New Mexico Register / Volume XXIX,
Issue 12 / June 26, 2018
This is an
amendment to 19.15.4 NMAC, amending Sections 1, 3 and 12, effective 6/26/2018.
19.15.4.1 ISSUING AGENCY: [Energy, Minerals and Natural Resources
Department, Oil Conservation Division] Oil Conservation Commission.
[19.15.4.1
NMAC - Rp, 19.15.14.1 NMAC, 12/1/2008; A, 6/26/2018]
19.15.4.3 STATUTORY AUTHORITY: 19.15.4 NMAC is adopted pursuant to the Oil
and Gas Act, [NMSA 1978,] Section 70-2-6 NMSA 1978, which grants
the oil conservation division and the oil conservation commission jurisdiction
and authority over all matters relating to the conservation of oil and gas, the
prevention of waste of oil and gas and of potash as a result of oil and gas
operations, the protection of correlative rights and the disposition of wastes
resulting from oil and gas operations, and [NMSA 1978,] Section 70-2-7 NMSA
1978, which provides that the division shall prescribe by rule its hearing
procedures.
[19.15.4.3
NMAC - Rp, 19.15.14.3 NMAC, 12/1/2008; A, 6/26/2018]
19.15.4.12 NOTICE REQUIREMENTS FOR SPECIFIC
ADJUDICATIONS:
A. Applications for the following
adjudicatory hearings before the division or commission, in addition to that
19.15.14.9 NMAC requires, as follows:
(1) Compulsory
pooling and statutory unitization.
(a) The applicant shall give notice to [an]
each owner of an interest in the mineral estate of any portion of the
lands the applicant proposes to be pooled or unitized whose interest is
evidenced by a written conveyance document either of record or known to the
applicant at the time the applicant filed the application and whose interest
has not been voluntarily committed to the area proposed to be pooled or
unitized (other than a royalty interest subject to a pooling or unitization
clause). An applicant seeking
compulsory pooling of a standard horizontal spacing unit need not give notice
to affected persons in adjoining spacing units or tracts unless the division so
directs.
(b) When the applicant has given notice
as required in Subsection A of 19.15.4.9 NMAC, of a compulsory pooling
application, [the proposed unit is not larger in size than provided in
19.15.15 NMAC or applicable special pool orders,] and those owners the
applicant has located do not oppose the application, the applicant may file
under the following alternative procedure.
The application shall include the following:
(i) a statement that the applicant expects no opposition
including the reasons why;
(ii) a map
outlining the spacing unit to be pooled, showing the ownership of each separate
tract in the proposed unit and the proposed well’s location;
(iii) the names and last known addresses of
the interest owners to be pooled and the nature and percent of their interests
and an attestation that the applicant has conducted a diligent search of all
public records in the county where the well is located and of phone
directories, including computer searches;
(iv) the names of
the formations and pools to be pooled;
(v) a statement
as to whether the pooled unit is for gas or oil production or both;
(vi) written
evidence of attempts the applicant made to gain voluntary agreement including
but not limited to copies of relevant correspondence;
(vii) proposed
overhead charges (combined fixed rates) to be applied during drilling and
production operations along with the basis for such charges;
(viii) the location and
proposed depth of the well to be drilled on the pooled units; and
(ix) a copy of the
AFE the applicant, if appointed operator, will submit to the well’s interest
owners.
(c) Applicants shall provide with all
submittals sworn and notarized statements by those persons who prepared
submittals, attesting that the information is correct and complete to the best
of their knowledge and belief.
(d) The division shall set unopposed
pooling applications for hearing. If the
division finds the application complete, the information submitted with the
application shall constitute the record in the case, and the division shall
issue an order based on the record.
(e) At an interested person’s request or
upon the division’s own initiative, the division shall set a pooling
application for full hearing with oral testimony by the applicant.
(2) Unorthodox well locations.
[ (a) Affected
persons are the following persons owning interests in the adjoining spacing
units:
(i) the division-designated operator;
(ii) in the absence
of an operator, a lessee whose interest is evidenced by a written conveyance
document either of record or known to the applicant as of the date he files the
application; and
(iii) in the absence
of an operator or lessee, a mineral interest owner whose interest is evidenced
by a written conveyance document either of record or known to the applicant as
of the date the applicant filed the application.
(b)] In the
event the proposed unorthodox well’s operator is also the operator of an
existing, adjoining spacing unit, and ownership is not common between the
adjoining spacing unit and the spacing unit containing the proposed unorthodox
well, then affected persons include working interest owners in that spacing
unit.]
[(c)]
(a) If the proposed well
location is unorthodox by being located closer to the spacing unit’s outer
boundary than 19.15.15 NMAC, 19.15.16 NMAC or applicable special pool
orders permit, the applicant shall notify the affected persons in [the
adjoining spacing units towards which the unorthodox location encroaches]
each adjoining spacing unit in the same pool or formation located closer to
the unorthodox well location than the minimum distance prescribed by the
applicable rule or order. If an
adjoining tract is not included in a spacing unit in the same pool or formation
in which the well may be completed, then for such tract the applicant shall
notify affected persons in the same pool or formation in any adjoining
quarter-quarter section (if the proposed well will be completed in a pool where
the standard spacing unit is 40 acres), or any adjoining quarter section (if
the proposed well will be completed in a pool where the standard spacing unit
is greater than 40 acres), that is located closer to the unorthodox well
location than the minimum setback distance prescribed by the applicable rule or
order.
[(d)]
(b) If the proposed well location is unorthodox by [being
located in] being in a different quarter-quarter section or quarter
section than Subsection B of 19.15.15.10 NMAC or special pool orders
provide, the applicant shall notify affected persons in all spacing units or
tracts in the same pool or formation that adjoin the proposed well’s spacing
unit.
(3) Non-standard
proration unit. The applicant shall
notify all owners of [interest] interests in the mineral
estate, including mineral interest owners and royalty owners, to be
excluded from the proration unit in the quarter-quarter section for 40-acre
pools or formations, the one-half quarter section for 80-acre pools or formations,
the quarter section for 160-acre pools for formations, the half section for
320-acre pools or formations or section for 640-acre pools or formations in
which the non-standard unit is located and to such other persons as the
division requires. This requirement
shall not apply to applications for non-standard horizontal spacing units
pursuant to Paragraph (5) of Subsection B of 19.15.16.15 NMAC.
(4) Special
pool orders regulating or affecting a specific pool.
(a) Except for non-standard proration
unit applications, if the application involves changing the amount of acreage
to be dedicated to a well, the applicant shall notify:
(i) division-designated
operators in the pool; and
(ii) owners of
interests in the mineral estate in existing spacing units with producing wells.
(b) If the application involves other
matters, the applicant shall notify:
(i) division-designated
operators in the pool; and
(ii) division-designated operators of
wells within the same formation as the pool and within one mile of the pool’s
outer boundary that have not been assigned to another pool.
(5) Special orders regarding any
division-designated potash area. The
applicant shall notify potash lessees, oil and gas operators, oil and gas
lessees and unleased mineral interest owners within the designated potash area.
(6) Downhole
commingling. The applicant shall
notify owners of interests in the mineral estate in the spacing unit if
ownership is not common for commingled zones within the spacing unit.
(7) Surface
disposal of produced water or other fluids.
The applicant shall notify surface owners within one-half mile of the
site.
(8) Surface
commingling. The applicant shall
give notice as Subsection C of 19.15.12.10 NMAC prescribes.
(9) Adjudications
not listed above. The applicant
shall give notice as the division requires.
B. Type and content
of notice. The applicant shall send
a notice 19.15.4.9 NMAC requires by certified mail, return receipt requested,
to the last known address of the person to whom notice is to be given at least
20 days prior to the application’s scheduled hearing date and shall include a
copy of the application; the hearing’s date, time and place; and [the means
by which] how protests may be made.
When an applicant has been unable to locate persons entitled to notice
after exercising reasonable diligence, the applicant shall provide notice by
publication, and submit proof of publication at the hearing. Such proof shall consist of a copy of a legal
advertisement that was published at least 10 business days before the hearing
in a newspaper of general circulation in the county or counties in which the
property is located, or if the application’s effect is statewide, in a
newspaper of general circulation in this state, together with the newspaper’s
affidavit of publication.
C. At the hearing, the applicant shall make a record, either
by testimony or affidavit, that the applicant or its
authorized representative has signed, that the applicant has:
(1) complied with notice provisions of
19.15.4.9 NMAC;
(2) conducted a
good-faith diligent effort to find the correct addresses of persons entitled to
notice; and
(3) given notice
at that correct address as 19.15.4.9 NMAC requires; in addition, the record
shall contain the name and address of each person to whom notice was sent and,
where proof of receipt is available, a copy of the proof.
D. Evidence of failure to provide notice as 19.15.4.9 NMAC
requires may, upon proper showing, be considered cause for reopening the case.
E. In the case of an administrative application where the
required notice was sent and a timely filed protest was made, the division
shall notify the applicant and the protesting party in writing that the case
has been set for hearing and the hearing’s date, time and place. No further notice is required.
[19.15.4.12
NMAC - Rp, 19.15.14.1210 NMAC, 12/1/2008; A,
6/26/2018]