| (2) Second priority shall be given to gas from special allowable wells as defined in §3.31(g)(6) of this title (relating to Gas Reservoirs and Gas Well Allowable) (Statewide Rule 31) granted special allowable status after the effective date of this section to prevent physical waste. Wells classified as special allowable wells pursuant to notice and hearing prior to the effective date of this section shall be given second priority unless a new determination is made that the special allowable status is not necessary to prevent physical waste. (3) Third priority shall be given to the remainder of casinghead gas so that gas produced in association with oil production shall not be wastefully vented and oil production shall not be unnecessarily curtailed. Gas recovered from a landfill or sewage process shall also be given third priority. (4) Fourth priority shall be given to gas from wells classified under §3.49(b) of this title (relating to Gas-Oil Ratio) (Statewide Rule 49), but only to the extent of one full allowable for multiple 49(b) wells. (5) Fifth priority shall be given to gas from administrative special allowable wells as defined in §3.31(g)(7) of this title (relating to Gas Reservoirs and Gas Well Allowable) (Statewide Rule 31) to gas from special allowable wells as described in §3.31(g)(6) granted that status prior to the effective date of this section (see paragraph (2) of this subsection) without notice and hearing, and to gas from special allowable wells granted that status by the commission subsequent to the effective date of this section after notice and hearing for other reasons than to prevent physical waste. (6) Sixth priority shall be given to the remainder of gas well gas, including limited wells (see subsection (g) of this section). (j) Prohibition against discriminating in favor of purchaser's own production. A first purchaser of natural gas may not discriminate between or against natural gas of a similar kind or quality in favor of its own production or production in which it may be directly or indirectly interested in whole or in part. (k) Special marketing programs. If a first purchaser elects to qualify an affiliate as a separate first purchaser, the first purchaser may designate the affiliate as a special marketing program. The special marketing program must comply with the following with respect to the purchase and acceptance of delivery of natural gas. (1) For purposes of this subsection, an affiliated first purchaser is the special marketing program purchaser's affiliate whose pipeline is being used to transport the gas in the special marketing program. (2) Each and every special marketing program offer to purchase gas must be made without discrimination within a field and without unjust or unreasonable discrimination between fields to all operators for all wells on the pipeline system of the affiliated first purchaser from which the affiliated first purchaser has been purchasing and accepting delivery of gas as a first purchaser. The offer must also be made for all first, second, and third priority category gas on the affiliated first purchaser's pipeline system which it has been purchasing and accepting for delivery under an obligation to purchase and accept delivery from the tailgate of a plant processing gas to extract liquids or from a gathering system that purchases from wells and is required by contract or by its physical connections to sell its gas entirely to the affiliated first purchaser, whether or not those purchases were made as a first purchaser. (3) It is unreasonably discriminatory, and therefore prohibited, for the offer to purchase gas in the special marketing program, or for any release of gas for sale in the special marketing program to require release of any claims under any existing contract or require modification of any existing contract provisions other than a release of the gas for sale in the special marketing program or a requirement of a volume-for-volume basis for gas taken in the special marketing program to be credited against the contract from which gas is released for sale in the special marketing program, if the credit provision is limited to the period of actual participation in the special marketing program. Nothing in this paragraph shall prohibit an operator of any well from offering terms inconsistent with these provisions. The making of an offer which is not accepted shall not affect rights under existing contracts. (4) If a well producing priority category 1, 2, or 3 gas is shut in or curtailed, and waste, as defined in the Texas Natural Resource Code, Title 3, is found by the commission to exist, neither a special marketing program purchaser nor its affiliated first purchaser may purchase lower priority category gas until all the priority Category 1, 2, and 3 gas is taken and resulting waste is prevented. The commission shall expedite determination of waste, and may enter an emergency, temporary, or interim order upon application and affidavit proof that waste is occurring. The application and affidavit proof must be accompanied by supporting documentation, including data on well performance, and a statement that the application and affidavit proof has been served on the first purchaser(s) of the subject well(s) and any affiliated special marketing program purchaser using the first purchaser(s) same pipeline system on or before the date the application and affidavit proof has been mailed or delivered to the commission, with the opportunity for the first purchaser to respond within five days of service or of commission receipt, whichever is latest. (5) The affiliated first purchaser must continue in compliance with this section to purchase and accept delivery from the wells for which the offer was made and not accepted. (6) With respect to the purchase of gas from those that accept an offer made pursuant to this subsection, the special marketing program purchaser must comply with this section and §3.28 and §3.31 of this title (relating to Potential and Deliverability of Gas Wells To Be Ascertained and Reported, and Gas Reservoirs and Gas Well Allowable) (Statewide Rules 28 and 31) as a separate first purchaser. (7) It is not the objective of this subsection to abrogate any existing contract rights or obligations. (l) Sellers' complaint procedure. Any operator or nonoperator that is denied by the first purchaser in violation of this section or §3.28 or §3.31 of this title (relating to Potential and Deliverability of Gas Wells To Be Ascertained and Reported, and Gas Reservoirs and Gas Well Allowable) (Statewide Rules 28 and 31) the opportunity to produce a well's ratable share of gas or opportunity for a well to participate in a special marketing program may file a complaint with the commission and request the commission to direct the first purchaser to end the discriminatory practices. A complainant may request a hearing regarding alleged discriminatory practices or to determine whether a first purchaser is or has, through gas exchange agreements or through actions of its affiliate(s), denied an operator a reasonable opportunity to market its gas. (m) Purchasers' complaint procedure. If after reasonable notice by the purchaser, an operator fails to comply with a first purchaser's request to reduce production ratably in compliance with this section and §3.28 and §3.31 of this title (relating to Potential and Deliverability of Gas Wells To Be Ascertained and Reported, and Gas Reservoirs and Gas Well Allowable) (Statewide Rules 28 and 31) the purchaser may file a complaint with the commission and request the commission to direct the operator to comply with the purchaser's requests to reduce production ratably. The complainant or the operator may request the commission to take further action, including setting the issue for hearing. (n) Hardship exceptions. If the operation of this section or §3.28 or §3.31 of this title (relating to Potential and Deliverability of Gas Wells To Be Ascertained and Reported, and Gas Reservoirs and Gas Well Allowable) (Statewide Rules 28 and 31) causes undue hardship, the commission may, after proper notice and hearing, grant an exception or take appropriate action, including action to prevent waste or protect correlative rights. (o) Severability provisions. If any provision of this section or its application to any person or circumstance is held invalid, the invalidity shall not affect other provisions or applications of the section which can be given effect without the invalid provisions or appreciation, and the provisions of the section are declared to be severable. |
| Source Note: The provisions of this §3.34 adopted to be effective September 1, 1986, 11 TexReg 3691; amended to be effective March 2, 1987, 12 TexReg 536; amended to be effective September 8, 1987, 12 TexReg 2860; amended to be effective February 29, 1988, 13 TexReg 838; amended to be effective July 1, 1992, 17 TexReg 3236; amended to be effective November 24, 2004, 29 TexReg 10728 |
