| (a) Where oil and gas are found in the same stratum
and it is impossible to separate one from the other, or when a well
has been classified as a gas well and such gas well is not connected
to a cycling plant and such well is being produced on a lease and
the gas is utilized under Texas Natural Resources Code §§86.181
- 86.185, the operator shall install a separating device of approved
type and sufficient capacity to separate the oil and liquid hydrocarbons
from the gas.
(1) A separating device shall be kept in place as long
as a necessity for it exists, and its use shall not be discontinued
without the consent of the Commission.
(2) All oil and any other liquid hydrocarbons as and
when produced shall be adequately measured pursuant to paragraphs
(3) and (4) of this subsection before the same leaves the lease from
which they are produced, except for gas wells where the full well
stream is moved to a plant or central separation facility in accordance
with §3.55 of this title (relating to Reports on Gas Wells Commingling
Liquid Hydrocarbons before Metering) (Statewide Rule 55) and the full
well stream is measured, with each completion being separately measured,
before the gas leaves the lease. If an operator commingles production
pursuant to subsection (b) of this section, the operator shall comply
with paragraphs (3) and (4) of this subsection but the operator is
not required to measure the production stream before it leaves the
lease.
(3) Sufficient tankage and separator capacity shall
be provided by the producer to adequately take daily gauges of all
oil and any other liquid hydrocarbons unless LACT equipment, installed
and operated in accordance with the latest revision of American Petroleum
Institute (API) Manual of Petroleum Measurement Standards, Chapter
6.1 or another method approved by the Commission or its delegate,
is being used to effect custody transfer.
(4) For Commission purposes, the measurement requirements
of this section are satisfied by the use of coriolis or turbine meters
or any other measurement device or technology that conforms to standards
established, as of the time of installation, by the American Petroleum
Institute (API) or the American Gas Association (AGA) for measuring
oil or gas, as applicable, or approved by the Director of the Oil
and Gas Division as an accurate measurement technology.
(b) Surface commingling of oil, gas, or oil and gas
production from two or more tracts of land producing from the same
Commission-designated reservoir or from one or more tracts of land
producing from different Commission-designated reservoirs is permitted
and authorized if:
(1) the operator measures the production stream from
each tract and each Commission-designated reservoir separately before
combining it with a stream from another tract or Commission-designated
reservoir; or
(2) the tracts and Commission-designated reservoirs
have identical working interest and royalty interest ownership in
identical percentages.
(c) Production that complies with subsection (b) of
this section is authorized even if the separator, metering, or storage
is located off the tract or tracts. If production is surface commingled
pursuant to subsection (b) of this section, the operator shall file
Form P-17A, Application for Commingle Permit Pursuant to Rules 26
and/or 27.
(d) If an operator does not meet the requirements of
subsection (b) of this section, the Commission may approve surface
commingling of oil, gas, or oil and gas production from two or more
tracts of land producing from the same Commission-designated reservoir
or from one or more tracts of land producing from different Commission-designated
reservoirs in order to prevent waste, to promote conservation, or
to protect correlative rights.
(1) Administrative approval. After receipt of a completed
Form P-17, the Commission may grant approval for surface commingling
administratively when the tracts or Commission-designated reservoirs
do not have identical working interest and royalty interest ownership
in identical percentages and the Commission has not received a protest
to an application within 21 days of notice of the application being
mailed by the applicant to all working and royalty interest owners
or, if publication is required, within 21 days of the date of last
publication and the applicant provides:
(A) a method of allocating production to ensure the
protection of correlative rights, in accordance with subsection (e)
of this section; and
(B) an affidavit or other evidence that all working
interest and royalty interest owners have been notified of the application
by certified mail or have provided applicant with waivers of notice
requirements; or
(C) in the event the applicant is unable, after due
diligence, to provide notice by certified mail to all working interest
and royalty interest owners, a publisher's affidavit or other evidence
that the Commission's notice of application has been published once
a week for two consecutive weeks in a newspaper of general circulation
in the county or counties in which the tracts that are the subject
of the application are located.
(2) Request for hearing. When the tracts or Commission-designated
reservoirs do not have identical working interest and royalty interest
ownership in identical percentages and a person entitled to notice
of the application has filed a protest to the application with the
Commission, the applicant may request a hearing on the application.
The Commission shall give notice of the hearing to all working interest
and royalty interest owners. The Commission may permit the commingling
if the applicant demonstrates that the proposed commingling will protect
the rights of all interest owners in accordance with subsection (e)
of this section and will prevent waste, promote conservation or protect
correlative rights.
(e) Reasonable allocation required. The applicant must
demonstrate to the Commission or its designee that the proposed commingling
of hydrocarbons will not harm the correlative rights of the working
or royalty interest owners of any of the wells to be commingled. The
method of allocation of production to individual interests must accurately
attribute to each interest its fair share of aggregated production.
(1) In the absence of contrary information, such as
indications of material fluctuations in the monthly production volume
of a well proposed for commingling, the Commission will presume that
allocation based on the daily production rate for each well as determined
and reported to the Commission by semi-annual well tests will accurately
attribute to each interest its fair share of production without harm
to correlative rights. As used in this section, "daily production
rate" for a well means the 24 hour production rate determined by the
most recent well test conducted and reported to the Commission in
accordance with §§3.28, 3.52, 3.53, and 3.55 of this title
(relating to Potential and Deliverability of Gas Wells to be Ascertained
and Reported, Oil Well Allowable Production, Annual Well Tests and
Well Status Reports Required, and Reports on Gas Wells Commingling
Liquid Hydrocarbons before Metering).
(2) Operators may test commingled wells annually after
approval by the Commission or the Commission's delegate of the operator's
written request demonstrating that annual testing will not harm the
correlative rights of the working or royalty interest owners of the
commingled wells. Allocation of commingled production shall not be
based on well tests conducted less frequently than annually.
(3) Nothing in this section prohibits allocations based
on more frequent well tests than the semi-annual well test set out
in paragraph (1) of this subsection. Additional tests used for allocation
do not have to be filed with the Commission but must be available
for inspection at the request of the Commission, working interest
owners or royalty interest owners.
(4) Allocations may be based on a method other than
periodic well tests if the Commission or its designee determines that
the alternative allocation method will insure a reasonable allocation
of production as required by this paragraph.
(f) An operator that commingles production from different
Commission-designated reservoirs, whether under subsection (b) or
(c) of this section, shall comply with §3.10 of this title (relating
to Restriction of Production of Oil and Gas from Different Strata).
(g) An operator that commingles production, whether
under subsection (b) or (c) of this section, shall review and correct
any forms related to its commingle permit as necessary in order to
maintain accurate information on file with the Commission.
(h) If oil or any other liquid hydrocarbon is produced
from a lease or other property covered by the coastal or inland waters
of the state, the liquid produced may, at the option of the operator,
be measured on a shore or at a point removed from the lease or other
property on which it is produced.
(i) Oil gravity tests and reports (Reference Order
Number 20-55, 647, effective 4-1-66, and Reference Order Number 20-58,
528, effective 5-10-68.)
Cont'd... |
