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TITLE 16ECONOMIC REGULATION
PART 1RAILROAD COMMISSION OF TEXAS
CHAPTER 3OIL AND GAS DIVISION
RULE §3.86Horizontal Drainhole Wells

  (6) In addition to the record well, each surface location of a stacked lateral well shall be listed on the proration schedule, but no allowable shall be assigned for an individual surface location. Each surface location of a stacked lateral well shall be required to have a separate well status report (Form G-10 or Form W-10, as applicable) and the sum of all horizontal drainhole test rates shall be reported as the test rate for the record well.

  (7) An operator shall report all production from horizontal drainholes included as a stacked lateral well on the production report that includes the record well. Production reported for a record well shall equal the total production from all of the horizontal drainholes comprising the stacked lateral well. An operator shall measure the production from each surface location of a stacked lateral well. An operator shall measure the full well stream with the measurement adjusted for the allocation of condensate based on the gas to liquid ratio established by the most recent Form G-10 test rate for that surface location. The gas and condensate production shall be identified by individual API number, and recorded and reported on the "Supplementary Attachment to Form PR".

  (8) If the field is designated as absolute open flow (AOF) pursuant to §3.31(j) of this title and that designation is removed, the Commission shall assign a single gas allowable to each record well classified as a gas well. The assigned allowable may be produced from any one, all, or a combination of the horizontal drainholes that constitute the stacked lateral well.

  (9) An operator shall file Form W-3A, Notice of Intention to Plug and Abandon, and Form W-3, Well Plugging Report, for each horizontal drainhole within the stacked lateral well as required by §3.14 of this title (relating to Plugging).

  (10) In order to maintain a single operator of record for a stacked lateral well, a certificate of compliance changing the designation of an operator for a horizontal drainhole in a stacked lateral well pursuant to §3.58 of this title (relating to Certificate of Compliance and Transportation Authority; Operator Reports) may only be approved if certificates of compliance designating the same operator have been filed for all horizontal drainholes within the stacked lateral well.

  (11) An operator may remove a horizontal drainhole from a designated stacked lateral well by filing an amended drilling permit application and a completion report. If the horizontal drainhole being removed is the record well for the stacked lateral and there are still multiple horizontal drainholes remaining within the designated stacked lateral well, then the operator shall designate a new record well for the stacked lateral well prior to removing the existing record well from the designated stacked lateral well.

(g) Drilling applications and required reports.

  (1) Application. Any intent to develop a new or existing well with horizontal drainholes must be indicated on the application to drill. An application for a permit to drill a horizontal drainhole shall include the fees required by §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 knowledge. If the penetration point on the proposed horizontal drainhole is located on an offsite tract, the following conditions shall be met prior to submission of the application to drill:

    (A) The applicant shall give written notice by certified mail, return receipt requested, to all mineral owners of any offsite tracts through which the proposed wellbore path traverses from the point of penetration. The notice shall identify the proposed well, include a plat clearly depicting the projected path of the entire wellbore, and allow the party notified not less than 21 days to object to the proposed offsite tract penetration. Notice of offsite tract penetration is not required if:

      (i) written waivers of objection are received by the applicant from all mineral owners of any offsite tracts and the waivers are attached to the drilling permit application; or

      (ii) the applicant is the only mineral owner of any offsite tracts.

    (B) For purposes of this subsection, the mineral owners of any offsite tracts through which the proposed wellbore path traverses from the point of penetration include:

      (i) the designated operator;

      (ii) all lessees of record for any offsite tracts which have no designated operator; and

      (iii) all owners of unleased mineral interests where there is no designated operator or lessee.

    (C) In the event the applicant is unable after due diligence to locate the whereabouts of any person to whom notice is required by this subsection, the applicant shall publish notice of this application pursuant to Chapter 1 of this title (relating to Practice and Procedure).

    (D) If any mineral owner of an offsite tract objects to the location of the penetration point, the applicant may request a hearing to demonstrate the necessity of the location of the penetration point of the well to prevent waste or to protect correlative rights.

    (E) If any person specified in subparagraph (B) of this paragraph did not receive notice as required in subparagraph (A) of this paragraph, that person may request a hearing. If the Commission determines at a hearing that the applicant did not provide the notice as required by subparagraph (A) of this paragraph, the Commission may cancel the permit.

    (F) To mitigate the potential for wellbore collisions, the applicant shall provide copies of any directional surveys to the parties entitled to notice under this section, upon request, within 15 days of the applicant's receipt of a request.

  (2) Drilling unit plat. The application to drill a horizontal drainhole shall be accompanied by a plat as required by §3.5(h) of this title (relating to Application to Drill, Deepen, Reenter, or Plug Back).

    (A) For fields that require a proration unit plat, in addition to the plat requirements provided for in §3.5(h) of this title, the plat shall include the lease, pooled unit or unitized tract, showing the acreage assigned to the drilling unit for the proposed well and the acreage assigned to the drilling units for all current applied for, permitted, or completed oil, gas, or oil and gas wells on the lease, pooled unit, or unitized tract.

    (B) An amended drilling permit application and plat shall be filed after completion of the horizontal drainhole well if the Commission determines that the drainhole as drilled is not reasonable with respect to the drainhole represented on the plat filed with the drilling permit application. A horizontal drainhole, as drilled, shall be considered reasonable with respect to the drainhole represented on the plat filed with the drilling permit application if the take points on the as-drilled plat comply with subsection (b)(4) and (5) of this section and with any applicable lease line spacing rules.

  (3) Directional survey. A directional survey from the surface to the farthest point drilled on the horizontal drainhole shall be required for all horizontal drainholes. The directional survey and accompanying reports shall be conducted and filed in accordance with §3.11 and §3.12 of this title (relating to Inclination and Directional Surveys Required, and Directional Survey Company Report, respectively). No allowable shall be assigned to any horizontal drainhole well until an acceptable directional survey and survey plat has been filed with the Commission.

  (4) Proration unit plat. The required proration unit plat must depict the lease, pooled unit, or unitized tract, showing the acreage assigned to the proration unit for the horizontal drainhole well, the acreage assigned to the proration units for all wells on the lease, pooled unit, or unitized tact, and the path, penetration point, take points, and terminus of all drainholes. No allowable shall be assigned to any horizontal drainhole well until an acceptable proration unit plat has been filed with the Commission. Proration unit plats are not required for wells in a designated UFT field. However, an operator of a well in a designated UFT field may file a proration unit plat along with Form P-16. Designated UFT fields have no maximum diagonal limit.

  (5) As-drilled plat. An as-drilled plat is required for each horizontal drainhole well. The as-drilled plat for each horizontal drainhole well shall show the surface location, actual wellbore path, penetration point, terminus, and first and last take points of the horizontal drainhole. If the drilling permit for the horizontal drainhole well is approved with one or more NPZs, the as-drilled plat shall show the nearest take point on either side of each NPZ.

Cont'd...

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