|(a) Definitions. The following words and terms, when
used in this section, shall have the following meanings, unless the
context clearly indicates otherwise.
(1) Commission designee--Director of the Oil and Gas
Division or any Commission employee designated in writing by the director
or the Commission.
(2) Drilling unit--The acreage assigned to a well for
(3) Proration unit--The acreage assigned to a well
for the purpose of assigning allowables and allocating allowable production
to the well.
(4) Substandard acreage--Less acreage than the smallest
amount established for standard or optional drilling units.
(5) Surplus acreage--Substandard acreage within a lease,
pooled unit, or unitized tract that remains unassigned after the assignment
of acreage to each applied for, permitted, or completed well in a
field, in an amount equaling or exceeding the amount established for
standard or optional drilling units. Surplus acreage is distinguished
from the term "tolerance acreage," in that tolerance acreage is defined
in context with proration regulation, while surplus acreage is defined
by this rule only in context with well density regulation.
(6) Tolerance acreage--Acreage within a lease, pooled
unit, or unitized tract that may be assigned to a well for proration
purposes pursuant to special field rules in addition to the amount
established for a prescribed or optional proration unit.
(b) Density requirements.
(1) General prohibition. No well shall be drilled on
substandard acreage except as hereinafter provided.
(2) Standard units.
(A) The standard drilling unit for all oil, gas, and
geothermal resource fields wherein only spacing rules, either special,
country regular, or statewide, are applicable is hereby prescribed
to be the following.
(B) The spacing rules listed in subparagraph (A) of
this paragraph are not exclusive. If any spacing rule not listed in
subparagraph (A) of this subsection is brought to the attention of
the commission, it will be given an appropriate acreage assignment.
(c) Development to final density. An application to
drill a well for oil, gas, or geothermal resource on a drilling unit
composed of surplus acreage, commonly referred to as the "tolerance
well," may be granted as regular when the operator seeking such permit
certifies to the commission in a prescribed form the necessary data
to show that such permit is needed to develop a lease, pooled unit,
or unitized tract to final density, and only in the following circumstances:
(1) when the amount of surplus acreage equals or exceeds
the maximum amount provided for tolerance acreage by special or county
regular rules for the field, provided that this paragraph does not
apply for a lease, pooled unit, or unitized tract that is completely
developed with optional units and the special or county regular rules
for the field do not have a tolerance provisions expressly made applicable
to optional proration units;
(2) if the special or county regular rules for the
field do not have a tolerance provision expressly made applicable
to optional proration units, when the amount of surplus acreage equals
or exceeds one-half of the smallest amount established for an optional
drilling unit; or
(3) if the applicable rules for the field do not have
a tolerance provision for the standard drilling or proration unit,
when the amount of surplus acreage equals or exceeds one-half the
amount prescribed for the standard unit.
(d) Applications involving the voluntary subdivision
(1) Density exception not required. An exception to
the minimum density provision is not required for the first well in
a field on a lease, pooled unit, or unitized tract composed of substandard
acreage, when the leases, or the drillsite tract of a pooled unit
or unitized tract:
(A) took its present size and shape prior to the date
of attachment of the voluntary subdivision rule (§3.37(g) of
this title (relating to Statewide Spacing Rule)); or
(B) took its present size and shape after the date
of attachment of the voluntary subdivision rule (§3.37(g) of
this title (relating to Statewide Spacing Rule)) and was not composed
of substandard acreage in the field according to the density rules
in effect at the time it took its present size and shape.
(2) Density exception required. An exception to the
density provision is required, and may be granted only to prevent
waste, for a well on a lease, pooled unit, or unitized tract that
is composed of substandard acreage and that:
(A) took its present size and shape after the date
of attachment of the voluntary subdivision rule (§3.37(g) of
this title (relating to the Statewide Spacing Rule)); and
(B) was composed of substandard acreage in the field
according to the density rules in effect at the time it took its present
size and shape.
(3) Unit dissolution.
(A) If two or more separate tracts are joined to form
a unit for oil or gas development, the unit is accepted by the Commission,
and the unit has produced hydrocarbons in the preceding twenty (20)
years, the unit may not thereafter be dissolved into the separate
tracts with the rules of the commission applicable to each separate
tract if the dissolution results in any tract composed of substandard
acreage for the field from which the unit produced, unless the Commission
approves such dissolution.
(B) The Commission shall grant approval only after
application, notice, and an opportunity for hearing. The applicant
seeking the unit dissolution shall provide a list of the names and
addresses of all current lessees and unleased mineral interest owners
of each tract within the joined or unitized tract at the time the
application is filed. The Commission shall give notice of the application
to all current lessees and unleased mineral interest owners of each
tract within the joined or unitized tract. Additionally, if one or
more wells on the unitized tract has produced from the field within
the 12-month period prior to the application, the applicant shall
include on the list all affected persons described in subsection (h)(1)(A)
of this section, and the Commission shall give notice of the application
to these affected persons.
(C) A Commission designee may grant administrative
approval if the Commission designee determines that granting the application
will not result in the circumvention of the density restrictions of
this section or other Commission rules, and if either:
(i) written waivers are filed by all affected persons;
(ii) no protest is filed within the time set forth
in the notice of application.
(e) Application involving unitized areas with entity
for density orders. An exception to the minimum density provision
is not required for a well in a unitized area for which the commission
has granted an entity for density order, if the sum of all applied
for, permitted, or completed producing wells in the field within the
unitized area, multiplied by the applicable density provision, does
not exceed the total number of acres in the unitized area. The operator
must indicate the docket number of the entity for density order on
the application form.
(f) Exceptions to density provisions authorized. The
Commission, or Commission designee, in order to prevent waste or,
except as provided in subsection (d)(2) of this section, to prevent
the confiscation of property, may grant exceptions to the density
provisions set forth in this section. Such an exception may be granted
only after notice and an opportunity for hearing.
(g) Filing requirements.
(1) Application. An application for permit to drill
shall include the fees required in §3.78 of this title (relating
to Fees and Financial Security Requirements) and shall be certified
by a person acquainted with the facts, stating that all information
in the application is true and complete to the best of that person's
(2) Plat. When filing an application for an exception
to the density requirements of this section, in addition to the plat
requirements in §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 application a plat that:
(A) depicts the lease, pooled unit, or unitized tract,
showing thereon the acreage assigned to the drilling unit for the
proposed well and the acreage assigned to all current applied for,
permitted, or completed oil, gas, or oil and gas wells in the same
field or reservoir which are located within the lease, pooled unit,
or unitized tract;
(B) on large leases, pooled units, or unitized tracts,
if the established density is not exceeded as shown on the face of
the application, outlines the acreage assigned to the well for which
the permit is sought and the immediately adjacent wells on the lease,
pooled unit, or unitized tract;
(C) on leases, pooled units, or unitized tracts from
which production is secured from more than one field, outlines the
acreage assigned to the wells in each field that is the subject of
the current application;
(D) corresponds to the listing required under subsection
(g)(1)(A) of this section.
(E) 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.
(3) Substandard acreage. An application for a permit
to drill on a lease, pooled unit, or unitized tract composed of substandard
acreage must include a certification in a prescribed form indicating
the date the lease, or the drillsite tract of a pooled unit or unitized
tract, took its present size and shape.
(4) Surplus acreage. An application for permit to drill
on surplus acreage pursuant to subsection (c) of this section must
include a certification in a prescribed form indicating the date the
lease, pooled unit, or unitized tract took its present size and shape.
(5) Certifications. Certifications required under paragraphs
(3) and (4) of this subsection shall be filed on Form W-1A, Substandard
(A) The operator shall file the Form W-1A with the
drilling permit application and shall indicate the purpose of filing.
The operator shall accurately complete all information required on
the form in accordance with instructions on the form.
(B) The operator shall list the field or fields for
which the substandard acreage certification applies in the designated
area on the form. If there are more than three fields for which the
certification applies, the operator shall attach additional Forms
W-1A and shall number the additional pages in sequence.
(C) The operator shall file the original Form W-1A
with the Commission's Austin office and a copy with the appropriate
district office, unless the operator files electronically.
(D) The operator or the operator's agent shall certify
the information provided on the Form W-1A is true, complete, and correct
by signing and dating the form, and listing the requested identification
and contact information.
(E) Failure to timely file the required information
on the appropriate form may result in the dismissal of the application.
(h) Procedure for obtaining exceptions to the density
(1) Filing requirements. If a permit to drill requires
an exception to the applicable density provision, the operator must
file, in addition to the items required by subsection (g) of this
(A) a list of the names and addresses of all affected
persons. For the purpose of giving notice of application, the Commission
presumes that affected persons include the operators and unleased
mineral interest owners of all adjacent offset tracts, and the operators
and unleased mineral interest owners of all tracts nearer to the proposed
well than the prescribed minimum lease-line spacing distance. The
Commission designee may determine that such a person is not affected
only upon written request and a showing by the applicant that:
(i) competent, convincing geological or engineering
data indicate that drainage of hydrocarbons from the particular tracts
subject to the request will not occur due to production from the proposed
(ii) notice to the particular operators and unleased
mineral interest owners would be unduly burdensome or expensive;
(B) engineering and/or geological data, including a
written explanation of each exhibit, showing that the drilling of
a well on substandard acreage is necessary to prevent waste or to
prevent the confiscation of property;
(C) additional data requested by the Commission designee.
(2) Notice of application. Upon receipt of a complete
application, the Commission will give notice of the application by
mail to all affected persons for whom signed waivers have not been
submitted. If, after diligent efforts, the applicant is unable to
ascertain the name and address of one or more persons required by
this subsection 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. Cont'd...