S.C. Code Regs. § § 121-8.20

Current through Register Vol. 48, No. 10, October 25, 2024

Section 121-8.20 - Pool Classification and Determination of Allowables

A. Upon discovery of each new field or pool, the Commission shall assign to it a name consisting of:

(1) A landmark designation with appropriate directional symbol; and

(2) The geologic name of the producing reservoir.

B. The Commission shall classify, and reclassify, the oil pools of the State, in the following categories:

(1) Pools on Temporary Allowable;

(2) Prorated Pools; and

(3) Pools under Pressure Maintenance or Secondary Recovery.

The Commission shall classify and reclassify the gas pools of the State in the following categories:

(1) Dry Gas Pools;

(2) Gas Condensate Pools; and

(3) Gas Condensate Pools under Cycling.

C. Each well completed which discovers a new pool may, upon approval by the Commission, be assigned a temporary allowable, not subject to market demand, and determined by the Commission to be reasonable and to prevent waste. The temporary allowable shall be assigned to all subsequent wells completed in said pool until a specified time as determined by the Commission, has elapsed from the date of completion of the discovery well. Subsequently, the pool shall enter the classification of a prorated pool.

A well discovering more than one new pool shall be entitled to a temporary allowable in each new pool, provided the well is completed to produce from such new pool prior to the time such pool is reclassified as a prorated pool.

At the same time as a temporary allowable is assigned to any well, the Commission may issue an order promulgating temporary field rules for such new pool, including a rule providing for well spacing so that in the early stage of development of such pool no unnecessary wells may be drilled, and the limit and characteristics of the reservoir and its fluid content may be determined with the least number of wells in the shortest possible time.

An operator desiring a temporary allowable shall furnish the Commission the following:

(1) An electric log or radioactivity log of the well in question, if taken;

(2) A map of the area, including the location of all oil and gas wells within the pool being produced by the subject well; showing total depth of such wells, and whether dry or productive, name of the producing interval, and the top and bottom of such interval;

(3) An affidavit setting out the following:

(a) The exact location of the well (legal description);

(b) The lease name;

(c) The suggested pool name (to include the producing interval);

(d) The top and bottom depths of the producing interval;

(e) The results of production tests and/or GOR tests;

(f) The date of first production;

(g) The names and addresses of the purchasers to whom oil is to be delivered;

(h) The name and address of each operator within one-half ( 1/2) mile of the well and an affidavit that notice in writing of the request for the temporary allowable was mailed to each operator named;

(i) A description of onsite storage facilities and means of transporting the produced oil or gas; and

(j) Any other data the Commission may deem pertinent, such as bottom hole pressure, core data, etc.

Prior to termination of the temporary allowable status of a pool, the Commission may require the submission of all reservoir data obtained and will hold a hearing to secure further evidence and the recommendations of operators for the future operations of such pool.

D. The Commission, after notice and hearing, may assign a temporary allowable to any well or promulgate temporary field rules for any new pool, based upon review of all known relevant information including, but not limited to the following: chemical composition of the production; size of the tract; distance of the well from property lines; information submitted to the Commission pursuant to (C) above; and any proposed allowable or field rules suggested by the operator. The Commission will exercise its discretion in establishing a temporary allowable or temporary field rules consistent with one of the three alternative methods for establishing temporary drilling units, as follows:

(1) Establishment of statewide spacing standards. Such standards and temporary allowables shall be determined with reference to a state-wide grid system suitable to this State. The Commission shall also consider the type of production, depth of production, well spacing, and producing practices.

(2) Test period and shut-in. This method authorizes a test period of between thirty (30) to ninety (90) days prior to the shutting-in of the well. During the shut-in period, the Commission will adopt temporary field rules, specifying unit size, allowables, well spacing, and production practices.

(3) Production on a lease basis. This method authorizes a well to be drilled and produced on a lease basis, according to state-wide rules concerning well spacing, allowables, and production practices.

The operator of each new well brought on to production shall file a production test with the Commission not later than thirty (30) days after completion of the well. Each individual well will be tested for not less than six (6) hours, and not more than twenty-four (24) hours, and the production reported at a daily rate (24 hours). The test may be witnessed by a representative of the Commission.

E. The Commission shall encourage and may exercise the authority, in its discretion, to order a pool-wide unit under the following circumstances:

(1) It is demonstrated to the Commission that a pool-wide unit is the best way to develop the pool and to achieve maximum efficiency;

(2) To maintain the pressure of the reservoir after it is fully developed;

(3) Secondary or other enhanced recovery methods are utilized; and

(4) Any other reason or good cause shown by the Commission that units on the pool should be on a pool-wide basis.

The Commission shall issue an order establishing a pool-wide unit after notice and hearing. After such notice and hearing, the Commission shall assign a pool-wide allowable. In determining the total pool allowable the following factors shall be considered:

(a) Productive capacity of the wells in said pool;

(b) Effective pay thickness of the producing zones;

(c) Size and content of the reservoir; and

(d) Reservoir performance, including the bottom hole pressure, gas-oil ratios, average depth of the pay zone, type of drive, permeability, water encroachment and water production, porosity, productivity indices and proper withdrawal rates from the reservoir as a whole.

The total pool allowable shall then be distributed to each separate leasehold or pooled unit so as to allow each tract an opportunity to produce ultimately the liquid hydrocarbons which underlie it. In allocating oil allowables to pools, the Commission will have the right to consider nominations of purchasers.

F. When it is shown that no avoidable waste or violation of correlative rights will result, the Commission may authorize the operation of a pool under a limiting gas-oil ratio in excess of 2,000 cubic feet of gas per barrel of oil produced.

Any oil well producing with a gas-oil ratio in excess of two thousand (2,000) cubic feet of gas per barrel of oil produced shall be allowed to produce daily only that volume of gas obtained by multiplying its top daily oil allowable, which could have been assigned to such well prior to application of this rule, by two thousand (2,000). The gas volume thus obtained shall be known as the daily gas limit of the well. The daily oil allowable of the well shall then be determined by dividing its daily gas limit, obtained as herein provided, by its producing gas-oil ratio in cubic feet per barrel of oil produced.

Any gas well producing from the same reservoir in which oil wells are completed and producing shall be allowed to produce daily only that amount of gas which is the volumetric equivalent in reservoir displacement of the gas and oil produced from the oil well in the reservoir that withdraws the maximum amount of gas in the production of its daily oil allowable.

If gas produced from an oil reservoir is returned to the same reservoir from which it was produced, only the volume of gas not returned to the reservoir shall be considered in applying the rule stated.

G. All gas wells shall be tested initially and annually unless otherwise waived by the Commission. Proration of gas production and/or the establishment of maximum allowable withdrawal rates shall be determined by use of appropriate procedures of the Interstate Oil Compact Commission's "Manual of Back Pressure Testing of Gas Wells" or Commission approved improvements, modifications, or substitutes.

H. Whenever necessary to assure the equitable taking of gas from a pool, or to prevent waste, the Commission, after notice and hearing, shall regulate the taking of gas from such pool by establishing a reasonable and equitable allocation formula with which to allocate production among wells.

I. Special field rules adopted for such pool shall provide that the total gas allowable of the pool shall be distributed among the separate leasehold or pooled units in said pool so as to allow each tract an opportunity to produce ultimately the gaseous hydrocarbons which underlie it.

J. Before gas from a non-associated gas pool may be utilized for production of carbon black, a special permit must be obtained for such use from the Commission.

K. Operators of wells and pools capable of producing carbon dioxide, nitrogen, hydrogen sulfide, or other gases, or combinations thereof, shall be required to secure approval of operating practices from the Commission.

L. Upon granting of an exception to well spacing required by these regulations, or in a special field rule, promulgated by the Commission, and it appearing that such exception location gives the applicant more than his just and equitable share of the hydrocarbons in the reservoir, the agency shall take such action, by allowable penalty or otherwise, as to offset the advantage over other owners in the pool occasioned by the granting of the exception location, after notice and hearing. In addition, whenever exceptional location is granted, a directional survey must be conducted and the results must be reported to the Commission.

M. If a prorated gas or oil well, or leasehold, during the proration period determined by the Commission, does not produce as much oil or gas as is allocated to it by the order of the Commission, the operator of the well, or leasehold, shall be permitted to carry such underproduction forward to the next succeeding balancing period, as future allowable credit to be produced during that period.

N. No gas or oil well, or leasehold, shall be overproduced, except by order of the Commission. All other overproduction, during the proration period determined by the Commission, shall be deducted from the lease allowable for the second succeeding proration period.

O. The commission, upon application, notice and hearing, may permit the transfer of an allowable of a high gas-oil ratio or high water-oil ratio well, after proper adjustment, partially or entirely to any other well or wells on the same lease having a lower gas-oil ratio or water-oil ratio, producing from the same common source of supply.

S.C. Code Regs. § 121-8.20