| (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 §3.49(b)
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, §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.
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| Source Note: The provisions of this §3.31 adopted to be effective September 1, 1986, 11 TexReg 3680; amended to be effective July 1, 1992, 17 TexReg 3236; amended to be effective September 20, 1993, 18 TexReg 5977; amended to be effective January 11, 1994, 19 TexReg 71; amended to be effective May 19, 1997, 22 TexReg 4065; amended to be effective October 20, 1997, 22 TexReg 10311; amended to be effective February 1, 2016, 41 TexReg 785 |
