SECTION 3.42. Oil Discovery Allowable

(a) The commission shall determine the discovery allowable rate for oil wells proven to be completed in a new and separate reservoir from the following discovery allowable schedule.

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(b) Duration and exemption from market demand limitation.

(1) Onshore. Each oil well completed in an oil reservoir determined by the commission to be a new onshore oil field onshore may receive, as a maximum daily, its discovery allowable, exempt from market demand limitation, for a period of 24 months (36 months for depth intervals deeper than 10,000 feet) from the date of assignment of the oil allowable to such discovery well or until the 11th oil well has been completed therein, whichever occurs first.

(2) Offshore. Each oil well completed in an oil reservoir determined by the commission to be a new offshore oil field may receive, as a maximum daily allowable, its discovery oil allowable, exempt from market demand limitation, for a period of 24 months (36 months for depth intervals deeper than 10,000 feet) from the date of assignment of the oil allowable to such discovery well or until the sixth oil well has been completed therein, whichever occurs first.

(c) The director or the director's delegate shall review the production performance of discovery wells to evaluate whether waste is occurring due to the discovery allowable. If the director or the director's delegate believes waste is or may be occurring, the director or the director's delegate may request any additional relevant information from the operator and may set the matter for hearing to allow the commission to determine if the discovery allowable should be lowered to prevent waste.

Source Note: The provisions of this §3.42 adopted to be effective January 1, 1976; amended to be effective August 6, 1980, 5 TexReg 2930; amended to be effective November 28, 1989, 14 TexReg 6006; amended to be effective January 4, 1999, 24 TexReg 131