Regulatory Aspects of Deep Gas Wells in Texas
Authors: Harris Bob R. 
Published: December 2007

This paper briefly discusses the general mechanics of normal gas proration, then covers related problems encountered as gas well completions become deeper. Proper classification of wells under the Texas State Statutes, Proper classification of wells under the Texas State Statutes, reasonable balancing procedures proration of gas fields based on liquid limits, deviation from regular backpressure calculations, and multi-interest wells connected to more than one pipeline seem to be the most perplexing problems currently. In spite of these problems, the deep problems currently. In spite of these problems, the deep gas exploration operations being conducted in far West Texas are contributing more reserves to the state total than are those of any other area.

Introduction

Proration of deep gas well production in the Delaware basin actually does not differ from gas proration in any other area. Basically, the Texas Railroad Commission, under Title 102 Revised Civil Statutes of Texas, Article 6008, Section 10, is charged with the duty of prorating and regulating the daily gas well production from each common reservoir for the "protection of public and private interest:In the prevention of waste as ‘waste’ is defined herein.In the adjustment of correlative rights and opportunities of each owner of gas in a common reservoir to produce and use or sell such gas as permitted in this Article."

Under Section 11 of the same statute, the Texas Railroad Commission is directed to exercise the authority granted under Section 10, when, after notice and hearing, evidence is received that supports a finding that either:waste is present or imminent, orthe "aggregate lawful volume of the open flow or daily potential capacity to produce of all gas wells located in a common reservoir, is in excess of the daily reasonable market demand for gas from gas wells that may be produced from such common reservoir…."

Gas Proration

When, after notice and hearing as provided under the statutes, special field rules have been adopted by the Texas Railroad Commission for gas production from a particular field, the reasonable market demand for gas from particular field, the reasonable market demand for gas from that field is determined by the Commission on a monthly basis. After the market demand is established, each well is assigned an allowable equal to its ratable share under such rules.

In most prorated fields, each operator is required monthly to submit a Producers Forecast (Form PF), which should reflect his best estimate of the amount of gas that actually will be delivered from his wells in that field during the following month.

The sum of these estimates each month becomes the total reservoir allowable for that month after adjustments have been made based on the relationship between forecast volumes and actual production the third month previous. Historical data for the third month previous is used previous. Historical data for the third month previous is used because it represents the most recent complete information required to be reported to the Commission. Because of the reporting lag a newly prorated field will therefore have its allowable determined solely on the basis of the Producers Forecast during the first three months of such operation. The Commission's "A" Sheet (Fig. 1) displays the stepwise calculation of market demand for a hypothetical field that was first prorated in April and has continued operation through the February computation. The adjustments depicted here are performed consistent with the requirements of Statewide Rule 31 (E) for the purpose of maintaining a reasonable relationship between total reservoir allowable and the true market demand as demonstrated by actual production.

If nominations are accurate, the allowable and production will coincide reasonably, and sufficient allowables production will coincide reasonably, and sufficient allowables will be assigned to the field at all times. When the nominations are inaccurate, wide variations in allowables occur, usually in the third month following the inaccuracy. In many fields a hardship is incurred because a high nomination for October is accompanied by low production, causing an adjustment of the allowable downward three months later when a higher allowable is needed under normal circumstances. On the other hand, overproduction in the winter months tends to increase the allowables in April, May and June when the normal gas demand is relatively low.

Texas Railroad Commission proration men automatically adjust allowables under a set formula described on the "A" Sheet (Fig. 1). If an operator should attempt to make a comparable adjustment, the adjustment would be magnified and cause wide variations in the allowables for the field. It is especially requested that each operator forecast as instructed and that he not make adjustments because of previous under- or over-nominations.

JPT

P. 1137