SECTION 3.52. Oil Well Allowable Production

(a) The daily allowable production of any lease or property shall not include production based upon the daily potential production of the field or area in which such well is located unless such well is actually on production, and such lease or property shall share in the total allowable production of the field or area, only to the extent of such well's actual ability to produce from day to day regardless of the rated potential production thereof according to the commission schedules.

(b) Production of a well in any one day shall not exceed 110% of the top well allowable as fixed by applicable rules and orders. Production and runs from a lease during the monthly allowable period shall not exceed 105% of the monthly allowable for the well or wells on the lease. However, the volume of oil that is produced and removed from the producing property as tolerance production shall be treated as overproduction and overruns shall be made up during the next succeeding month.

(c) All oil allowable volumes shall be measured in a manner consistent with §3.71 of this title (relating to Pipeline Tariffs) (Statewide Rule 71).

(d) A newly completed well coming into production during a proration period will be gauged either by a commission agent, or pipeline gauger if a commission agent is not available, if an offset lease owner witnesses the gauge taken by the pipeline gauger. The allowable production of such newly completed well shall be in addition to the existing total allowable production of the field as previously ascertained. The well whose allowable is thus fixed shall take its ratable share of production at the next succeeding schedule date according to rule.

(e) All oil produced from any well governed by any proration order of the commission shall be charged against the allowable daily production of such well regardless of the disposition which is made of the oil so produced.

(f) The operator of any lease or unitized area in the State of Texas may be permitted to produce the total allowable for any such lease or unitized area subject to the following provisions:

(1) The operator must submit an application to produce that total allowable on a lease or unit production basis to the commission with a plat showing the subject lease or unit as well as the adjacent properties thereto. Such plat shall identify properly all properties and wells. The applicant shall give written notice to all operators in the field when application is made for permission to produce on a lease basis in a field. If no protest is received by the commission within 15 days of the date of mailing, the application may be granted by administrative action. If protest is received, notice will be given and the matter set for hearing.

(2) The total daily allowable of the lease or unit shall be initially established as an allowable equal to the sum of the current allowables for all wells on the lease or unit. The allowable credited to any new or existing well may be increased to the top well allowable permitted by subsequently filing a new potential test on that well. The maximum total daily allowable of the lease or unit will be equal to the sum of the scheduled top allowables assignable to each well for its proration unit.

(3) The total daily allowable of the lease or unit may be produced in any quantity from any well or combination of wells with the exception that wells nearer than a regular location from a lease or unit line shall not be permitted to produce more than their normal allowables and wells at a distance of a regular location from a lease or unit line shall not be produced at a rate of more that two times the top allowable for such well unless waivers of objection to rates in excess of this limit have been obtained from the operators of wells offsetting the well.

(4) Annual well test or allocation:

(A) An annual well test, or an allocation pursuant to §3.53(a)(2) of this title (relating to Annual Well Tests and Well Status Reports Required) shall be made and reported on the oil well status report form on each lease or unit property to which a lease production basis has been granted showing an individual well test or allocation on each oil well on the property made during the prescribed test period determined by the commission. Annual well tests may be witnessed by offset operators. An offset operator that desires to witness an annual well test shall give the testing operator written notice of its desire to witness the next scheduled annual well test of a specific well. A testing operator that has received prior written notice that an offset operator desires to witness an annual well test shall give that offset operator at least 24 hours advance notice of the date of the next annual well test for that well. The Commission will use the test or allocation data in the preparation of the oil proration schedule. The total schedule daily lease allowable shall be the sum of the individual well allowables as determined under applicable rules and the lease production basis shall be designated on the oil proration schedule by an appropriate symbol. All wells on the lease for which an allowable is requested shall have their production volumes reported pursuant to §3.53(a).

(B) Any producing well with a gas-oil ratio in excess of that permitted by the applicable rules shall have its daily allowable calculated by dividing the producing gas-oil ratio into the daily gas limit of the well.

(5) The Commission shall continue to require special tests in cases of commingled production where individual lease apportionment is determined by this method. Other special tests may be required as the Commission deems necessary.

(6) In the event that the monthly gas production of the lease or unit exceeds the permissible monthly lease gas limit, the volume of gas in excess of the lease gas limit shall be considered overproduction and must be made up by underproduction of the lease gas limit. Whenever the overproduced amount equals the next month's lease gas limit the overproduced amount shall immediately be reduced to zero by shutting in the lease or by other means acceptable to the Commission.

(7) The East Texas Field is excluded from the provisions of this section.

(g) Administrative cancelation of overproduction.

(1) An operator may request in writing to the Commission that overproduction for a specific lease be canceled. The request shall include a listing of the names and addresses of all offsetting operators in the same field as the lease for which the request is filed.

(2) Upon receipt of an operator's written request:

(A) Commission staff shall determine whether the operator's wells on the specified lease are in compliance with Commission rules excluding rules pertaining to overproduction.

(B) If the wells are found to be in compliance, the Commission staff shall send written notice to offset operators as identified in the request advising them of the request and giving them not less than 15 days to file a written objection to the request.

(C) If no objection to the request is received, the overproduction on the lease requested by the operator shall be canceled.

(D) If objection to the request is received or if Commission staff determines that the operator's wells are not in compliance with Commission rules excluding rules pertaining to overproduction, then the requested cancelation shall not be administratively approved. The operator may request that the matter be scheduled for public hearing pursuant to Tex. Nat. Res. Code §86.090. The burden of proof shall be on the applicant operator.

Source Note: The provisions of this §3.52 adopted to be effective January 1, 1976; amended to be effective May 1, 1991, 16 TexReg 2095; amended to be effective February 18, 1994, 19 TexReg 783; amended to be effective February 13, 1997, 22 TexReg 1313; amended to be effective January 10, 2000, 25 TexReg 79; amended to be effective November 24, 2004, 29 TexReg 10728; amended to be effective February 1, 2016, 41 TexReg 785