|(a) Distance requirements.
(1) No well for oil, gas, or geothermal resource shall
hereafter be drilled nearer than 1,200 feet to any well completed
in or drilling to the same horizon on the same tract or farm, and
no well shall be drilled nearer than 467 feet to any property line,
lease line, or subdivision line; provided the commission, in order
to prevent waste or to prevent the confiscation of property, may grant
exceptions to permit drilling within shorter distances than prescribed
in this paragraph when the commission shall determine that such exceptions
are necessary either to prevent waste or to prevent the confiscation
(2) When an exception to this section is desired, application
shall be made by filing the proper fee as provided in §3.78 of
this title (relating to Fees and Financial Security Requirements)
and the appropriate form according to the instructions on the form,
accompanied by a plat as described in subsection (c) of this section.
A person acquainted with the facts pertinent to the application shall
certify that all facts stated in it are true and within the knowledge
of that person.
(A) When an exception to only the minimum lease-line
spacing requirement is desired, the applicant shall file a list of
the mailing addresses of all affected persons, who, for tracts closer
to the well than the greater of one-half of the prescribed minimum
between-well spacing distance or the minimum lease-line spacing distance,
(i) the designated operator;
(ii) all lessees of record for tracts that have no
designated operator; and
(iii) all owners of record of unleased mineral interests.
(B) When an exception to the minimum between-well spacing
requirement of this section is desired, the applicant is required
to file the mailing addresses of those persons identified in subparagraph
(A)(i)-(iii) of this paragraph for each adjacent tract and each tract
nearer to the well than the greater of one-half the prescribed minimum
between-well spacing distance or the minimum lease-line spacing.
(3) An exception may be granted pursuant to subsection
(h)(2) of this section, or after a public hearing held after at least
10 days notice to all persons described in paragraph (2) of this subsection.
At any such hearing, the burden shall be on the applicant to establish
that an exception to this section is necessary either to prevent waste
or to prevent the confiscation of property. For purposes of giving
notice of an application for an exception, the commission will presume
that every person described in paragraph (2) of this subsection will
be affected by the application, unless the Oil and Gas Division director
or the director's delegate determines they are unaffected. Such determination
will be made only upon written request and a showing by the applicant
(A) competent, conclusive geological or engineering
data indicate that no drainage of hydrocarbons from the particular
tract(s) subject to the request will occur due to production from
the applicant's proposed well; and
(B) notice to the particular operator(s), lessee(s)
of record, or owner(s) of record of unleased mineral interest would
be unduly burdensome or expensive.
(4) If, after diligent efforts, the applicant is unable
to ascertain the name and address of one or more persons required
by this subparagraph to be notified, then the applicant shall notify
such persons by publishing notice of the application in a form approved
by the Commission. The applicant shall publish the notice once each
week for two consecutive weeks in a newspaper of general circulation
in the county where the well will be located. The first publication
shall be published at least 14 days before the protest deadline in
the notice of application. The applicant shall file with the Commission
a publisher's affidavit or other evidence of publication.
(b) The distances mentioned in subsection (a) of this
section are minimum distances to provide standard development on a
pattern of one well to each 40 acres in areas where proration units
have not been established.
(c) In filing an application for an exception to the
distance requirements of this section, in addition to the plat requirements
in §3.5 of this title (relating to Application to Drill, Deepen,
Reenter, or Plug Back) (Statewide Rule 5), the applicant shall attach
to each copy of the form a plat that:
(1) shows to scale the property on which the exception
is sought; all other applied for, permitted, and completed oil, gas,
or oil and gas wells in the same field and reservoir on said property;
and all adjoining surrounding properties and completed wells in the
same field and reservoir within the prescribed minimum between-well
spacing distance of the applicant's well;
(2) shows the entire lease, pooled unit, or unitized
tract indicating the names and offsetting properties of all affected
(3) corresponds to the listing required under subsection
(a)(2) of this section;
(4) is certified by a person acquainted with the facts
pertinent to the application that the plat is accurately drawn to
scale and correctly reflects all pertinent and required data.
(d) In the interest of protecting life and for the
purpose of preventing waste and preventing the confiscation of property,
the commission reserves the right in particular oil, gas, and geothermal
resource fields to enter special orders increasing or decreasing the
minimum distances provided by this section.
(e) No well drilled in violation of this section without
special permit obtained, issued, or granted in the manner prescribed
in said section, and no well drilled under such special permit or
on the commission's own order which does not conform in all respects
to the terms of such permit shall be permitted to produce either oil,
gas, or geothermal resources and any such well so drilled in violation
of said section or on the commission's own order shall be plugged.
(f) No operator shall commence the drilling of a well,
either on a regular location or on a Rule 37 exception location, until
first having been notified by the commission that the regular location
has been approved, or that the Rule 37 exception location has been
approved. Failure of an operator to comply with this subsection will
cause such well to be closed in and the holding up of the allowable
of such well.
(g) Subdivision of property.
(1) In applying Rule 37 (Statewide Spacing Rule) of
statewide application and in applying every special rule with relation
to spacing in every field in this state, no subdivision of property
made subsequent to the adoption of the original spacing rule will
be considered in determining whether or not any property is being
confiscated within the terms of such spacing rule, and no subdivision
of property will be regarded in applying such spacing rule or in determining
the matter of confiscation if such subdivision took place subsequent
to the promulgation and adoption of the original spacing rule.
(2) Any subdivision of property creating a tract of
such size and shape that it is necessary to obtain an exception to
the spacing rule before a well can be drilled thereon is a voluntary
subdivision and not entitled to a permit to prevent confiscation of
property if it were either:
(A) segregated from a larger tract in contemplation
of oil, gas, or geothermal resource development; or
(B) segregated by fee title conveyance from a larger
tract after the spacing rule became effective and the voluntary subdivision
(3) The date of attachment of the voluntary subdivision
rule is the date of discovery of oil, gas, or geothermal resource
production in a certain continuous reservoir, regardless of the subsequent
lateral extensions of such reservoir, provided that such rule does
not attach in the case of a segregation of a small tract by fee title
conveyance which is not located in an oil, gas, or geothermal resource
field having a discovery date prior to the date of such segregation.
(4) The date of attachment of the voluntary subdivision
rule for multiple reservoir fields located in the same structural
feature and separated vertically but not laterally (i.e., the multiple
reservoirs overlap geographically at least in part), shall be the
same date as that assigned to the earliest discovery well for such
multiple reservoir structure.
(5) If a newly discovered reservoir is located outside
the then productive limits of any previously discovered reservoirs
and is classified by the commission as a newly discovered field, then
the date of discovery of such newly found reservoir remains the date
of attachment for the voluntary subdivision rule, even though subsequent
development may result in the extension of such newly discovered reservoir
until it overlies or underlies older reservoirs with prior discovery
(6) The date of attachment of the voluntary subdivision
rule for a reservoir that has been developed through expansion of
separately recognized fields into a recognized single reservoir and
is merged by commission order is the earliest discovery date of production
from such merged reservoir, and that date will be used subsequent
to the date of merger of the fields into a single field.
(7) The date of attachment of the voluntary subdivision
rule for a reservoir under any special circumstance which the commission
deems sufficient to provide for an exception may be established other
than as prescribed in this section, so that innocent parties may have
their rights protected.
(h) Exceptions to Rule 37.
(1) An order granting exception to Rule 37 wherein
protest is had shall carry as its last paragraph the following language:
It is further ordered by the commission that this order shall not
be final until 20 days after it is actually mailed to the parties
by the commission; provided that if a motion for rehearing of the
application is filed by any party at interest within such 20-day period,
this order shall not become final until such motion is overruled,
or if such motion is granted, this order shall be subject to further
action by the commission. Permits issued pursuant to paragraph (2)
of this subsection shall be issued without the 20-day waiting period.
(2) The director of the Oil and Gas Division or a delegate
of the director may issue an exception permit for drilling, deepening,
or additional completion, recompletion, or reentry in an existing
well bore if:
(A) a notice of at least 10 days has been given, and
no protest has been made to the application; or
(B) written waivers of objection are received from
all persons to whom notice would be given pursuant to subsection (a)(2)
of this section.
(3) Applications filed for drilling, deepening, or
additional completion, recompletion, or reentry will be processed
and permit issued in accordance with this regulation, subject to the
commission's discretion to set any application for hearing. If the
director or a delegate of the director declines to grant an application,
the operator may request a hearing.
(i) Rule 37 permits.
(1) Unless otherwise specified in a permit or in a
final order granting an exception to this section, permits issued
by the commission for completions requiring an exception to this section
shall expire two years from the effective date of the permit unless
drilling operations are commenced in good faith within the two-year
permit period. The permit period will not be extended.
(2) So long as a Rule 37 exception is in litigation,
the two-year permit period will not commence. On final adjudication
and decree from the last court of appeal the two-year permit period
will commence, beginning on the date of final decree.
(j) Once an application for a spacing exception has
been denied, no new application shall be entertained except on changed
conditions. Changed conditions in the commission's administration
of its Spacing Rule 37 and amendments thereto applicable to the various
special fields and reservoirs of Texas and in passing upon applications
for permits under said rule and amendments shall include, among other
things, the following.
(1) Any material changes in the physical conditions
of the producing reservoir under the tract under consideration or
under the area surrounding said tract which would materially affect
the recovery of oil, gas, or geothermal resource from the given tract.
(2) Any material changes in the distribution or allocation
of allowable production in the area surrounding the tract under consideration
which would materially affect or tend to affect the recovery of oil,
gas, or geothermal resource from the given tract.
(3) Any additional permits granted by the commission
for wells drilled in the area surrounding or on offset tracts to the
tract under consideration which would materially affect or tend to
affect the recovery of oil, gas, or geothermal resource from the given
(4) Any additional facts or evidence thereof materially
affecting or tending to affect the recovery of oil, gas, or geothermal
resource from the applicant's tract, or the property rights of applicant,
which were not known of and considered by the commission at any previous
hearing or application thereon.