Arkansas Administrative Code › Agency 178 - Arkansas Oil and Gas Commission › Rule 178.00.09-004 - Rule A-7 - Determination of Natural Gas Well Categories for Severance Tax Purposes

Current through Register Vol. 49, No. 6, June, 2024
RULE A-7
DETERMINATION OF NATURAL GAS WELL
			 CATEGORIES FOR SEVERANCE TAX PURPOSES
a) Applicability
In accordance with Ark. Code Ann. § 26-58-128, the Director
			 of the Oil and Gas Commission shall determine the well categories for all gas
			 production wells, which will be used by the Arkansas Department of Finance and
			 Administration to determine the appropriate severance tax rate for each well.
			 All gas production wells under the jurisdiction of the Oil and Gas Commission
			 are subject to the provisions of this rule.
b) Definitions:
1) "Commission" shall mean the Arkansas Oil
		  and Gas Commission, on which the Director serves as secretary, but is a
		  non-voting member.
2)
		  ''Conventional Gas Well" means a gas well that is not classified as a high cost
		  gas well.
3) "'Director" means the
		  Oil and Gas Commission Director of Production and Conservation.
4) "High Cost Gas Well" means a gas well
		  that:
A) Produces gas from any shale
		  formation, including but not limited to the Fayetteville Shale, Woodford Shale,
		  Moorefield Shale and the Chattanooga Shale, or their stratigraphic equivalents
		  as described in published stratigraphic nomenclature recognized by the Arkansas
		  Geologic Survey; or
B) Produces gas
		  from any completion that is located at a depth of more than 12,500 feet below
		  the surface of the earth, where the term "'depth" means the length of the
		  maximum continuous drilling string of drill pipe used between the drill bit
		  face and the drilling rig's Kelly bushing; or
C) Produces gas from a tight gas formation
		  which is defined as a formation which:
i) Has
		  previously been determined to be a low permeability formation by Commission
		  Orders or field rules for Booneville and Chismville (84-2003-07), Gragg
		  (89-2004-07), Waveland (86-2004-07), Rich Mountain (304-2006-09), Mansfield
		  (28-2003-03), Witcherville and Excelsior (103-2005-07); and General Rule B-44;
		  or
ii) Is determined by the Director
		  to have an estimated in situ permeability of one-tenth millidarcy (0.1 mD) or
		  less; or
iii) Is determined to be
		  a tight gas formation by field rule, general rule or orders approved by the
		  Commission and issued by the Director.
D) Produces gas from a geopressured brine;
		  or
E) Produces occluded gas from a
		  coal seam.
5) "Marginal
		  Conventional Gas Well" shall mean a conventional gas well which is incapable of
		  producing more than 250 Mcf per day, from all zones producing in such well, as
		  determined by the sum of the individual deliverability rates for each zone,
		  using one of the current wellhead deliverability rate methodologies described
		  in subparagraph h) below.
6)
		  "Marginal High Cost Gas Well" shall mean a high cost gas well which is
		  incapable of producing more than 100 Mcf per day, from all zones producing in
		  such well, as determined by the sum of the individual deliverability rates for
		  each zone, using one of the current wellhead deliverability rate methodologies
		  described in subparagraph h) below.
7) "New Discovery Gas Well" shall mean any
		  conventional gas well for the period commencing on the date of first production
		  and ending on the date that is 24 consecutive calendar months following the
		  date of first production.