Signal Oil and Gas - Approving Diagonal Exceptions
22nd April 2008, 22:43
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Signal Oil and Gas - Clarification of Criteria Used in Approving Diagonal Exceptions
The Railroad Commission of Texas has a fundamental responsibility to prevent waste and
protect correlative rights. For diagonal spacing, three criteria are used:
1) Distance to the nearest lease line,
2) Distance between wells, and
3) Distance to the farthest point on a proration unit.
These criteria work together to ensure that a well is placed within reasonable proximity to the center of a proration unit. Diagonal Exceptions Request is administratively approved on a caseby- case basis. Wells placed near the center of a proration unit on reasonably productive acreage that cannot be reconfigured (in a manner that does not require a diagonal exception) will require limited review and will be able to be processed without delays.
Wells that do not follow this guideline will require a closer review, possibly additional data, and may be administratively denied.
An operator that is administratively denied for a diagonal exception may request a hearing.
Signal Oil and Gas - RRC RESPONSE TO INCREASE IN COMPLETION ACTIVITY
With oil and gas completion filings at a twenty year high mark, the Railroad Commission has responded with adjustments to internal procedures for processing well completions in order to handle the increased paperwork with existing staff levels. As a result of those changes, the Commission is pleased to announce that the paperwork backlog that once existed has now been greatly reduced. Well completion forms are being reviewed timely, filing deficiencies are being communicated more quickly, and unless the applicant’s filing has a significant deficiency, RRC Lease/ID numbers are being assigned within 4-6 weeks of the forms being received in the Austin office.
When well completion forms are received at the Austin office of the RRC from the appropriate district office, the Well Compliance Unit staff audit the forms to verify compliance with Commission rules and regulations. The drilling permit for the well is compared to and validated with the completion forms. The Well Compliance analyst assigns each well an RRC Lease/ID Number for tracking purposes and updates the proration schedule database.
A supplement notice is generated and mailed to the operator when the Commission assigns the Lease/ID Number. The supplement will either show a numeric production allowable if the filing is approved, or a non-numeric allowable code if a filing deficiency exists or further review is required. Remarks will appear at the bottom of the supplement that explain what information is still required before a production allowable can be assigned.
You are encouraged to review all supplements you receive very carefully since it communicates the status of well filings and any possible filing deficiencies. Subsequent changes to allowables will be communicated through oil and gas supplements and will be reflected on the Oil and Gas Proration Schedule Listed by Operator (or “Strip out”) that is mailed to operators monthly.
Please monitor these initial supplement notices and the monthly schedule “strip-out” mailings carefully. Failure to file necessary paperwork or data after the assignment of a Lease/ID Number could result in further Commission action.
The Railroad Commission is committed to providing the best service possible while efficiently using the time and the resources of the Commission.
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