New Mexico Administrative Code › Title 19 - NATURAL RESOURCES AND WILDLIFE › Chapter 15 - OIL AND GAS › Part 20 - OIL PRORATION AND ALLOCATION › Section 19.15.20.10 - AUTHORIZATION FOR PRODUCTION OF OIL

Current through Register Vol. 35, No. 13, July 16, 2024
A. Except as provided below, the daily top
				proration unit allowable for an oil pool is 100 percent of the depth bracket
				allowable for the pool determined pursuant to 19.15.20.12 NMAC.
B. The division may, within five days prior
				to the end of the month, determine the likelihood the total producing capacity
				of all oil wells in the state exceeding anticipated reasonable market demand
				for oil from the state. If the division determines that the capacity may exceed
				the anticipated reasonable market demand, and that a market demand factor of
				less than 100 percent may be necessary to prevent waste, it shall immediately
				institute proper proceedings for a hearing to be held before the 20th day of
				the following month to determine actual reasonable market demand up to a
				maximum of six months.
C. At the
				hearing the division shall consider all evidence of market demand for oil from
				this state, and if it determines that the market demand percentage factor
				should be less than 100 percent, issue an order establishing the market demand
				factor and set a date for the next market demand hearing.
D. The division shall multiply the market
				demand factor established by the applicable depth bracket allowable for each
				well and each pool to determine its unit allowable. A fraction of a barrel is
				regarded as a full barrel in determining top proration unit allowable. Upon
				initial establishment of a market demand factor, and from time to time
				thereafter, the division shall issue a proration schedule authorizing the
				production of oil from the various proration units in the various pools in the
				state. A well completed or recompleted after the schedule's issuance and for
				which the division has approved form C-104, shall, by supplement to the
				schedule, be authorized a daily allowable equal to the top proration unit
				allowable in effect. The allowable for the well is effective at 7:00 a.m. on
				the date of the completion, provided the operator submits form C-104 and the
				division approves the form within 10 days following the completion date;
				otherwise the allowable is effective on the date the division approves the form
				C-104.
E. A non-marginal unit may
				produce the top proration unit allowable without waste and subject to the
				provisions of 19.15.18.7 NMAC, 19.15.20.9 NMAC and 19.15.20.13 NMAC and all
				other applicable rules.
F. A
				marginal unit may produce any amount of oil that it is capable of producing
				without waste up to the pool's top proration unit allowable, subject to the
				provisions of 19.15.18.7 NMAC, 19.15.20.9 NMAC and 19.15.20.13 NMAC and all
				other applicable rules if the division has assigned an allowable to the unit to
				authorize the production.
G. A
				penalized non-marginal unit is a proration unit to which, because of an
				excessive gas-oil ratio, the division has assigned an allowable determined in
				accordance with the procedure in 19.15.20.13 NMAC. In calculating a penalized
				allowable, a fraction of a barrel is regarded as a full barrel.
H. The division shall make and distribute a
				periodic tabulation of all supplements to the current proration
				schedule.
I. The division shall
				adhere to 19.15.15.14 NMAC in fixing top proration unit allowables.
J. If it becomes necessary for an oil
				transporter to resort to pipeline proration, the transporter shall, as soon as
				possible and not later than 24 hours after the effective date of the pipeline
				proration, notify the division of its decision to prorate. Upon receipt of the
				notice from the transporter, the division may take such emergency action as it
				deems proper or upon its own motion, after notice, hold a hearing for the
				purpose of considering any action within its authority to preserve and protect
				correlative rights.
K. In case of
				pipeline proration an operator the pipeline proration affects may apply to the
				division for authorization to have an underproduction resulting from the
				pipeline proration included in subsequent proration schedules. The operator
				shall apply upon a division-prescribed form and file it with the division
				within 30 days after the close of the first proration period in which the
				pipeline proration underproduction occurred. The authorization is limited to
				wells capable of producing the daily top proration unit allowable for the
				period.
L. In approving the
				application the division shall determine the time period during which the
				underproduction shall be made up without injury to the well or pool, and shall
				include the time period in the regularly approved proration schedules following
				the pipeline proration's conclusion.