Okla. Admin. Code § 165:10-3-28

Current through Vol. 42, No. 7, December 16, 2024

Section 165:10-3-28 - Horizontal drilling

(a)Scope. This Section affects a horizontal well with one or more laterals.

(b)Definitions. The following words and terms, when used in this Section, shall have the following meaning, unless the context clearly indicates otherwise:

(1)"Adjacent common source of supply" shall mean a common source of supply which is immediately adjacent to and adjoining the targeted reservoir(s) in a multiunit horizontal well being drilled or a well being drilled in a horizontal well unitization pursuant to 52 O.S. § 87.6 et seq. and which is inadvertently encountered in the drilling of the lateral of a multiunit horizontal well or a well pursuant to a horizontal well unitization when such well is drilled out of or exits, whether on one or multiple occasions, the targeted reservoir(s), and which is not the primary target of the subject well and shall not be included in the relinquished rights pursuant to 52 O.S. § 87.1(h). In the event that an adjacent common source of supply may be inadvertently encountered in the drilling of the lateral of a multiunit horizontal well or a well pursuant to a horizontal well unitization when such well is drilled out of or exits, whether on one or multiple occasions, the targeted reservoir(s), then said inadvertently entered adjacent common source of supply shall be included as part of the targeted reservoir only for the purpose of the inadvertent penetrations, and any subsequent completion, commingling and production of said adjacent common source of supply with the targeted reservoir(s), but not for future development of said adjacent common source of supply [52 O.S. § 87.6(B)(1)].

(2)"Completion interval" shall mean, for open hole completions, the interval from the point of entry to the terminus and, for cased and cemented completions, the interval from the first perforations to the last perforations [52 O.S. § 87.6(B)(5)].

(3)"Conventional reservoir" shall mean a common source of supply that is not an unconventional reservoir.

(4)"Date of first production" shall mean the date hydrocarbons are first produced from the horizontal well, whether or not production occurs during drilling, completion, or through permanent surface equipment.

(5)"Directional survey" shall mean that survey or report showing the location of any point of the wellbore as it relates to the surveyed surface location from the surface to the terminus of each lateral.

(6)"Horizontal component" shall mean the calculated horizontal distance from the point of entry to the terminus [52 O.S. § 87.6(B)(8)].

(7)"Horizontal well" shall mean a well drilled, completed, or recompleted with one or more laterals which, for at least one lateral, the horizontal component of the completion interval exceeds the vertical component of the completion interval and the horizontal component extends a minimum of 150 feet in the formation [52 O.S. § 87.6(B)(6)].

(8)"Horizontal well unit" shall mean a drilling and spacing unit established by the Commission, after application, notice, and hearing, for a common source of supply into which a horizontal well has been or will be drilled.

(9)"Horizontal well unitization" shall mean a unitization for a targeted reservoir created pursuant to 52 O.S. § 87.6 et seq. [52 O.S. § 87.6(B)(7)].

(10)"Lateral" shall mean the portion of the wellbore of a horizontal well from the point of entry to the terminus [52 O.S. § 87.6(B)(9)].

(11)"Multiunit horizontal well" shall mean a horizontal well in a targeted reservoir or targeted reservoirs wherein the completion interval of the well is located in more than one unit formed for the same targeted reservoir, with the well being completed in and producing from such targeted reservoir in two or more of such units [52 O.S. § 87.6(B)(10)].

(12)"Non-standard horizontal well unit" shall mean a horizontal well unit that is not a standard horizontal well unit.

(13)"Point of entry" shall mean the point at which the borehole of a horizontal well first intersects the top of the common source of supply [52 O.S. § 87.6(B)(12)].

(14)"Standard horizontal well unit" shall mean a horizontal well unit that is a square 10-, 40-, 160-, or 640-acre tract or a rectangular 20-, 80-, 320- or 1,280-acre tract in accordance with OAC 165:10-1-22.

(15)"Targeted reservoir" shall mean one or more common sources of supply which will be encountered by the horizontal lateral portion of a horizontal well, and which has been designated by the Commission as part of an order, rule or emergency rule as potentially suited for development for the applied for multiunit horizontal well or horizontal well unitization pursuant to 52 O.S. § 87.6 et seq. Provided, however, that more than one common source of supply may only be granted by the Commission and included in the targeted reservoir upon a showing of reasonable cause by the applicant requesting the multiunit well in the application requesting authority for the multiunit well prior to the drilling of said multiunit well that the inclusion of the additional common source(s) of supply shall prevent waste and protect the correlative rights of all of the owners of the oil and gas rights [52 O.S. § 87.6(B)(14)].

(16)"Terminus" shall mean the end point of the borehole of a horizontal well in the targeted reservoir [52 O.S. § 87.6(B)(15)].

(17)"True vertical depth" shall mean that depth at the point of entry perpendicular to the surface as measured from the elevation of the kelly bushing on the drilling rig.

(18)"Unconventional reservoir" shall mean a common source of supply that is a shale or a coal bed. "Unconventional reservoir" shall also mean any other common source of supply designated as such by Commission order or rule.

(19)"Vertical component" shall mean the calculated vertical distance from the point of entry to the terminus of the lateral [52 O.S. § 87.6(B)(20)].

(c)General horizontal well requirements.

(1) Within 60 days after completion of a horizontal well, the operator shall show that the location of the completion interval complies with the applicable general rule, location exception order, or other order of the Commission by submitting the following to the Technical Services Department:

(A) A directional survey run in the horizontal well shall be submitted within 45 days of the release of the rig used to drill such well. The survey shall be submitted electronically using a program provided by the Commission.

(B) An "as drilled" plat constructed from the results of the directional survey showing the completion interval, including the depths of the first and last perforations and footages with latitude and longitude from the quarter section. The depths of the first and last perforations reflected in the "as drilled" plat must correspond to the information included in the OCC Form 1002A Completion Report for the well. The "as drilled" plat must be submitted to the Conservation Division with the OCC Form 1002A Completion Report for the well.

(2) The completion interval of an oil and or gas horizontal well shall be located not closer than the minimum distance as set out below from any other oil or gas well completed in the same common source of supply except as authorized by a special order of the Commission:

(A) Three hundred feet from any other oil or gas well completed in the same common source of supply, the top of which is less than 2,500 feet in true vertical depth.

(B) Six hundred feet from any other oil or gas well completed in the same common source of supply, the top of which is 2,500 feet or more in true vertical depth.

(C) This paragraph does not apply to horizontal wells drilled in a unit created for secondary or enhanced recovery operations pursuant to 52 O.S. § 287.1 et seq. or to horizontal wells drilled in a horizontal well unitization created pursuant to 52 O.S. § 87.6 et seq. Furthermore, the above-described requirements for the distance between any such oil and/or gas horizontal well and any such other oil or gas well shall not apply if such wells are operated by the same operator, and notification to working interest owners in such oil and/or gas horizontal well shall be indicated on Form 1000 for such horizontal well.

(3) The perforated interval of an oil or gas non-horizontal well shall be located not closer than the minimum distance as set out below from the completion interval of any oil or gas horizontal well completed in the same common source of supply, except as authorized by a special order of the Commission:

(A) Three hundred feet from any completion interval of any oil or gas horizontal well completed in the same common source of supply, the top of which is less than 2,500 feet in true vertical depth.

(B) Six hundred feet from any completion interval of any oil or gas horizontal well completed in the same common source of supply, the top of which is 2,500 feet or more in true vertical depth.

(C) This paragraph does not apply to non-horizontal wells drilled in a unit created for secondary or enhanced recovery operations pursuant to 52 O.S. § 287.1 et seq.

(d)Horizontal well requirements in an unspaced common source of supply. In a horizontal well drilled in a common source of supply in which the Commission has not established any drilling and spacing units or horizontal well units, the completion interval of a horizontal well may not be located closer to the boundaries of the applicable mineral estate, oil and gas leasehold estate, or voluntary unit than the minimum distance set out below except as authorized by a special order of the Commission:

(1) Not less than 165 feet when the top of the common source of supply is less than 2,500 feet in true vertical depth.

(2) Not less than 330 feet when the top of the common source of supply is 2,500 feet or more in true vertical depth.

(e)Drilling and spacing units.

(1) A horizontal well may be drilled on any drilling and spacing unit.

(2) A horizontal well unit may be created in accordance with 165:10-1-22 and 165:5-7-6. Such units shall be created as new units after notice and hearing as provided for by the Rules of Practice, OAC 165:5.

(3) The Commission may create a non-standard horizontal well unit covering contiguous lands in any configuration or shape deemed by the Commission to be necessary for the development of a conventional reservoir or an unconventional reservoir by the drilling of one or more horizontal wells. A non-standard horizontal well unit may not exceed 1,280 acres plus the tolerances and variances allowed pursuant to 52 O.S. § 87.1.

(4) A horizontal well unit may be established for a common source of supply for which there are already established non-horizontal drilling and spacing units, and said horizontal well unit may include within the boundaries thereof more than one existing non-horizontal drilling and spacing unit for the common source of supply. Upon the formation of a horizontal well unit that includes within the boundaries thereof one or more non-horizontal drilling and spacing units, the Commission shall provide that such horizontal well unit exists concurrently with one or more of such non-horizontal drilling and spacing units, and each such unit may be concurrently developed.

(f)Horizontal well location requirements for horizontal well units and horizontal well unitizations.

(1)Conventional reservoirs. In a conventional reservoir, the completion interval of a horizontal well in a horizontal well unit shall be located not less than the minimum distance from the unit boundary as follows:

(A) Not less than 165 feet from the boundary of any 10-, 20-, or 40-acre horizontal well unit.

(B) Not less than 330 feet from the boundary of any 80- or 160-acre horizontal well unit.

(C) Not less than 660 feet from the boundary of any 320-, 640- or 1,280-acre horizontal well unit.

(2)Unconventional reservoirs. In an unconventional reservoir, the completion interval of a horizontal well in a horizontal well unit shall be located not less than the minimum distance from the unit boundary as follows:

(A) Not less than 165 feet from the boundary of any 10-, 20-, or 40-acre horizontal well unit.

(B) Not less than 330 feet from the boundary of any 80-, 160-, 320-, 640- or 1,280- acre horizontal well unit.

(3)Horizontal well unitizations. The completion interval of a horizontal well in a horizontal well unitization shall not be located less than 330 feet from the unit boundary.

(g)Alternative well location requirements. The Commission may establish well location requirements different from those provided in subsection (f) of this Section when necessary to prevent waste and protect correlative rights. These requirements may be established in the order creating a standard or non-standard horizontal well unit or through a special rule of the Commission covering a conventional or unconventional reservoir in a designated geographic area. (see OAC 165:10, Subchapter 29, Special Area Rules).

(h)Allowable.

(1) Horizontal oil well allowables may be established administratively using the standard allowables provided in Appendix A (Allocated Well Allowable Table) supplemented by the additional allowables provided in Appendix C (Table HD) to this Chapter.

(2) The allowable for a horizontal gas well shall be computed in the manner prescribed for a non-horizontal gas well in the same common source of supply. The allowable for a horizontal well in a horizontal well unit 640-acres in size or less shall be the minimum well allowable as established in the current proration order determining the allowable formula issued pursuant to OAC 165:10-17-11, unless a higher allowable is established by conducting a flow potential test. The allowable for a horizontal well in a horizontal well unit in excess of 640-acres in size shall be calculated by multiplying the minimum well allowable by the quotient of the number of acres in the unit divided by 640. If an allowable higher than the minimum well allowable is established by way of a flow potential test, then the higher allowable will be utilized in calculating the appropriate allowable for a horizontal well in a horizontal well unit in excess of 640-acres in size.

(3) The allowable for a horizontal well unit or horizontal well unitization with multiple horizontal gas wells shall be the sum of the allowables for the separate horizontal gas wells. For this summation, the allowable for each horizontal gas well will be calculated as if it were the only well in the unit.

(4) The allowable for a multiunit horizontal well shall be allocated to each affected unit using the allocation factors determined in accordance with 52 O.S. § 87.8(B)(1).

(5) A non-horizontal well in a non-horizontal drilling and spacing unit which exists concurrently with a horizontal well unit shall be assigned the same allowable as a horizontal well in the horizontal well unit producing from the same common source of supply, except as otherwise specified by Order of the Commission.

(i)Pooling. Horizontal well units, horizontal well unitizations and multiunit horizontal wells may be pooled as provided in 52 O.S. § 87.1, 52 O.S. § 87.6 et seq. and Commission Rules of Practice, OAC 165:5.

Okla. Admin. Code § 165:10-3-28

Amended at 27 Ok Reg 2128, eff 7-11-10 ; Amended at 28 Ok Reg 1894, eff 5-19-11 (emergency); Amended at 28 Ok Reg 1949, eff 7-11-11 ; Amended at 28 Ok Reg 1894, eff 5-19-11 (emergency); Amended at 29 Ok Reg 950, eff 7-1-12 ; Amended at 30 Ok Reg 1041, eff 7-1-13

Amended by Oklahoma Register, Volume 31, Issue 24, September 2, 2014, eff. 9/12/2014

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

Amended by Oklahoma Register, Volume 35, Issue 24, September 4, 2018, eff. 9/14/2018

Amended by Oklahoma Register, Volume 36, Issue 21, July 15, 2019, eff. 8/1/2019

Amended by Oklahoma Register, Volume 37, Issue 24, September 1, 2020, eff. 10/1/2020

Amended by Oklahoma Register, Volume 38, Issue 24, September 1, 2021, eff. 10/1/2021

Amended by Oklahoma Register, Volume 39, Issue 24, September 1, 2022, eff. 10/1/2022

Amended by Oklahoma Register, Volume 40, Issue 24, September 1, 2023, eff. 10/1/2023