|(a) General provisions applicable to producing oil
and/or gas on state leases.
(1) The GLO will treat a well as non-producing if no
RRC production reports are filed for that well or if reports showing
zero production are filed with the RRC for that well.
(2) All wells producing natural gas and water or natural
gas and surface hydrocarbon liquids or natural gas, water and surface
hydrocarbon liquids must be produced through oil and gas separators
of ample capacity and in good working order. All separators shall
be of conventional type (or other equipment at least as efficient)
to provide for separation and measurement of all lease or pooled unit
gas and liquid hydrocarbon production before sale or surface commingling
with production from any other lease and/or pooled unit. All measurement
shall be in accordance with the American Gas Association (AGA) standards
and all applicable chapters of the American Petroleum Institute (API)
Manual of Petroleum Measurement Standards (MPMS) subject to the following:
(i) gross lease or pooled unit gas and liquid hydrocarbon production
must be measured by, at the option of the lessee, either (A) continuous
measurement, or (B) utilization of periodic production well tests
as described in MPMS Chapter 20.5 with each lease or pooled unit being
tested at least once per month; and (ii) all lessees shall perform
both gas and oil sampling with compositional analyses at the outlet
of the initial stage of separation for each lease and/or pooled unit
with (A) the gas sampling occurring within fifteen (15) days of the
expiration of each six (6) month interval, and (B) the oil sampling
occurring initially within thirty (30) days after completion of the
well, and again between 24 to 36 months after such initial sampling.
Industry standard laboratory analysis shall be performed on such samples
in compliance with ASTM, API, and GPA standards for gas and oil. Lessees
shall retain the foregoing required oil and gas analysis data and
make such data available to the GLO as directed per the authority
retained under §9.32(c)(3)(D) of this title, upon request. Requests
submitted by the lessee shall be sent to the Texas General Land Office,
Attention: Mineral Leasing, 1700 N. Congress Ave., Austin, TX 78701-1495.
(3) Lessee shall obtain written permission from GLO
before surface commingling state lease or state pooled-unit production
with private lease production or before surface commingling oil and/or
gas from two separate state leases and/or pooled state units. Lessee
shall obtain written permission from GLO staff before down-hole commingling
production from two or more intervals where the state's royalty interests
differ between the proposed commingled intervals. Send commingling
requests to the Texas General Land Office, Attention: Mineral Leasing,
1700 North Congress Avenue, Austin, TX 78701-1495. The requirement
to obtain GLO staff approval applies to all commingle exception applications
including new permits and amendments to existing permits.
(4) If, within a group of properties comprised of
surface commingled leases, tracts, and/or pooled units (Commingled
(A) all state leases pertaining to the Commingled Properties
were executed prior to January 7, 1999; or
(B) the State's largest revenue interest among the
Commingled Properties is less than 5.000%; or
(C) the State has a net revenue interest in each and
all of the Commingled Properties and those net revenue interests are
identical to a tolerance of 0.001, then upon written certification
by Lessee to the GLO that one or more of these conditions has been
met, such Commingled Properties are deemed to have obtained permission
from the GLO as required under §9.35(a)(3) of this title until
and unless additional, non-qualifying surface commingling occurs in
conjunction with the Commingled Properties, at which time written
permission from the GLO shall be required.
(b) Effect of production during or after the primary
term. If production in paying quantities is established during the
primary term, lessee shall be exempt from paying further delay rentals
so long as such production continues through the primary term. Thereafter,
subject to other lease requirements, terms and conditions, a lease
shall remain in effect so long as oil and/or gas is being produced
in paying quantities from the lease.
(c) Cessation of production.
(1) If production ceases within 60 days of a lease
anniversary date during the primary term, the lease is maintained
until the next anniversary date without payment of delay rentals.
If production ceases more than 60 days before a lease anniversary
date during the primary term, a delay rental must be timely paid on
or before such anniversary date to maintain the lease by delay rentals.
(2) If production ceases during the last year of the
primary term or within the 60 days immediately preceding that last
year, the lease will be maintained to the end of the primary term.
To maintain a lease after such cessation of production, lessee may
conduct drilling or reworking operations in compliance with §9.34(d)
of this title, (relating to Drilling and Reworking Operations), treating
the last day of the primary term as the date of cessation of production
under such paragraph.
(3) If production ceases after the primary term has
expired, lessee may maintain its lease by conducting drilling or reworking
operations under §9.34(d) or as otherwise authorized by the lease.
(d) No ratification or revivor. If a lease ceases to
produce and is not otherwise maintained in force and effect, no action
by the state or an owner of the soil on Relinquishment Act property,
may ratify, re-grant or revive the terminated lease or may estop the
state from asserting lease termination.
|Source Note: The provisions of this §9.35 adopted to be effective January 7, 1999, 24 TexReg 146; amended to be effective August 9, 2009, 34 TexReg 5379; amended to be effective July 12, 2020, 45 TexReg 4526