SECTION 3.10. Restriction of Production of Oil and Gas from Different Strata

(a) General prohibition. Oil or gas shall not be produced from different strata through the same string of tubulars except as provided in this section. As used in this section, "different strata" means two or more different commission-designated fields, or one or more commission-designated fields and any other hydrocarbon reservoir.

(b) Exception. After notice and an opportunity for a hearing, the commission or its delegate may grant an exception to subsection (a) of this section to permit production from a well or wells commingling oil or gas or oil and gas from different strata, if commingled production will prevent waste or promote conservation or protect correlative rights.

(c) Notice of Application for Exception.

(1) Timing of Notice.

(A) The applicant shall give notice of each request for an exception by serving a copy of the application to commingle production on all affected operators at the same time the application is filed with the commission.

(B) Service shall be accomplished by delivering a copy of the application to the operator to be served, or to the operator's duly authorized representative, in person, by agent, by courier receipted delivery, by first class mail to the operator's mailing address as shown on the operator's most recently filed Form P-5 (Organization Report) or the most recently filed letter notification of change of address, or by such other manner as the commission may direct.

(2) Operators Presumptively Affected By Application.

(A) An initial exception to commingle production exclusively from different commission-designated fields is presumed to affect all operators in each of the commission-designated fields proposed to be produced through the same string of tubulars.

(B) An initial exception to commingle production from a commission-designated field with production from one or more hydrocarbon reservoirs that have not been designated by the commission as a field is presumed to affect all operators in each of the different commission-designated fields proposed to be produced through the same string of tubulars and all operators of adjacent tracts, and of tracts nearer to the well for which a commingling exception is sought than the longest applicable minimum lease-line distance.

(C) An exception to commingle production exclusively from the same commission-designated fields for which an initial commingling application has previously been granted is presumed to affect all operators of adjacent tracts, and of tracts nearer to the well for which a subsequent commingling exception is sought than the longest applicable minimum lease-line distance, who have a well completed in one or more of the commission-designated fields for which commingling is sought.

(D) An exception to commingle production from a commission-designated field and one or more hydrocarbon reservoirs in specified correlative intervals that have not been designated by the commission as fields, for which an initial commingling exception involving the same fields and hydrocarbon reservoirs has previously been granted, is presumed to affect all operators of adjacent tracts, and of tracts nearer to the well for which a commingling exception is sought than the longest applicable minimum lease-line distance.

(3) Notice Required Only to Affected Operators.

(A) Except as provided in subparagraph (B) of this paragraph, all operators described in paragraph (2)(A)-(D) of this subsection are affected by a requested exception to allow commingling and the applicant shall give each of them notice of the application as provided in paragraph (1)(A) of this subsection.

(B) The commission or its delegate may determine that an operator described in paragraph (2)(A)-(D) will be unaffected by a requested exception to allow commingling. This determination shall be made only upon the applicant's written request and provision to the commission of competent geological or engineering data establishing conclusively that commingling production as requested by the applicant will not physically interfere with the production of hydrocarbons by the operator for which an unaffected determination is requested. An applicant for an exception to allow commingling is not required to give notice of the application to an operator who has been determined to be unaffected as provided in this subparagraph.

(d) Commingled production. Commingled production of gas from different strata pursuant to subsection (b) of this section shall be considered production from a common source of supply for purposes of proration and allocation.

Source Note: The provisions of this §3.10 adopted to be effective January 1, 1976; amended to be effective February 23, 1979, 4 TexReg 436; amended to be effective September 12, 1979, 4 TexReg 3082; amended to be effective May 14, 1996, 21 TexReg 3791.