Texas Administrative Code
Title 31 - NATURAL RESOURCES AND CONSERVATION
Part 1 - GENERAL LAND OFFICE
Chapter 9 - EXPLORATION AND LEASING OF STATE OIL AND GAS
Subchapter C - MAINTAINING A STATE OIL AND GAS LEASE
Section 9.35 - Producing the State Lease
Universal Citation: 31 TX Admin Code ยง 9.35
Current through Reg. 49, No. 38; September 20, 2024
(a) General provisions applicable to producing oil and/or gas on state leases.
(1) The GLO will treat a well as
non-producing if no RRC production reports are filed for that well or if
reports showing zero production are filed with the RRC for that well.
(2) All wells producing natural gas and water
or natural gas and surface hydrocarbon liquids or natural gas, water and
surface hydrocarbon liquids must be produced through oil and gas separators of
ample capacity and in good working order. All separators shall be of
conventional type (or other equipment at least as efficient) to provide for
separation and measurement of all lease or pooled unit gas and liquid
hydrocarbon production before sale or surface commingling with production from
any other lease and/or pooled unit. All measurement shall be in accordance with
the American Gas Association (AGA) standards and all applicable chapters of the
American Petroleum Institute (API) Manual of Petroleum Measurement Standards
(MPMS) subject to the following:
(A) gross
lease or pooled unit gas and liquid hydrocarbon production must be measured by,
at the option of the lessee, either:
(i)
continuous measurement; or
(ii)
utilization of periodic production well tests as described in MPMS Chapter 20.5
with each lease or pooled unit being tested at least once per month;
and
(B) all lessees
shall perform both gas and oil sampling with compositional analyses at the
outlet of the initial stage of separation for each lease and/or pooled unit
with:
(i) the gas sampling occurring within
fifteen (15) days of the expiration of each six (6) month interval;
and
(ii) the oil sampling occurring
initially within thirty (30) days after completion of the well, and again
between 24 to 36 months after such initial sampling.
(3) Industry standard laboratory
analysis shall be performed on such samples in compliance with ASTM, API, and
GPA standards for gas and oil. Lessees shall retain the foregoing required oil
and gas analysis data and make such data available to the GLO as directed per
the authority retained under §
9.32(c)(3)(D)
of this title, upon request. Requests submitted by the lessee shall be sent to
the Texas General Land Office, Attention: Mineral Leasing, 1700 N. Congress
Ave., Austin, TX 78701-1495.
(4)
Lessee shall obtain written permission from GLO before surface commingling
state lease or state pooled-unit production with private lease production or
before surface commingling oil and/or gas from two separate state leases and/or
pooled state units. Lessee shall obtain written permission from GLO staff
before down-hole commingling production from two or more intervals where the
state's royalty interests differ between the proposed commingled intervals.
Send commingling requests to the Texas General Land Office, Attention: Mineral
Leasing, 1700 North Congress Avenue, Austin, TX 78701-1495. The requirement to
obtain GLO staff approval applies to all commingle exception applications
including new permits and amendments to existing permits.
(5) If, within a group of properties
comprised of surface commingled leases, tracts, and/or pooled units (Commingled
Properties):
(A) all state leases pertaining
to the Commingled Properties were executed prior to January 7, 1999;
or
(B) the State's largest revenue
interest among the Commingled Properties is less than 5.000%; or
(C) the State has a net revenue interest in
each and all of the Commingled Properties and those net revenue interests are
identical to a tolerance of 0.001, then upon written certification by lessee to
the GLO that one or more of these conditions has been met, such Commingled
Properties are deemed to have obtained permission from the GLO as required
under §
9.35(a)(3)
of this title until and unless additional, non-qualifying surface commingling
occurs in conjunction with the Commingled Properties, at which time written
permission from the GLO shall be required.
(b) Effect of production during or after the primary term. If production in paying quantities is established during the primary term, lessee shall be exempt from paying further delay rentals so long as such production continues through the primary term. Thereafter, subject to other lease requirements, terms and conditions, a lease shall remain in effect so long as oil and/or gas is being produced in paying quantities from the lease.
(c) Cessation of production.
(1) If production ceases within 60 days of a
lease anniversary date during the primary term, the lease is maintained until
the next anniversary date without payment of delay rentals. If production
ceases more than 60 days before a lease anniversary date during the primary
term, a delay rental must be timely paid on or before such anniversary date to
maintain the lease by delay rentals.
(2) If production ceases during the last year
of the primary term or within the 60 days immediately preceding that last year,
the lease will be maintained to the end of the primary term. To maintain a
lease after such cessation of production, lessee may conduct drilling or
reworking operations in compliance with §
9.34(d)
of this title, (relating to Drilling and Reworking Operations), treating the
last day of the primary term as the date of cessation of production under such
paragraph.
(3) If production ceases
after the primary term has expired, lessee may maintain its lease by conducting
drilling or reworking operations under §9.34(d) or as otherwise authorized
by the lease.
(d) No ratification or revivor. If a lease ceases to produce and is not otherwise maintained in force and effect, no action by the state or an owner of the soil on Relinquishment Act property, may ratify, re-grant or revive the terminated lease or may estop the state from asserting lease termination.
Disclaimer: These regulations may not be the most recent version. Texas may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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