Okla. Admin. Code § 165:10-17-9

Current through Vol. 41, No. 19, June 17, 2024

Section 165:10-17-9 - Special allocated gas pools

(a)Scope. This Section applies to special allocated gas pools except any special allocated gas pool with allowables based upon volumetric withdrawals.

(b)Minimum unit allowable of 150 mcf/d. For all special allocated gas pools except the West Cheyenne Upper Morrow, Purvis Chert, Guymon-Hugoton, Custer City N. Hunton, Sharon W. Morrow, Red Oak Fanshawe, Red Oak Red Oak, and Red Oak Spiro, the minimum allowable for a drilling and spacing unit in the pool shall be 150 MCF/D regardless of the amount of any location exception penalty charged against a unit well. For purposes of this Section, the net minimum allowable shall be the gross minimum allowable adjusted for overage or underage according to this Section.

(c)Minimum unit allowable of 450 mcf/d for the Guymon-Hugoton pool.

(1) For the Guymon-Hugoton Special Allocated Gas Pool, minimum allowables shall be determined as follows: The minimum allowable shall be the lesser of 450 mcf/d or the drilling and spacing unit's capability. Capability shall be defined as the average of the highest three (3) of the last twelve (12) months of production. A drilling and spacing unit receiving a minimum allowable shall not accrue underage. The minimum allowables under this Section shall not affect the calculation of capable well allowables. The field monthly allowable shall be equal to total nominations and not adjusted for underage or overage.

(2) The deliverability standard pressure (DSP) to be used in the application of special allocated rules (field rules) shall be defined as 25 pounds less than the average shut-in wellhead pressure of the pool.

(3) The Corporation Commission shall calculate and publish reports of allowable and production quarterly.

(d) Minimum unit allowable of 2,000 mcf/d for the Red Oak Fanshawe, Red Oak Red Oak, and Red Oak Spiro Pools. For the Red Oak Fanshawe, Red Oak Red Oak, and Red Oak Spiro Pools (Pool Nos. 456, 457 and 458) located in Latimer and LeFlore Counties, Oklahoma, the minimum allowable for a drilling and spacing unit in each pool shall be 2,000 mcf/d. For purposes of this Section, the net minimum allowable shall be the gross minimum allowable adjusted for overage or underage according to this Section.

(e)Double minimum allowable of 300 mcf/d.

(1)Compressor and application required. For all special allocated gas pools except the West Cheyenne Upper Morrow, Purvis Chert, Guymon-Hugoton, Custer City N. Hunton, Sharon W. Morrow, Red Oak Fanshawe, Red Oak Red Oak, and Red Oak Spiro, if a drilling and spacing unit has a minimum allowable under (b) of this Section, the operator of a well in the drilling and spacing unit may obtain for the unit a double minimum allowable regardless of any location penalty against a well by installing a compressor on a unit well and applying for a double minimum allowable under (2) of this subsection.

(2)Request for administrative approval. To apply for a double minimum allowable, the operator shall submit to the Manager of Production Allowables for the Conservation Division a letter requesting a double minimum allowable and stating the factual basis for the request and the legal description of the well with the compressor.

(f)Basic allowable.

(1)Use of basic allowable for determining overage and underage. For purposes of determining the amount of overage or underage accrued by a well or drilling and spacing unit, the Conservation Division shall establish on a yearly basis a status factor known as the basic allowable.

(2)Apportionment of basic allowable.

(A)Increased density unit without apportionment of the allowable. If neither OAC 165:10-13-9 nor an order of the Commission require specific allocation of the unit allowable to each unit well, overage and underage shall be carried on a unit basis.

(B)Increased density unit with ratable allowables. If either OAC 165:10-13-9 or an order of the Commission require specific allocation of the unit allowable to each unit well, overage and underage shall be carried on a per well basis. For purposes of computing overage and underage, the basic allowable shall be apportioned to each unit well using the formula for determining each well's ratable allowables for the applicable month under (3) of this subsection. The term "ratable allowables" refers to a well's share of the unit allowable under the formula apportioning the allowable amongst the unit wells.

(3)Computation of the basic allowable. Except as provided in (C) of this paragraph for basic allowable changes, the basic allowable for the calendar year shall be computed as follows:

(A)For all pools except the Red Oak Pools. For all pools except the Red Oak Fanshawe, Red Oak Red Oak, and Red Oak Spiro, the basic allowable shall equal the drilling and spacing unit's January allowable for the calendar year.

(B)For the Red Oak Pools. For the Red Oak Fanshawe, Red Oak Red Oak, and Red Oak Spiro, the basic allowable shall equal the drilling and spacing unit's March allowable for the calendar year.

(C)Changes in the basic allowable.

(i)Test exempt minimum allowable. If a drilling and spacing unit receives test exempt minimum allowable status as provided in this Section, then the basic allowable shall be a minimum allowable.

(ii)Test exempt double minimum allowable. If a drilling and spacing unit receives a test exempt double minimum allowable as provided in this Section, then the basic allowable for the unit shall be a double minimum allowable.

(iii)Retests. If the well operator submits to the Conservation Division a retest which is approved by the Conservation Division, then the Conservation Division shall recompute the basic allowable using the retest. Retests are permitted at any time and become effective the first day of the month after acceptance by the Conservation Division.

(g)Determination of overage and underage.

(1)Overage.

(A)Drilling and spacing unit without ratable allowables. If no well in a drilling and spacing unit is subject to a ratable allowable, the current monthly allowable shall be compared with the second prior month's unit production. Production in excess of the current monthly allowable is overage. Aside from any adjustment to the pool allowable required by pool rules, overage shall not reduce any subsequent monthly allowable until accumulated overage exceeds the applicable overage limit under (h) of this Section.

(B)Drilling and spacing unit subject to ratable allowables. If any well in a drilling and spacing unit is subject to a ratable allowable, the current monthly ratable allowable for the well shall be compared with the second prior month's production from the well. Production in excess of the ratable allowable is overage. Aside from any adjustment to the pool allowable required by pool rules, the well's overage shall not reduce any subsequent monthly ratable allowable until accumulated overage exceeds the well's overage limit under (h) of this Section.

(2)Underage.

(A)Drilling and spacing unit without ratable allowable. If no well in a drilling and spacing unit is subject to a ratable allowable under OAC 165:10-13-9, the current monthly allowable for the unit shall be compared with the second prior month's unit production. If production is less than the allowable, the difference between the production and the unit allowable is underage. Aside from any adjustment to the pool allowable required by pool rules, only reinstated cancelled underage under (k) of this Section shall increase any subsequent monthly allowable.

(B)Drilling and spacing unit with ratable allowables. In a drilling and spacing unit with ratable allowables, the current monthly ratable allowable for a well shall be compared with the second prior month's production from the well. If production was less than the current monthly ratable allowable, the difference between the production and the ratable allowable is underage. Aside from any adjustment to the pool allowable required by pool rules, only reinstated cancelled underage under (k) of this Section shall increase any subsequent monthly ratable allowable for the well.

(h)Overage limits.

(1)For all pools Except the Red Oak Fanshawe, Red Oak Red Oak, and Red Oak Spiro. For all pools except the Red Oak Fanshawe, Red Oak Red Oak, and the Red Oak Spiro, the overage limit is six times:

(A) The basic allowable for the drilling and spacing unit, if the overage carried on a unit basis; or

(B) The well's share of the basic allowable for the drilling and spacing unit, if the well receives a ratable allowable.

(2)For the Red Oak Fanshawe, Red Oak Red Oak, and Red Oak Spiro Pools. For the Red Oak Fanshawe, Red Oak Red Oak, and Red Oak Spiro Pools, the overage limit is 168 times:

(A) The basic allowable for the drilling and spacing unit, if the overage is carried on a unit basis; or

(B) The well's share of the basic allowable for the drilling and spacing unit, if the well receives a ratable allowable.

(3)Mandatory curtailment for excessive overage.

(A)Single well drilling and spacing unit. If accumulated overage from a single well drilling and spacing unit exceeds the applicable overage limit, production from the unit shall be curtailed to 25 percent of the monthly allowable until accumulated overage is reduced below the overage limit.

(B)Multiple well unit without ratable allowables. In a multiple well drilling and spacing unit without ratable allowables, if accumulated overage for the unit exceeds the applicable overage limit, the unit production shall be curtailed to 25 percent of its monthly allowable until the accumulated overage is reduced below the overage limit.

(C)Multiple well unit with a ratable allowable. In a multiple well drilling and spacing unit with one or more wells subject to a ratable allowable, if the accumulated overage for a well exceeds its overage limit, production from the well shall be curtailed to 25 percent of its monthly ratable allowable until the well's accumulated overage is reduced below its overage limit.

(i)Underage limits.

(1)For the Red Oak Fanshawe, Red Oak Red Oak, and Red Oak Spiro Pools. For the Red Oak Fanshawe, Red Oak Red Oak, and Red Oak Spiro Pools (Pool Nos. 456, 457 and 458) located in Latimer and LeFlore Counties, Oklahoma, the underage limit is three times the status factor for:

(A) The drilling and spacing unit,

(i) If the unit has only one well, or

(ii) If the unit has multiple wells but no unit well has a ratable allowable; or

(B) The well, if a well has a ratable allowable.

(2)For all other special allocated gas pools subject to this Section. For all other special allocated gas pools subject to the Section, the underage limit is six times the status factor for:

(A) The drilling and spacing unit, if the status factor is determined on a unit basis; or

(B) The well, if the well is subject to a ratable allowable.

(j)Cancellation of underage.

(1)Underage in excess of the underage limit. If accumulated underage exceeds the applicable underage limit, the accumulated underage shall be cancelled.

(2)Subsequent underage. After cancellation, underage shall not accrue until after:

(A) The drilling and spacing unit produces a current monthly allowable, if the unit wells share a unit allowable; or

(B) A well with a ratable allowable produces a current monthly ratable allowable.

(k)Reinstatement of cancelled underage.

(1) The operator may apply for reinstatement of cancelled underage by:

(A) An application for administrative approval on Form 1010, if filed within six months after cancellation of underage; or

(B) Application, notice, and hearing under OAC 165:5-7-1.

(2) Reinstated cancelled underage shall be available to increase the monthly allowable or ratable allowable for up to one year without cancellation. If reinstated underage is cancelled, the operator may reapply under (1) of this subsection.

(3) For the Guymon-Hugoton special allocated gas pool, the operator of any drilling and spacing unit in such pool which unit has accumulated cancelled underage credited thereto on the records of the Commission prior to July 1, 1998 shall have until January 1, 2000 to file an application with the Commission pursuant to OAC 165:5-7-1 for the reinstatement of such accumulated cancelled underage as credited to such unit prior to July 1, 1998. Upon the filing of such an application, the cause seeking reinstatement of such accumulated cancelled underage shall be diligently prosecuted. In such proceeding for the reinstatement of such accumulated cancelled underage credited to such drilling and spacing unit prior to July 1, 1998, the Commission shall determine the portion of such accumulated cancelled underage which is proper and valid under the special pool allocation rules (field rules) applicable to the Guymon-Hugoton special allocated gas pool and shall reinstate only such portion that is determined to be proper and valid under such special pool allocation rules (field rules). If an application for reinstatement of any such accumulated cancelled underage credited to a drilling and spacing unit on the records of the Commission prior to July 1, 1998 is not filed with the Commission on or before January 1, 2000, such accumulated cancelled underage shall be permanently deleted from the records of the Commission and shall not thereafter be able to be reinstated or used for any other purpose under the special pool allocation rules (field rules) applicable to the Guymon-Hugoton special allocated gas pool.

(l)Effect of reinstatement of underage on pool allowables. If cancelled underage has been distributed among the capable wells in the pool, reinstated underage shall not be deducted for the allowables of the capable wells which received distributed cancelled underage.

(m)Test exempt status.

(1)No allowable without test. For all pools except West Cheyenne Upper Morrow and Purvis Chert, no allowable shall be assigned unless:

(A)Single well drilling and spacing unit. The operator submits the required test or the unit has test exempt status under this Section.

(B)Multiple well drilling and spacing unit. In a multiple well drilling and spacing unit, the operator of at least one well in the unit submits the required test in accordance with applicable pool rules or the unit is granted test exempt status under this Section.

(2)Automatic test exempt status.

(A)For the West Cheyenne Upper Morrow and Purvis Chert Pool. For the West Cheyenne Upper Morrow and Purvis Chert, a drilling and spacing unit shall have test exempt status as follows:

(i)Single well drilling and spacing unit. In a single well drilling and spacing, the well operator does not submit either an initial or an annual test.

(ii)Multiple well drilling and spacing unit. In a multiple well drilling and spacing unit, none of the well operators in the unit submit either an initial or annual test. A test exempt drilling and spacing unit on the West Cheyenne Upper Morrow and Purvis Chert Pools shall have a minimum allowable under the applicable orders establishing and modifying pool rules as opposed to (b) of this Section.

(3)Test exempt status upon requests for all other pools. For all other pools except Guymon-Hugoton a drilling and spacing unit shall be test exempt upon written request to the Conservation Division if the potential for the unit does not exceed:

(A) The applicable minimum allowable under this Section.

(B) A double minimum allowable, if the Conservation Division has granted a double minimum to the unit.

(4)Termination of requested test exempt status.

(A)Automatic termination. Requested test exempt status shall terminate upon:

(i)Submission of a retest. Submission of a retest showing that the well has a potential in excess of a test exempt allowable, or;

(ii)Overproduction.

(I)Single well drilling and spacing unit. If gas production from a single well drilling and spacing unit exceeds a test exempt allowable during any month while the well has test exempt status, the unit shall lose test exempt status beginning with next month following the month with overproduction.

(II)Multiple well drilling and spacing unit. If total gas production from a multiple well drilling and spacing unit exceeds the minimum allowable during any month while the unit has test exempt status, the unit shall lose test exempt status beginning with the next month following the month with overproduction.

(B)Reinstatement of test exempt status after automatic termination. After termination of test exempt status for overproduction, the Conservation Division shall not reinstate test exempt status until:

(i) The operator requests test exempt status; and

(ii) The allowable year during which overproduction occurred expires.

(n)Suspension of well allowable calculations under field rules when market demand exceeds supply for Red Oak Fanshawe, Red Oak Red Oak, and Red Oak Spiro pools. The Commission, upon finding in the market demand hearing that the supply of natural gas from the various separate common sources of supply included in and covered by the Red Oak Fanshawe Pool 456, the Red Oak Red Oak Pool 457, and the Red Oak Spiro Pool 458 is less than such market demand, shall suspend the special field rules calculations for determining allowables for wells in such pools and such suspension shall be effective until such time that the supply of natural gas from these pools exceeds the market demand for such natural gas, and during such suspension the gas allowables for wells in such pools shall be determined under this rule. See Order No. 571714 which issued in Cause CD No. 200902831.

(1)For existing wells, granting separate allowables and establishing overage status as of the effective date of this rule. Each well in existence as of the effective date of this rule which is then completed in one or more of the Red Oak Fanshawe Pool 456, Red Oak Red Oak Pool 457, and the Red Oak Spiro Pool 458 shall be deemed an Existing Well for purposes of this rule. Each Existing Well shall receive a full separate allowable. Any total net overage including cancelled underage, accumulated by and assigned to any such drilling and spacing unit, shall be distributed and assigned in equal proportions to the Existing Wells in such drilling and spacing unit. Any such net overage so assigned to an Existing Well shall hereinafter be made up from the separate allowable for such well under the provisions of the Commission's rules applicable to a well in an unallocated gas pool.

(2)Test requirements and determination of unit allowables for new and existing wells. Any new well drilled and completed or any Existing Well re-completed into one or more of the Red Oak Fanshawe Pool 456, Red Oak Red Oak Pool 457, and Red Oak Spiro Pool 458 after the effective date of this rule, shall be deemed a New Well for purposes of this rule. The allowable for any New Well or Existing Well as to the applicable pool covered hereby shall be determined using the same allowable formula used by the Commission for the determination of a gas allowable for a capable well or a minimum well in an unallocated gas pool. EXCEPTION: Any Existing Well which is a minimum well shall be exempt from the annual test requirement. If any drilling and spacing unit formed for any common source of supply in any pool covered by this rule contains more than one New Well completed in such common source of supply and such New Wells are classified as gas wells, such New Wells shall share a single unit gas allowable in the same manner as any other gas wells in the same drilling and spacing unit in an unallocated gas pool, unless the Commission grants a separate gas allowable as to production from such pool after proper notice and hearing.

(o)Suspension of well allowable calculations using field rules when market demand exceeds supply for the Guymon-Hugoton Pool 182. The Commission, upon finding that the supply of natural gas from Guymon-Hugoton Pool 182 common source of supply is less than the market demand and that the expectations for supply to continue to be less than the market demand as determined in the market demand hearing, will suspend special field rule calculations for determining allowables until such time that the supply of natural gas from this pool exceeds the market demand. See Order No. 571714 which issued in Cause CD No. 200902831.

(1) For allowable purposes, wells which produce less than 450 mcfg per day must conduct a 48 hour shut-in pressure test according to pool rules. For reporting purposes, an operator may submit these data for several wells as an attachment to Form 1017 providing operator name, date of test, well name, location and api number for each well.

(2) For allowable purposes, wells which produce more than 450 mcfg per day must conduct a deliverability test according to pool rules and submitted on Form 1017.

(3) Upon submission of the proper test, the allowable shall be the well's capability to produce.

(p)Suspension of well allowable calculations using field rules when all wells in the West Cheyenne Upper Morrow gas pool produce less than the pool minimum allowable and the market demand exceeds supply. The Commission, upon finding that the supply of natural gas from West Cheyenne Upper Morrow Pool 136 common source of supply is less than the market demand and that the expectations for supply to continue to be less than the market demand as determined in the market demand hearing, will suspend special field rule calculations for determining allowables and well allowables will be the wells' capacity to produce up to 2000 mcf per day. See Order No. 571714 which issued in Cause CD No. 200902831. Each well will be exempt from the annual test requirement.

Okla. Admin. Code § 165:10-17-9

Amended at 15 Ok Reg 2165, eff 7-1-98; Amended at 16 Ok Reg 2206, eff 7-1-99; Amended at 18 Ok Reg 2372, eff 7-1-01; Amended at 21 Ok Reg 1960, eff 5-11-04 (emergency); Amended at 21 Ok Reg 2019, eff 7-1-04; Amended at 26 Ok Reg 2498, eff 7-11-09; Amended at 27 Ok Reg 2128, eff 7-11-10

Amended by Oklahoma Register, Volume 32, Issue 23, August 17, 2015, eff. 8/27/2015.