| (C) an environmentally corrected, calibrated gamma ray log with values greater than 100 API units over the Devonian age stratigraphic section, or a gamma ray log with superimposed indications of the shale base line and the gamma ray index of 0.7 over this section or, if the gamma ray log is not reasonably available, a driller's log or similar report indicating the general characteristics of the strata penetrated and the corresponding depths at which they are encountered throughout the Devonian age stratigraphic section; (D) information which calculates the percentage of footage of the producing interval which is not Devonian shale as indicated by the gamma ray log, driller's log, or similar report; (E) information which demonstrates that the percentage of potentially disqualifying nonshale footage for the stratigraphic section selected is equal to or less than 5.0% of the Devonian stratigraphic age interval; and (F) reference to a standard stratigraphic chart or text establishing that the producing interval is a shale of Devonian age. (5) Applications for wells producing designated tight formation gas shall include: (A) the completed applicable commission form; (B) copies of all Gas Well Back Pressure Test, Completion or Recompletion Reports and Logs ever filed on the subject well; (C) specific reference to the commission docket number assigned to the applicable designated tight formation area certification along with a copy of the map with the subject well location shown, which outlines the designated tight formation area approved by the commission. (6) Applications for wells producing production enhancement gas shall include: (A) the completed applicable commission form; (B) copies of all Gas Well Back Pressure Test, Completion or Recompletion Reports and Logs ever filed on the subject well; (C) a description of the production enhancement work that has been performed on the well, including the dates the work was commenced and completed, or that will be performed on the well; (D) an itemized statement of costs incurred in performing the production enhancement work, including copies of invoices and bills for such work, or, if the work has not yet been completed, estimates of such costs; (E) a statement estimating, for a five-year test period beginning from the month in which the application is filed, the increase in gas production resulting from the application of production enhancement work; (F) calculations showing that the projected increase in revenue does not exceed 200% of the §103 price; (G) the renegotiated price; (H) a copy of that portion of the sales contract that authorizes collection of the renegotiated price; and (I) the properly executed statement under oath made by the purchaser of natural gas which states that there is a reasonable basis for the statements and estimates made by the applicant. (f) Application requirements for tight formation area certifications. (1) If justification for an individual well application is based on a tight formation certification and the well is not located within a geographical area that has been previously certified as a designated tight formation area or the well is not completed in a formation interval that has been previously certified as a designated tight formation by the Federal Energy Regulatory Commission under the Natural Gas Policy Act or by the Railroad Commission of Texas, the operator shall first apply for a tight formation area designation. (2) An applicant requesting a tight formation area designation shall submit a written request to the High-Cost Gas Severance Tax Section, at the address given in subsection (d)(2) of this section, for a certification that a named formation or a specific portion thereof is a tight formation. The applicant shall supply a list of the names and addresses of all affected persons. For purposes of this subsection, "affected persons" means all operators of all wells listed on the current proration schedule for the applicable field or fields located within the proposed designated area. The applicant shall mail or deliver a copy of the prescribed, completed notice of application form to all affected persons, and if required, shall publish the notice of application in accordance with §1.46 of this title (relating to Notice by Publication in Oil and Gas and Surface Mining and Reclamation Nonrulemaking Proceedings), as found in the Commission's General Rules of Practice and Procedure (16 Texas Administrative Code Chapter 1). Notice of application forms may be obtained by contacting the Railroad Commission of Texas, P.O. Box 12967, Austin, Texas 78711-2967, Attention: High-Cost Severance Tax Section. Before the application may be approved, the applicant shall submit a letter certifying that all affected persons were sent a copy of the notice of application, and the date on which the notice of application was sent. (3) In addition to the written request and list of affected persons, the applicant shall submit the following information in duplicate: (A) a geographical and geological description of the formation, including: (i) a map with an outline of the geographical limits of the formation in and around the requested area, with the proposed designated areal boundaries shown, with counties, surveys and abstracts identified and with the locations clearly identified for all wells inside the requested area that have penetrated the proposed formation; all wells (i.e., those that penetrated the proposed formation) shown on the map inside the requested area shall include either the commission's gas well identification number or the API number (if available); (ii) a list of the counties involved, abstract numbers, survey names, geologic formation markers, and any other descriptive information that will aid in identifying the subject formation including an estimate of the number of acres within the requested area; and (iii) a structure map contoured on the top of the formation and a cross-section to depict upper and lower limits of the proposed formation, or specific portion thereof. (B) engineering and geological exhibits, including a written explanation of each, to establish the following: (i) that the in situ permeability throughout the proposed formation or specific portion thereof is 0.1 millidarcies or less, as determined by geometric mean or median analysis of available data from all wells that either have been tested or are completed in the proposed formation within the requested area. If no in situ permeability estimates are provided for wells that are in the requested area and have been tested and/or are completed in the proposed formation, an explanation shall be provided; (ii) that the pre-stimulation stabilized production rate against atmospheric pressure at the wellhead, as determined by a geometric mean or median analysis of available data from all wells within the requested area that either have been tested and/or are completed in the proposed formation or specific portion thereof, does not exceed the production rate listed in the following table: Attached Graphic (iii) that no well drilled into the formation is expected to produce, without stimulation, more than five barrels of crude oil per day; and (iv) that the requested designated area does not extend beyond a two and one-half mile radius drawn from any data point well. (g) Commission action on applications for individual well certifications and for tight formation area designations. (1) Each application, for an individual well certification, shall be assigned a docket number identifying it as a severance tax application. A notice of receipt shall be sent to the applicant, indicating the assigned docket number and receipt date. All further correspondence shall include this docket number. (2) The director may administratively approve the individual well certification applications if the forms and information submitted by the operator establish that the gas qualifies as high-cost gas eligible for the severance tax exemption or tax reduction. If the director denies administrative approval, the applicant shall have the right to a hearing. (3) If Commission staff finds that the data submitted with the tight formation area designation applications are complete and comply with the requirements set out in subsection (f)(3) of this section and if no protest to the application is filed within 21 days of the notice, the application shall be presented to the Commission for approval. If Commission staff finds the data submitted are incomplete, or indicate the area does not qualify, or if a protest is filed within the 21-day notice period, the applicant shall request a hearing to have the application considered. If the applicant does not request such a hearing or if the applicant fails to appear at a requested hearing, the application shall be dismissed. Any such hearing shall be held only after at least 10 days' notice by the Commission to all affected persons as defined in subsection (f)(2) of this section. If no protestant appears at the Cont'd... |
