an exception to this section is
necessary either to prevent waste or to prevent the confiscation of property.
For purposes of giving notice of an application for an exception, the
commission will presume that every person described in paragraph (2) of this
subsection will be affected by the application, unless the Oil and Gas Division
director or the director's delegate determines they are unaffected. Such
determination will be made only upon written request and a showing by the
applicant that:
(A) competent, conclusive
geological or engineering data indicate that no drainage of hydrocarbons from
the particular tract(s) subject to the request will occur due to production
from the applicant's proposed well; and
(B) notice to the particular operator(s),
lessee(s) of record, or owner(s) of record of unleased mineral interest would
be unduly burdensome or expensive.
(4) If, after diligent efforts, the applicant
is unable to ascertain the name and address of one or more persons required by
this subparagraph to be notified, then the applicant shall notify such persons
by publishing notice of the application in a form approved by the Commission.
The applicant shall publish the notice once each week for two consecutive weeks
in a newspaper of general circulation in the county where the well will be
located. The first publication shall be published at least 14 days before the
protest deadline in the notice of application. The applicant shall file with
the Commission a publisher's affidavit or other evidence of
publication.
(b) The
distances mentioned in subsection (a) of this section are minimum distances to
provide standard development on a pattern of one well to each 40 acres in areas
where proration units have not been established.
(c) In filing an application for an exception
to the distance requirements of this section, in addition to the plat
requirements in §
RSA
3.5 of this title (relating to Application to
Drill, Deepen, Reenter, or Plug Back) (Statewide Rule 5), the applicant shall
attach to each copy of the form a plat that:
(1) shows to scale the property on which the
exception is sought; all other applied for, permitted, and completed oil, gas,
or oil and gas wells in the same field and reservoir on said property; and all
adjoining surrounding properties and completed wells in the same field and
reservoir within the prescribed minimum between-well spacing distance of the
applicant's well;
(2) shows the
entire lease, pooled unit, or unitized tract indicating the names and
offsetting properties of all affected offset operators;
(3) corresponds to the listing required under
subsection (a)(2) of this section;
(4) is certified by a person acquainted with
the facts pertinent to the application that the plat is accurately drawn to
scale and correctly reflects all pertinent and required data.
(d) In the interest of protecting
life and for the purpose of preventing waste and preventing the confiscation of
property, the commission reserves the right in particular oil, gas, and
geothermal resource fields to enter special orders increasing or decreasing the
minimum distances provided by this section.
(e) No well drilled in violation of this
section without special permit obtained, issued, or granted in the manner
prescribed in said section, and no well drilled under such special permit or on
the commission's own order which does not conform in all respects to the terms
of such permit shall be permitted to produce either oil, gas, or geothermal
resources and any such well so drilled in violation of said section or on the
commission's own order shall be plugged.
(f) No operator shall commence the drilling
of a well, either on a regular location or on a Rule 37 exception location,
until first having been notified by the commission that the regular location
has been approved, or that the Rule 37 exception location has been approved.
Failure of an operator to comply with this subsection will cause such well to
be closed in and the holding up of the allowable of such well.
(g) Subdivision of property.
(1) In applying Rule 37 (Statewide Spacing
Rule) of statewide application and in applying every special rule with relation
to spacing in every field in this state, no subdivision of property made
subsequent to the adoption of the original spacing rule will be considered in
determining whether or not any property is being confiscated within the terms
of such spacing rule, and no subdivision of property will be regarded in
applying such spacing rule or in determining the matter of confiscation if such
subdivision took place subsequent to the promulgation and adoption of the
original spacing rule.
(2) Any
subdivision of property creating a tract of such size and shape that it is
necessary to obtain an exception to the spacing rule before a well can be
drilled thereon is a voluntary subdivision and not entitled to a permit to
prevent confiscation of property if it were either:
(A) segregated from a larger tract in
contemplation of oil, gas, or geothermal resource development; or
(B) segregated by fee title conveyance from a
larger tract after the spacing rule became effective and the voluntary
subdivision rule attached.
(3) The date of attachment of the voluntary
subdivision rule is the date of discovery of oil, gas, or geothermal resource
production in a certain continuous reservoir, regardless of the subsequent
lateral extensions of such reservoir, provided that such rule does not attach
in the case of a segregation of a small tract by fee title conveyance which is
not located in an oil, gas, or geothermal resource field having a discovery
date prior to the date of such segregation.
(4) The date of attachment of the voluntary
subdivision rule for multiple reservoir fields located in the same structural
feature and separated vertically but not laterally (i.e., the multiple
reservoirs overlap geographically at least in part), shall be the same date as
that assigned to the earliest discovery well for such multiple reservoir
structure.
(5) If a newly
discovered reservoir is located outside the then productive limits of any
previously discovered reservoirs and is classified by the commission as a newly
discovered field, then the date of discovery of such newly found reservoir
remains the date of attachment for the voluntary subdivision rule, even though
subsequent development may result in the extension of such newly discovered
reservoir until it overlies or underlies older reservoirs with prior discovery
dates.
(6) The date of attachment
of the voluntary subdivision rule for a reservoir that has been developed
through expansion of separately recognized fields into a recognized single
reservoir and is merged by commission order is the earliest discovery date of
production from such merged reservoir, and that date will be used subsequent to
the date of merger of the fields into a single field.
(7) The date of attachment of the voluntary
subdivision rule for a reservoir under any special circumstance which the
commission deems sufficient to provide for an exception may be established
other than as prescribed in this section, so that innocent parties may have
their rights protected.
(h) Exceptions to Rule 37.
(1) An order granting exception to Rule 37
wherein protest is had shall carry as its last paragraph the following
language: It is further ordered by the commission that this order shall not be
final until 20 days after it is actually mailed to the parties by the
commission; provided that if a motion for rehearing of the application is filed
by any party at interest within such 20-day period, this order shall not become
final until such motion is overruled, or if such motion is granted, this order
shall be subject to further action by the commission. Permits issued pursuant
to paragraph (2) of this subsection shall be issued without the 20-day waiting
period.
(2) The director of the Oil
and Gas Division or a delegate of the director may issue an exception permit
for drilling, deepening, or additional completion, recompletion, or reentry in
an existing well bore if:
(A) a notice of at
least 10 days has been given, and no protest has been made to the application;
or
(B) written waivers of objection
are received from all persons to whom notice would be given pursuant to
subsection (a)(2) of this section.
(3) Applications filed for drilling,
deepening, or additional completion, recompletion, or reentry will be processed
and permit issued in accordance with this regulation, subject to the
commission's discretion to set any application for hearing. If the director or
a delegate of the director declines to grant an application, the operator may
request a hearing.
(i)
Rule 37 permits.
(1) Unless otherwise
specified in a permit or in a final order granting an exception to this
section, permits issued by the commission for completions requiring an
exception to this section shall expire two years from the effective date of the
permit unless drilling operations are commenced in good faith within the
two-year permit period. The permit period will not be extended.
(2) So long as a Rule 37 exception is in
litigation, the two-year permit period will not commence. On final adjudication
and decree from the last court of appeal the two-year permit period will
commence, beginning on the date of final decree.
(j) Once an application for a spacing
exception has been denied, no new application shall be entertained except on
changed conditions. Changed conditions in the commission's administration of
its Spacing Rule 37 and amendments thereto applicable to the various special
fields and reservoirs of Texas and in passing upon applications for permits
under said rule and amendments shall include, among other things, the
following.
(1) Any material changes in the
physical conditions of the producing reservoir under the tract under
consideration or under the area surrounding said tract which would materially
affect the recovery of oil, gas, or geothermal resource from the given
tract.
(2) Any material changes in
the distribution or allocation of allowable production in the area surrounding
the tract under consideration which would materially affect or tend to affect
the recovery of oil, gas, or geothermal resource from the given
tract.
(3) Any additional permits
granted by the commission for wells drilled in the area surrounding or on
offset tracts to the tract under consideration which would materially affect or
tend to affect the recovery of oil, gas, or geothermal resource from the given
tract.
(4) Any additional facts or
evidence thereof materially affecting or tending to affect the recovery of oil,
gas, or geothermal resource from the applicant's tract, or the property rights
of applicant, which were not known of and considered by the commission at any
previous hearing or application thereon.
(k) Exceptions to Statewide Rule 37 apply to
the total depth for which the permit is granted or if special field rules are
applicable, an exception to the spacing rule shall be granted only for the
reservoir or reservoirs or applicable depth to which the well is projected.
Subsequent recompletion of the well to reservoirs other than that covered by
the permit issued would be granted only after the filing and processing of a
new application.
(l) Salt dome oil
or gas fields.
(1) The provisions of this
section shall not apply to certain approved salt dome oil or gas fields. An
application for classification as a salt dome oil or gas field shall include
the following:
(A) geological evidence
proving that an oil or gas field is a piercement-type salt dome, that faulting
has caused the producing formation to be at a 45 angle or greater, and that
each well is likely to be completed in a separate reservoir;
(B) establishment, by plat or otherwise, of
the probable productive limits of the salt dome area;
(C) certification that notice of the
application for salt dome classification with evidence included has been given
to all operators in the field or, if a new field, in accordance with subsection
(a)(2) of this section; and
(D) a
list of persons notified and the date notice was mailed.
(2) The director of the Oil and Gas Division,
or the director's delegate, may administratively grant an application for salt
dome classification if the evidence proves that the oil or gas field is a salt
dome.
(3) The operator may request
a hearing if the director of the Oil and Gas Division, or the director's
delegate, declines to approve an application. If an application is protested
within 10 days of notice, it will be set for hearing. After hearing, the
examiner shall recommend final commission action.
(4) The amendment providing for
administrative approval of salt dome oil and gas fields does not alter the
status of those fields previously approved and listed in this
section.
(m) Wells that
were deviated, whether intentionally or otherwise, prior to April 1, 1949, and
are bottomed on the lease where permitted, are legal wells. The Rule 37
department will develop the record in each reapplication for such deviated
wells so that the commission can determine the condition of each such well. The
following will be adduced from sworn testimony and authenticated data at each
such hearing.
(1) That such well was deviated
before April 1, 1949. Proof of completion of the well prior to that date and
its subsequent producing status is not adequate proof of deviation.
(2) That such well was completed on the lease
where the surface location was permitted. Such bottom hole location must be
proven by the submission of an acceptable authenticated directional
survey.
(3) That such bottom hole
location is one that either is not in direct violation of a condition or
limitation placed in the permit to drill, or is not in violation of a specific
commission order. Example: Denial order for a Rule 37 application for a
comparable location.
(4) That the
present operator of such well or its predecessor has not filed either a false
inclination or a false directional survey with the commission.
(5) A well that is either bottomed off the
lease, deviated after April 1, 1949, drilled in direct violation of a specific
condition or limitation placed in the Rule 37 permit, or is in violation of a
specific commission order, is an illegal well and it shall not be permitted,
and such well where permit is refused shall not be considered a replaceable
well under commission replacement-well regulation.
(6) The provisions of this section do not
preclude an operator from applying for approval of the bottom hole location of
a deviated well as a reasonable location under the rules and regulations now
applicable, provided, that such bottom hole location shall not be approved
unless the applicant proves that a vertical projection of the permitted surface
location for such well is within the productive limits of the
reservoir.