TITLE 19 NATURAL RESOURCES AND WILDLIFE

CHAPTER 15 OIL AND GAS

PART 2 GENERAL PROVISIONS FOR OIL AND GAS OPERATIONS

19.15.2.1 ISSUING AGENCY: Energy, Minerals and Natural Resources Department, Oil Conservation

Division. [19.15.2.1 NMAC - Rp, 19.15.1.1 NMAC, 12/1/08]

19.15.2.2 SCOPE: 19.15.2 NMAC applies to persons or entities engaged in oil and gas development and production within New Mexico and to 19.15.2 NMAC through 19.15.39 NMAC. [19.15.2.2 NMAC - Rp, 19.15.1.2 NMAC, 12/1/08]

19.15.2.3 STATUTORY AUTHORITY: 19.15.2 NMAC is adopted pursuant to the Oil and Gas Act, NMSA 1978, Sections 70-2-1 through 70-2-38, which grants the oil conservation division jurisdiction and authority over all matters relating to the conservation of oil and gas, the prevention of waste of o il and gas and of potash as a result of oil and gas operations, the protection of correlativ e rights and the disposition of wastes resulting from oil and gas operations. [19.15.2.3 NMAC - Rp, 19.15.1.3 NMAC, 12/1/08]

19.15.2.4 DURATION: Permanent. [19.15.2.4 NMAC - Rp, 19.15.1.4 NMAC, 12/1/08]

19.15.2.5 EFFECTIVE DATE: December 1, 2008, unless a later date is cited at the end of a section. [19.15.2.5 NMAC - Rp, 19.15.1.5 NMAC, 12/1/08]

19.15.2.6 OBJECTIVE: To set forth general provisions and definitions pertaining to the authority of the oil conservation division and the oil conservation commission pursuant to the Oil and Gas Act, NMSA 1978, Sections 70-2-1 through 70-2-38. [19.15.2.6 NMAC - Rp, 19.15.1.6 NMAC, 12/1/08]

19.15.2.7 DEFINITIONS: These definitions apply to 19.15.2 NMAC through 19.15.39 NMAC.

A. Definitions beginning with the letter “A”. (1) “Abate” means to investigate, contain, remove or mitigate water pollution. (2) “Abatement” means the investigation, containment, removal or other mitigation of water pollution. (3) “Abatement plan” means a description of operational, monitoring, contingency and closure requirements and conditions for water pollu tion’s prevention, investigation and abatement. (4) “ACT” mean s automatic custody transfer. (5) “Adjoining spacing units” mean those existing or prospective spacing units in the same pool that are touching at a point or line on the subject spacing unit. (6) “Adjusted allowable” means the allowable production a well or proration unit receives after all adjustments are made. (7) “AFE” means authorization for expenditure. (8) “Allocated pool” means a pool in which the total oil or gas production is restricted and is allocated to various wells in the poo l in accordance with proration schedules. (9) “Allowable production” means that number of barrels of oil or cubic feet of gas the division authorizes to be produced from an allocated pool. (10) “APD” means application for permit to drill. (11) “API” means the American petroleum institute. (12) “Approved temporary abandonment” means the status of a well that is inactive, has been approved in acco rdance with 19.15.25.13 NMAC and is in compliance with 19.15.25.12 NMAC through

19.15.25.14 NMAC. (13) “Aquifer” means a geological formation, group of formations or a part of a formation that is capable of yielding a significan t amount of water to a well or spring.(14) “ASTM” means ASTM International - an international standards developing organization that develops and publishes voluntary technical standards for a wide range of materials, products, systems and services.

B. Definitions beginning with the letter “B”. (1) “Back allowable” means the authorization for production of an underproduction resulting from pipeline proration. (2) “Background” means, for purpos es of ground water abatement plans only, the amount of ground water contaminants naturally occurring from undisturbed geologic sources or water contaminants occurring from a source other than the responsible person’s facility. This definition does not prevent the director from requiring abatement of commingled plumes of pollution, does not prevent responsible persons from seeking contribution or other legal or equitable relief from other persons and does not preclude the director from exercising enforcement authority under any applicable statute, rule or common law. (3) “Barrel” means 42 United Stat es gallons measured at 60 degrees fahrenheit and atmospheric pressure at the sea level. (4) “Barrel of oil” means 42 United States gallons of oil, after deductions for the full

amount of basic sediment, wa ter and other impurities present, ascertaine d by centrifugal or other recognized and

customary test. (5) “Below-grade tank” means a vessel, excluding sumps and pressurized pipeline drip traps, where a portion of the tank's sidewalls is below the surrounding ground surface’s elevation. Below-grade tank does not include an above ground storage tank that is located above or at the surrounding ground surface’s elevation and is surrounded by berms. (6) “Berm” means an embankment or ridge constructed to prevent the movement of liquids, sludge, solids or other materials. (7) “Biopile”, also known as biocell, bioheap, biomound or compost pile, means a pile of contaminated soils used to reduce concentrations of petr oleum constituents in excavated soils through the use of biodegradation. This technology involves heaping contam inated soils into piles or “cells” and stimulating aerobic microbial activity within the soils through the aeratio n or addition of minerals, nutrients and moisture. (8) “BLM” means the United States department of the interior, bureau of land

management. (9) “Bottom hole pressure” means the gauge pressure in psi under conditions existing at or near the producing horizon. (10) “Bradenhead gas well” means a well producing gas through wellhead connections from a gas reservoir that has been successfully cased off from an un derlying oil or gas reservoir. (11) “BS&W” means basic sediments and water. (12) “BTEX” means benzene, toluene, ethylbenzene and xylene.

C. Definitions beginning with the letter “C”. (1) “Carbon dioxide gas” means noncombustible gas composed chiefly of carbon dioxide occurring naturally in underground rocks. (2) “Casinghead gas” means a gas or vapor or both gas and vapor indigenous to and produced from a pool the division classifies as an oil pool. This also includes gas-cap gas produced from such an oil pool. (3) “Cm/sec” means centimeters per second. (4) “CPD” means central point delivery. (5) “Combination multiple completion” means a multiple completion in which two or more common sources of supply are pr oduced through a combination of two or more conventional diameter casing strings cemented in a common well bore, or a combinatio n of small diameter and co nventional diameter casing strings cemented in a common well bore, the conventional diameter strings of which might or might not be a conventional multiple completion. (6) “Commission” m eans the oil conservation commission. (7) “Commission clerk” means the divi sion employee the director designates to provide staff support to the commission and accep t filings in rulemaking or adjudi catory cases before the commission. (8) “Common purchaser for gas” means a person now or hereafter engaged in purchasing from one or more producers gas produced from gas wells within each common source of supply from which it purchases. (9) “Common purchaser for oil” means every person now engaged or hereafter engaging in the business of purchasing oil to be transported through pipelines.(10) “Common source of supply”. See pool. (11) “Condensate” means the liquid recove red at the surface that results from condensation due to reduced pressure or temperature of petroleum hydrocarbons existing in a gaseous phase in the reservoir. (12) “Contiguous” means acreage joined by more than one common point, that is, the common boundary is at least one side of a governmental quarter-quarter section. (13) “Conventional completion” means a well completion in which the production string of casing has an outside diameter in excess of 2.875 inches. (14) “Conventional multiple completion” means a completion in which two or more common sources of supply are produced through one or more strings of tubing installed within a single casing string, with the production from each comm on source of supply completely se gregated by means of packers. (15) “Correlative rights” means the opportun ity afforded, as far as it is practicable to do so, to the owner of each property in a pool to produce without waste the owne r’s just and equitable share of the oil or gas in the pool, being an amount, so far as can be practically determined, and so far as can be practicably obtained without waste, substantially in the proportion that the quan tity of recoverable oil or gas under the property bears to the total recoverable oil or gas in the pool, and for the purpose to use the owner’s just and equitable share of the reservoir energy. (16) “Cubic feet of gas or cubic foot of gas” means that volume of gas contained in one cubic foot of space and computed at a base pressure of 10 ounces per squa re inch above the average barometric pressure of 14.4 psi (15.025 psi absolute), at a standard base temperature of 60 degrees fahrenheit.

D. Definitions beginning with the letter “D”. (1) “Deep pool” means a common source of supply that is situated 5000 feet or more

below the surface. (2) “Depth bracket allowable” means the basic oil allowable the division assigns a pool and based on its depth, unit size or special pool orders, which, when multiplied by the market demand percentage factor in effect, determines the p ool’s top proration unit allowable. (3) “Director” means the director of the New Mexico energy, minerals and natural resources department, oil conservation division. (4) “Division” means the New Mexico energy, minerals and natural resources department,

oil conservation division. (5) “Division clerk” means the divisi on employee the director designates to accept filings in adjudicatory cases before the division. (6) “Downstream facility” means a facility associated with the transportation (including gathering) or processing of gas or oil (including a refinery, gas plant, compressor station or crude oil pump station); brine production; or the oil field service industry. (7) “DRO” means diesel range organics.

E. Definitions beginning with the letter “E”. (1) “EC” means electrical conductivity. (2) “Enhanced oil recovery project” means the use or the expanded use of a process for the displacement of oil from an oil well or division-designated pool other than a primary recovery process, including but not limited to the use of a pressure maintenance process; a water flooding process; an immiscible, miscible, chemical, thermal or biological process; or any other related process. (3) “EOR project” mean s an enhanced oil recovery project. (4) “EPA” means the Unite d States environmental protection agency. (5) “Exempted aquifer” means an aquifer that does not currently serve as a source of drinking water, and that cannot now an d will not in the foreseeable future se rve as a source of drinking water

because: (a) it is hydrocarbon producing;

( b) it is situated at a depth or location that makes the recovery of water for drinking water purposes economically or technologically impractical; or (c) it is so contaminated that it would be economically or technologically impractical to render that water fit for human consumption. (6) “Exempt waste” means oil field waste exempted from regulation as hazardous waste pursuant to Subtitle C of RCRA and applicable regulations. (7) “Existing spacing unit” means a spacing unit containing a producing well.

F. Definitions beginning with the letter “F”.(1) “Facility” means a structure, inst allation, operation, storag e tank, transmission line, access road, motor vehicle, rolling stock or activity of any kind, whether stationary or mobile. (2) “Field” means the general area that at least one pool underlay s or appears to underlay; and also includes the underground reservoir or reservoirs containing oil or gas. The words field and pool mean the same thing when only one underground reservoir is involved; however, field unlike pool may relate to two or more pools. (3) “Fresh water” to be protected includes the water in lakes and playas (regardless of quality, unless the water exceeds 10,000 mg/l TDS and it can be shown that degradation of the particular water body will not adversely affect hydrologically connected fresh gr ound water), the surface wate rs of streams regardless of the water quality within a given reach , and underground waters containing 10,000 mg/l or less of TDS except for which, after notice and hearing, it is found there is no present or reasonably foreseeable beneficial use that contamination of such waters would impair.

G. Definitions beginning with the letter “G”. (1) “Gas”, also known as natural gas, means a combustible vapor composed chiefly of hydrocarbons occurring naturally in a pool the division has classified as a gas pool. (2) “Gas lift” means a method of lif ting liquid to the surface by injecting gas into a well from which oil production is obtained. (3) “Gas-oil ratio” means the ratio of the casinghead gas produced in standard cubic feet to the number of barrels of oil concurrently produced during any stated period. (4) “Gas-oil ratio adjustment” means the reduction in allowable of a high gas oil ratio unit to conform with the production permitted by the limiting gas- oil ratio for the particular pool during a particular proration period. (5) “Gas transportation facility” mean s a pipeline in operation serving gas wells for the transportation of gas, or some other device or equipment in like operation where the gas produced from gas wells connected with the pipeline or other device or equipment can be transported or used for consumption. (6) “Gas well” means a well producing gas from a gas pool, or a well with a gas-oil ratio in excess of 100,000 cubic feet of gas per barrel of oil producing from an oil pool. (7) “Geomembrane” means an impermeable polymeric sheet material that is impervious to liquid and gas as long as it maintains its integrity, and is used as an integral part of an engineered structure designed to limit the movement of liquid or gas in a system. (8) “Geotextile” means a sheet material that is less impervious to liquid than a geomembrane but more resistant to penetration damage, and is used as part of an engineered structure or system to serve as a filter to prevent the movement of soil fines into a drainage system, to provide planar flow for drainage, to serve as a cushion to protect geomembran esor to provide structural support. (9) “GRO” means gasoline range organics. (10) “Ground water” means interstitial water that occurs in saturated earth material and is capable of entering a well in sufficient amounts to be used as a water supply. (11) “Ground water sensitive area” means an area the division specifically designates after evaluation of technical evidence where ground water exists that would likely exceed WQCC standards if

contaminants were introduced into the environment.

H. Definitions beginning with the letter “H”. (1) “Hardship gas well” means a gas well where underground waste occurs if the well is

shut-in or curtailed below its minimum sustainable flow rate. (2) “Hazard to public health” exists when water that is used or is reasonably expected to be used in the future as a human drinking water supply ex ceeds at the time and place of the use, one or more of the numerical standards of Subsection A of 20.6.2.3103 NMAC, or the naturally occurring concentrations, whichever is higher, or if a toxic pollutant as defined at Subsection WW of 20.6.2.7 NMAC affecting human health is present in the water. In determining whether a rel ease would cause a hazard to public health to exist, the director investigates and considers the purification and dilution reasonably expect ed to occur from the time and place of release to the time and place of withdrawal for use as human drinking water. (3) “Hazardous waste” means non-exem pt waste that exceeds the minimum standards for waste hazardous by characteristics es tablished in RCRA regulations, 40 CF R 261.21-261.24, or listed hazardous waste as defined in 40 CFR, part 261, subpart D, as amended. (4) “HDPE” means high-density polyethylene. (5) “High gas-oil ratio proration unit” means a unit with at least one producing oil well with a gas-oil ratio in excess of the limiting gas- oil ratio for the pool in which the unit is located.(6) “H 2 S” means hydrogen sulfide.

I. Definitions beginning with the letter “I”. (1) “Illegal gas” means gas produced from a gas well in excess of the division-determined

allowable. (2) “Illegal oil” means oil produced in excess of the allowable the division fixes. (3) “Illegal product” means a product of illegal gas or illegal oil. (4) “Inactive well” means a well that is not being used for beneficial purposes such as production, injection or monitoring and that is not being drilled, completed, repaired or worked over. (5) “Injection well” means a well used for the injection of air, gas, water or other fluids into an underground stratum.

J. [RESERVED]

K. Definitions beginning with the le tter “K”. “Knowingly and willf ully”, for the purpose of assessing civil penalties, means the voluntary or conscious pe rformance of an act that is prohibited or the voluntary or conscious failure to perform an act or duty that is required. It does not include performances or failures to perform that are honest mistakes or mere ly inadvertent. It includes, but does not require, performances or failures to perform that result from a criminal or evil intent or from a specific intent to violate the law. The conduct’s knowing and willful nature may be esta blished by plain indifference to or reckless disregard of the requirements of statutes, rules, orders or permits. A consistent pattern or performance or failure to perform also may be sufficient to establish the conduct’s knowing and willf ul nature, where such consistent pattern is neither the result of honest mistakes nor mere inadvertency. Conduct that is otherw ise regarded as being knowing and willful is rendered neither accidental nor mitiga ted in character by the belief that th e conduct is reasonable or legal.

L. Definitions beginning with the letter “L”. (1) “Limiting gas-oil ratio” means the gas-oil ratio the division assigns to a particular oil pool to limit the volumes of casinghead gas that may be produced from the various oil producing units within that particular pool. (2) “Liner” means a continuous, low-permeability layer constructed of natural or humanmade materials that restricts the migration of liquid oil field wastes , gases or leachate. (3) “LLDPE” means linear low-density polyethylene. (4) “Load oil” means oil or liquid hydrocarbon that has been used in remedial operation in an oil or gas well. (5) “Log” means a systematic detaile d and correct record of formations encountered in drilling a well.

M. Definitions beginning with the letter “M”. (1) “Marginal unit” means a proration unit that is incapable of producing top proration unit allowable for the pool in which it is located. (2) “Market demand percentage factor” means that percentage factor of 100 percent or less as the division determines at an oil allowable hearing, which, when multiplied by the depth bracket allowable applicable to each pool, determines that pool’s top proration unit allowable. (3) “MCF” means a thousand cubic feet. (4) “MCFD” means a thousand cubic feet per day. (5) “MCFGPD” means a thousand cubic feet of gas per day. (6) “Mg/l” means milligrams per liter. (7) “Mg/kg” means milligrams per kilogram. (8) “Mineral estate” is the most comp lete ownership of oil and gas recognized in law and includes the mineral interests and the royalty interests. (9) “Mineral interest owners” means ow ners of an interest in the executive rights, which are the rights to explore and develop, including oil and gas lessees ( i.e. , “working interest owners”) and mineral interest owners who have not signed an oil and gas lease. (10) “Minimum allowable” means the minimum amount of production from an oil or gas well that may be advisable from time to time to the end that production will repay reasonable lifting cost and thus prevent premature abandonment and resulting waste. (11) “Miscellaneous hydrocarbons” means tank bottoms occurring at pipeline stations; oil storage terminals or refineries; pipeline break oil; catchings collected in traps, drips or scrubbers by gasoline plant operators in the plants or in the gathering lines serving th e plants; the catchings collected in private, community or commercial salt water disposal systems; or other liquid hydrocarbon that is not lease crude or condensate.

N. Definitions beginning with the letter “N”.(1) “Non-aqueous phase liquid” m eans an interstitial body of liquid oil, petroleum product, petrochemical or organic solvent, including an emulsion containing such material. (2) “Non-exempt waste” means oil fiel d waste not exempted from regulation as hazardous waste pursuant to Subtitle C of RCRA and applicable regulations. (3) “Non-hazardous waste” means non-exempt oil field wa ste that is not hazardous waste. (4) “Non-marginal unit” means a pr oration unit that is capable of producing the top proration unit allowable for the pool in which it is located, and to which the division assigns a top proration unit

allowable. (5) “NORM” means the naturally o ccurring radioactive materials regulated by 20.3.14

NMAC.

O. Definitions beginning with the letter “O”. (1) “Official gas-oil ratio test” means the periodic gas-oil ratio test the operator performs pursuant to division order by the method and in the manner the division prescribes. (2) “Oil” means pe troleum hydrocarbon produced from a well in the liquid phase and that existed in a liquid phase in the reservoir. This definition includes crude oil or crude petroleum oil. (3) “Oil field waste” means waste ge nerated in conjunction with the exploration for, drilling for, production of, refining of, processing of, gather ing of or transportation of oi l, gas or carbon dioxide; waste generated from oil field service company operations; and waste generated from oil field remediation or abatement activity regardless of the date of release. Oil field waste does not include waste not generally associated with oil and gas industry operations such as tires, appliances or ordinary garbage or refuse unless generated at a division-regulated facility, and does not in clude sewage, regardless of the source. (4) “Oil well” means a well capable of producing oil and that is not a gas well as defined in Paragraph (6) of Subsection G of 19.15.2.7 NMAC. (5) “Operator” means a person who, duly authorized, is in charge of a lease’s development or a producing property’s operation, or who is in charge of a facility’s operation or management. (6) “Overproduction” means the amount of oil or gas produced during a proration period in excess of the amount authorized on the proration schedule. (7) “Owner” means the person who ha s the right to drill into and to produce from a pool, and to appropriate the production either for the person or for the person and another.

P. Definitions beginning with the letter “P”. (1) “Penalized unit” means a proration unit to which, because of an excessive gas-oil ratio, the division assigns an allowable that is less than top pr oration unit allowable for the pool in which it is located and also less than the ability of the well or wells on the unit to produce. (2) “Person” means an individual or entity including partnerships, corporations, associations, responsible business or association agents or of ficers, the state or a political subdivision of the state or an agency, department or instrumentality of the United States and of its officers, agents or employees. (3) “Pit” means a surface or sub-surf ace impoundment, man-made or natural depression or

diked area on the surface. Ex cluded from this definition are berms construc ted around tanks or other facilities solely for safety, secondary containment and storm water or run-on control. (4) “Playa lake” means a level or n early level area that occupies the lowest part of a completely closed basin and that is covered with water at irregular intervals, forming a temporary lake. (5) “Pool” means an underground reservoir containing a common accumulation of oil or gas. Each zone of a general structure, which zone is completely separated from other zones in the structure, is covered by the word pool as used in 19.15.2 NMAC through 19.15.39 NMAC. “Pool” is synonymous with “common source of supply” and with “common reservoir”. (6) “Potential” means a well’s properly determined capacity to produce oil or gas under division-prescribed conditions. (7) “Ppm” means parts per million by volume. (8) “PQL” means practical quantitation limit. (9) “Pressure maintenance” means the injection of gas or other fluid into a reservoir, either to maintain the reservoir’s existing pressure or to retard the reservoir pressure’s natural decline. (10) “Produced water” means water that is an incidental byproduct from drilling for or the production of oil and gas. (11) “Producer” means the owner of a well or wells capable of producing oil or gas or both in paying quantities.(12) “Product” means a commodity or thing made or manufactured from oil or gas, and derivatives of oil or gas, including refined crude oil, crude tops, topped crude, processed crude petroleum, residue from crude petroleum, cracking stock, uncracked fuel oil, treated crude oil, fuel oil, residuum, gas oil, naphtha, distillate, gasoline, kerosene, benzene, wash oil, lubricating oil and blends or mixtures of oil or gas or a derivative

thereof. (13) “Proration day” consists of 24 consecutive hours that begin at 7:00 a.m. and end at 7:00 a.m. on the following day. (14) “Proration month” means the calendar month that begins at 7:00 a.m. on the first day

of the month and ends at 7:00 a.m. on th e first day of the next succeeding month. (15) “Proration period” means for oil the proration month and for gas the 12-month period that begins at 7:00 a.m. on January 1 of each year and ends at 7:00 a.m. on Ja nuary 1 of the succeeding year or other period designated by general or special order of the division. (16) “Proration schedule” means the division orders authorizing the production, purchase and transportation of oil, casinghead gas and gas from the various units of oil or of gas in allocated pools. (17) “Proration unit” means the area in a p ool that can be effectively and efficiently drained by one well as determined by the division or commission (see NMSA 1978, Section 70-2- 17(B)) as well as the area assigned to an individual well for the purposes of alloca ting allowable production pursuant to a prorationing order for the pool. A proration unit shall be the same size and shape as a spacing unit. A ll proration units are spacing units but not all spacing units are proration units. (18) “Prospective spacing unit” means a hypothetical spacing unit that does not yet have a producing well. (19) “PVC” means poly vinyl chloride. (20) “Psi” means pounds per square inch. Q. [RESERVED]

R. Definitions beginning with the letter “R”. (1) “RCRA” means the federal Resource Recovery and Conservation Act. (2) “Recomplete” means the subsequent completion of a well in a different pool from the pool in which it was originally completed. (3) “Regulated NORM” means NORM co ntained in oil-field soils, equipment, sludges or other materials related to oil-field op erations or processes exceeding the radi ation levels specifi ed in 20 .3.14.1403

NMAC. (4) “Release” means breaks, leaks, spills, releases, fires or blowouts involving oil, produced water, condensate, drilling fluids, completion fluids or other chemical or contaminant or mixture thereof, including oil field wastes and gases to the environment. (5) “Remediation plan” means a writte n description of a program to address unauthorized releases. The plan may include appropriate information, including assessment data, health risk demonstrations and corrective action or actions. The plan may also include an alternative proposing no action beyond the spill report’s

submittal. (6) “Responsible person” means the owner or operator who shall complete a divisionapproved corrective action for pollution from releases. (7) “Royalty interest owner” means the owner of an interest in the non-executive rights including lessors, royalty interest owners and overriding royalty interest owners. Royalty interests are non-cost bearing. (8) “Run-on” means rainwater, leachat e or other liquid that drai ns from other land onto any part of a division-approved facility.

S. Definitions beginning with the letter “S”. (1) “SAR” means the sodium adsorption ratio. (2) “Secondary recovery” means a method of recovering quantities of oil or gas from a reservoir which quantities would not be recovera ble by ordinary primary depletion methods. (3) “Sediment oil” means tank bottoms and other accumulations of liquid hydrocarbons on an oil and gas lease, which hydrocarbons are not merchantable through normal channels. (4) “Shallow pool” means a pool that has a depth range from zero to 5000 feet. (5) “Shut-in” means the status of a production well or an injection well that is temporarily closed down, whether by closing a valve or disconnection or other physical means. (6) “Shut-in pressure” means the ga uge pressure noted at the wellhead when the well is completely shut-in, not to be confused with bottom hole pressure.(7) “Significant modification of an abatement plan” means a change in the abatement technology used excluding design and operational parameters, or relocation of 25 percent or more of the compliance sampling stations, for a single medium, as designated pursuant to Subparagraph (d) of Paragraph (2) of Subsection D

of 19.15.30.13 NMAC. (8) “Soil” means earth, sediments or other unconsolidated accumula tions of solid particles produced by the physical and chemical disintegration of rocks, and that may or may not contain organic matter. (9) “Spacing unit” means the area allocated to a well under a well spacing order or rule. Under the Oil and Gas Act, NMSA 1978, Section 70-2-12(B)(10), the commission may fix spacing units without first creating proration units. See Rutter & Wilbanks corp. v. oil conservation comm’n , 87 NM 286 (1975). This is the area designated on form C-102. (10) “Subsurface water” means ground water and water in the vadose zone that may become ground water or surface water in the reasonabl y foreseeable future or that vegetation may use. (11) “Surface waste management facility” means a facility that recei ves oil field waste for collection, disposal, evaporation, remediation, reclamation, treatment or storage except: (a) a facility that utilizes underground injection wells subject to division regulation pursuant to the federal Safe Drinking Water Act, and does not manage oil field wastes on the ground in pits, ponds, below-grade tank s or land application units; (b) a facility permitted pu rsuant to the New Mexico environmental improvement board rules or WQCC rules; (c) a temporary pit as defined in 19.15.17 NMAC; (d) a below-grade tank or pit th at receives oil field waste from a single well, permitted pursuant to 19.15.37 NMAC, regardless of the capacity or volume of oil field waste received; (e) a facility located at an oil and gas production facility and used for temporary storage of oil field waste generated on-site from normal operations, if the facility does not pose a threat to fresh water, public health, safety or the environment; (f) a remediation conducted in accordance with a division-approved abatementplan pursuant to 19.15.30 NMAC, a corrective action pursuant to 19.15.29 NMAC or a corrective action of a nonreportable release; (g) a facility operating pursuant to a division emergency order; (h) a site or facility where the operator is conducting emergency response operations to abate an immediate threat to fresh water, public health, safety or the environment or as the division has specifically directed or approved; or (i) a facility that receives only exempt oil field waste, receives less than 50 barrels of liquid water per day (averaged over a 30-day period), has a capacity to hold 500 barrels of liquids or less and is permitted pursuant to 19.15.17 NMAC.

T. Definitions beginning with the letter “T”. (1) “Tank bottoms” means that accumulation of hydrocarbon material and other substances that settles naturally below oil in tanks and rece ptacles that are used in oil’s handling and storing, and which accumulation contains in excess of two percent of BS&W; provided, however, that with respect to lease production and for lease storage tanks, a tank bottom shall be limited to that volume of the tank in which it is contained that lies below the bottom of the pipeline outlet to the tank. (2) “TDS” means total dissolved solids. (3) “Temporary abandonment” m eans the status of a well that is inactive. (4) “Top proration unit allowable for gas” means the maximum number of cubic feet of gas, for the proration period, the division allocates to a gas produc ing unit in an allocated gas pool. (5) “Top proration unit allowable for oil” means the maximum number of barrels for oil daily for each calendar month the division allocates on a proration unit basis in a pool to non-marginal units. The division shall determine the top proration unit allowable for a pool by multiplying the applicable depth bracket allowable by the market demand percentage factor in effect. (6) “TPH” means total petroleum hydrocarbons. (7) “Treating plant” means a plant constructed for the purpose of wholly or partially or being used wholly or partially for reclaiming, treating, processing or in any manner making tank bottoms or other

waste oil marketable. (8) “Tribal lands” means those lands for which the United States government has a trust responsibility to a native American tribe or a member of a native American tribe. This includes reservations, pueblo land grants, tribal trust lands and individual trust allotments.(9) “Tribal leases” means those leases of minerals or interests in or rights to minerals for which the United States government has a trust responsib ility to a nativeAmerican tribe or a member of a native

American tribe. (10) “Tribal minerals” means those minerals for which the United States government has a trust responsibility to a native American trib e or a member of a native American tribe. (11) “Tubingless completion” means a well completion in which the production string of casing has an outside diameter of 2.875 inches or less. (12) “Tubingless multiple completion” means completion in which two or more common sources of supply are produced through an equal numb er of casing strings cemented in a common wellbore, each such string of casing having an out side diameter of 2.875 inches or le ss, with the produc tion from each common source of supply completely segregated by cement.

U. Definitions beginning with the letter “U”. (1) “Underground source of drinking water” means an aquifer that supplies water for human consumption or that contains ground water having a TDS concentration of 10,000 mg/l or less and that is not an exempted aquifer. (2) “Underproduction” means the amount of oil or the amount of gas during a proration period by which a given proration unit failed to produce an amount equal to that the division authorizes in the proration schedule. (3) “Unit of proration for gas” consists of such multiples of 40 acres as may be prescribed by division-issued special pool orders. (4) “Unit of proration for oil” consis ts of one 40-acre tract or such multiples of 40-acre tracts as may be prescribed by di vision-issued special pool orders. (5) “Unorthodox well location” mean s a location that does not conform to the spacing requirements division rules establish. (6) “Unstable area” means a location that is susceptible to natural or human-induced events or forces capable of impairing the integrity of some or all of a division-approved facility’s structural components. Examples of unstable areas are areas of poor foundation conditions, areas susceptible to mass earth movements and karst terrain areas where karst topography is developed as a result of dissolution of limestone, dolomite or other soluble rock. Characteristic physiographic features of karst terrain include sinkholes, sinking streams, caves, large springs and blind valleys. (7) “Upstream facility” means a facility or operation associated with the exploration, development, production or storage of oil or gas that is not a downstream facility.

V. Definitions beginning with the letter “V”. “Vadose zone” means unsaturated earth material below the land surface and above ground water, or in between bodies of ground water.

W. Definitions beginning with the letter “W”. (1) “Waste”, in addition to its ordinary meaning, includes: (a) underground waste as those words are generally understood in the oil and gas business, and to embrace the ineffi cient, excessive or improper use or dissipation of the reservoir energy, including gas energy and water drive, of a pool, and the locating, spacing, drilling, equipping, operating or producing of a well or wells in a manner to reduce or tend to reduce the total quantity of oil or gas ultimately recovered from a pool, and the use of inefficient underground storage of gas; (b) surface waste as those wo rds are generally understood in the oil and gas business, and to embrace the unnecessary or excessive surf ace loss or destruction without beneficial use, however caused, of gas of any type or in any form, or oil, or a product thereof, but including the loss or destruction, without beneficial use, resulting from evaporation, seepage, leakage or fire, especially su ch loss or destruction incident to or resulting from the manner of spacing, equipping, operating or producing a well or wells, or incident to or resulting

from the use of inefficient st orage or from the production of oil or gas, in excess of the reasonable market demand; (c) oil production in this state in excess of the reasonable market demand for the oil; the excess production causes or results in waste that the Oil and Gas Act prohibits; reasonable market demand as used herein with respect to oil means the demand for th e oil, for reasonable current requirements for current consumption and use within or outside of the state, together with the demand of amounts as are reasonably necessary for building up or maintaining reasonable storage reserves of oil or the products thereof, or both the oil and products; (d) the non-ratable purchase or taking of oil in this state; the non-ratable taking and purchasing causes or results in waste, as defined in Subparagraphs (a), (b) and (c) of Paragraph (1) ofSubsection W of 19.15.2.7 NMAC and causes waste by violating the Oil and Gas Act, NMSA 1978, Section 70-2-

16; (e) the production in this state of gas from a gas well or wells, or from a gas pool, in excess of the reasonable market demand from such source for gas of the type produced or in excess of the capacity of gas transportation facilities for such type of ga s; the words “reasonable market demand”, as used herein with respect to gas, shall be construed to mean the demand for gas for reasonable current requirements, for current consumption and for use within or outside the state, together with the de mand for such amounts as are necessary for building up or maintaining reasonable storage reserves of gas or products thereof, or both the gas and products. (2) “Water” means all water including wa ter situated wholly or partly within or bordering upon the state, whether surface or subsurface, public or priv ate, except private waters that do not combine with other

surface or subsurface water. (3) “Water contaminant” means a substance that could alter if released or spilled water’s physical, chemical, biological or radiological qualities. Wate r contaminant does not mean source, special nuclear or by-product material as defined by the Atomic Energy Act of 1954. (4) “Watercourse” means a river, cr eek, arroyo, canyon, draw or wash or other channel having definite banks and bed with visible evidence of the occasional flow of water. (5) “Water pollution” means introducing or permitting the introduction into water, either directly or indirectly, of one or more water contaminan ts in such quantity and of such duration as may with reasonable probability injure human health, animal or plan t life or property, or to un reasonably interfere with the public welfare or property use. (6) “Well blowout” means a loss of control over and subsequent eruption of a drilling or workover well or the rupture of the casing, casinghead or wellhead of an oil or gas well or injection or disposal well, whether active or inactive, accompan ied by the sudden emission of fluids , gaseous or liquid, from the well. (7) “Well bore” means the interior su rface of a cased or open hole through which drilling, production or injection operations are conducted. (8) “Wellhead protection area” means th e area within 200 horizont al feet of a private, domestic fresh water well or spring used by less than five households for domestic or stock watering purposes or within 1000 horizontal feet of any ot her fresh water well or spring. Wellhead protection areas does not include areas around water wells drilled after an existing oil or gas waste storage, treatment or disposal site was established. (9) “Wetlands” means those areas th at are inundated or saturated by surface or ground water at a frequency and duration sufficient to support, and under normal circumstances do support, a prevalence of vegetation typically adapted for life in saturated soil cond itions in New Mexico. This definition does not include constructed wetlands used for wastewater treatment purposes. (10) “Working interest owner” means the owner of an operating interest under an oil and gas lease who has the exclusive right to exploit the oil and gas minerals. Working interests are cost bearing. (11) “WQCC” means the New Mexico water quality control commission. [19.15.2.7 NMAC - Rp, 19.15.1.7 NMAC, 12/1/08; A, 3/31/15]

19.15.2.8 GENERAL OPERATIONS/WASTE PROHIBITED:

A. The production or handling of oil or gas of any type or in any form or the handling of oil or gas products in a manner, under conditions or in an amount as to constitute or resu lt in waste is prohibited.

B. Operators, contractors, drillers, carri ers, gas distributors, service companies, pipe pulling and salvaging contractors, treating plant operators or other persons shall conduct their operations in or related to the drilling, equipping, operating, producing, plugging and ab andonment of oil, gas, injection, disposal and storage wells or other facilities in a manner that prevents waste of oil and gas, the contamination of fresh waters and shall not wastefully utilize oil or gas or allow either to leak or escape from a natural reservoir or from wells, tanks, containers, pipe or other storage, conduit or operating equipment. [19.15.2.8 NMAC - Rp, 19.15.1.13 NMAC, 12/1/08]

19.15.2.9 ORDERS: The division or commission may issue orders, including division or commission special pool orders when required and the orders sha ll prevail against rules if in conflict with them. [19.15.2.9 NMAC - Rp, 19.15.1.11 NMAC, 12/1/08]

19.15.2.10 GENERAL WAIVERS AND EXCEPTIONS: [RESERVED]

19.15.2.11 EMERGENCY ORDERS AND RULES:A. Notwithstanding other provisions of 19.15.2 NMAC through 19.15.39 NMAC, in the event the division or commission finds an emergency exists that requires an order’s or rule’s issuance without a hearing, the emergency rule or order shall have the same validity as if the division or commission held a hearing before the division or commission after due notice. The emergency rule or order shall remain in force no longer than 15 days

from its effective date.

B. Notwithstanding other provisions of 19.15.2 NMAC through 19.15.39 NMAC, if the division or commission finds an emergency exists, the division or commission may conduct a hearing on an application within less than 30 days after party files an application and the director may set the notice period at the director’s

discretion. [19.15.2.11 NMAC - Rp, 19.15.14.1225 NMAC, 12/1/08]

19.15.2.12 NUMBERING OF DIVISION ORDERS:

A. Division orders entered after January 1, 1950, pertaining to the allocation of production of oil and gas shall be prefixed with the letter “A” or “AG” in the case of gas pools and shall be numbered consecutively, commencing with the number one, i.e. , the first allocation order issued after January 1, 1950, is No. A-1, the next A2, etc. or AG-1 and AG-2.

B. Other division orders entered after January 1, 1950, shall be prefixed with the letter “R” and shall be numbered consecutively, commencing with the number 1, i.e ., the first such order issued after January 1,

1950, is No. R-1, the next R-2, etc. [19.15.2.12 NMAC - Rp, 19.15.15.1304 NMAC, 12/1/08]

19.15.2.13 COMPUTATION OF TIME: In computing a period of time 19.15.2 NMAC through 19.15.39 NMAC prescribes, the day from which the period of time begins to run shall not be included. The last calendar day of the time period shall be included in the computation unless it is a Saturday, Sunday or a day on which state agencies observe a legal holiday. In such case, the period of time runs to the close of business on the next regular workday. If the period is less than 11 days, a Saturday , Sunday or legal holiday is excluded from the computation. [19.15.2.13 NMAC - Rp, 19.15.14.1226 NMAC, 12/1/08]

19.15.2.14 MEETINGS BY TELECONFERENCE: Pursuant to NMSA 1978, Section 10-15-1 commission members may participate in commission meetings and hearings by conference telephone or other similar communications equipment when it is otherwise difficult or impossible for members to attend the meeting or hearing in person. Each member participating by conference telephone or other similar communications equipment shall be identified when speaking. Par ticipants shall be able to hear each ot her at the same time. Members of the public hearing attending the meetings or hearing shall be able to hear commission members who speak during the meeting or hearing. [19.15.2.14 NMAC - Rp, 19.15.1.20 NMAC, 12/1/08]

19.15.2.15 AUTHORI TY TO COOPERATE WITH OTHER AGENCIES: The division may from time to time enter into arrangements with state and federal governmental agencies, industry committees and individuals with respect to special proj ects, services and studies relating to o il and gas conservation and the associated protection of fresh waters. [19.15.2.15 NMAC - Rp, 19.15.1.17 NMAC, 12/1/08]

19.15.2.16 DUT IES AND AUTHORITY OF FIELD PERSONNEL: Oil and gas inspectors, deputy oil and gas inspectors, scouts, engineers and geologists the division duly appoints have the authority and duty to enforce division rules. Oil and gas inspectors and their deputies may allow minor deviations from 19.15.2 NMAC through 19.15.39 NMAC’s requirements as to field practices where, by so doing, waste is prevented or burdensome delay or expense on the part of the operator is avoided. [19.15.2.16 NMAC - Rp, 19.15.15.1303, 12/1/08]

19.15.2.17 DISTRICT OFFICES:

A. To expedite administration of the division’s work and its rules’ enforcement, the state is divided

into four districts as follows: (1) district 1 consisting of Lea, Roosevelt and Curry counties and that portion of Chaves county lying east of the north-south line dividing ranges 29 and 30 east, NMPM with the district office in Hobbs;(2) district 2 consisting of Eddy, Otero, Dona Ana, Luna, Hidalgo, Grant, Sierra, Lincoln and De Baca counties and that portion of Chaves county lyin g west of the north-south lin e dividing ranges 29 and 30

east, NMPM with the dist rict office in Artesia; (3) district 3 consisting of San Juan, Rio Arriba, McKinley and Sandoval counties with the

district office in Aztec; and (4) district 4 consisting of the remainder of state with the district office in Santa Fe.

B. Each district office shall be under the charge of a district supervisor, an oil and gas inspector or a deputy oil and gas inspector, unless otherwise specifically required.

C. The district office of the district in which the affected land is located shall take care of matters pertaining to the division. [19.15.2.17 NMAC - Rp, 19.15.15.1301 NMAC, 12/1/08]

19.15.2.18 RENUMBERING OR REORGANIZATION OF RULES: When the commission approves reorganization or renumbering of division rules, either through amendment or repeal and replacement, persons with permits, orders or agreements that reference rules that have been reorganized or renumbered shall comply with the rules as reorganized or renumbered.

[19.15.2.18 NMAC - N, 12/1/08]

HISTORY of 19.15.2 NMAC:

History of Repealed Material: 19.15.1 NMAC, General Provisions (filed 04/27/2001); 19.15.14 NMAC, Procedure (filed 09/16/2005); and 19.15.15 NMAC, Administration (filed 07/12/2004) all repealed 12/1/08.

NMAC History: Those applicable portions of 19.15.1 NMAC, General Provisions (Sections 1-7, 11, 13, 17, & 20) (filed 04/27/2001); 19.15.14 NMAC, Procedure (Sections 1225 and 1226) (filed 09/16/2005); and 19.15.15 NMAC, Administration (Sections 1301 and 1303) (filed 07/12/2004) were replaced by 19.15.2 NMAC, General Provisions for Oil and Gas Operations, effective 12/1/08.