N.M. Admin. Code § 19.15.20.9 - RATE OF PRODUCING WELLS
A.
Daily tolerance.
(1) Oil wells located on
units capable of producing their allowables may overproduce one day and
underproduce another. No unit capable of producing its allowable, except for
the purpose of testing, in the process of completing or recompleting a well or
for tests made for the purpose of obtaining scientific data, shall produce any
day more than 125 percent of the daily top proration unit allowable for the
pool in which the well is located. (Subject to the foregoing, an
underproduction may be made up by production from the same unit within the same
month, and in like manner any overproduction shall be adjusted or balanced by
underproduction from the same unit, within the same proration
period).
(2) Certain wells must, as
a matter of practicality, be produced at daily rates in excess of 125 percent
of the daily top proration unit allowable for the pool in which the wells are
located. The director may grant exceptions to the provisions of Paragraph (1)
of Subsection A of
19.15.20.9 NMAC, without formal
hearing, where an operator has filed application setting out the reasons for
the requested exception.
(a) Applicants for
the exceptions shall, at the time of filing, furnish each operator in the pool
in which the well is located a copy of the application.
(b) The applicant shall include in an
application for exception or attach to the application a formal written
statement that the applicant has served every operator in the pool in which the
well is located with a copy of the application.
(3) The director shall wait at least 10 days
after receipt before approving the application, and shall approve the
application only in absence of objection from an operator or interested party,
or in the director's discretion. In the event the director fails to approve the
application, the division after notice shall hear and determine the
matter.
B. Monthly
tolerance. No unit shall produce during any one proration period more than the
unit's allowable production for the proration period plus a tolerance of not to
exceed five days allowable production. This permissive tolerance of
overproduction from a unit is subject to all other provisions of
19.15.20.9 NMAC and particularly
to the provisions of Subsection D of
19.15.20.9 NMAC. The operator
shall adjust or balance permissive tolerance of overproduction from a unit by
subsequent corresponding underproduction from the same unit. The division shall
consider overproduction within the permitted tolerance as oil produced against
the allowable production assigned to the unit for the proration period during
which the overproduction is adjusted or balanced by underproduction.
C. Production in excess of monthly allowable,
plus tolerance.
(1) Oil produced from a unit
in excess of the assigned monthly allowable plus the permissive proration
period tolerance shall be "illegal oil" as defined in the Oil and Gas Act,
unless the excess oil:
(a) is produced as a
result of mistake or error;
(b)
results from mechanical failure beyond the operator's immediate control;
or
(c) results from essential tests
of the unit within the purview of division rules.
(2) Whenever production from a unit for a
proration period exceeds the assigned allowable, plus the permitted tolerance
authorized in Subsection B of
19.15.20.9 NMAC and the cause of
the excess reasonably falls within Subparagraphs (a), (b) or (c) of Paragraph
(1) of Subsection C of
19.15.20.9 NMAC, the producer or
operator shall briefly set forth the excess production's cause together with a
proposed plan for production adjustment in the comments area of form C-115 for
the month in which the excess production occurs. The excess production shall be
considered as oil produced against the allowable assigned to the unit for the
following proration period, and it may be transported from the lease tanks only
as and when the unit accrues daily allowable to offset the excess
production.
D. General.
(1) The tolerance permitted on a daily or
monthly basis as provided in Subsections A and B of
19.15.20.9 NMAC does not increase
a producing unit's allowable or grant an operator authority to market or a
transporter authority to transport any quantity of oil in excess of the unit's
allowable.
(2) The possession of a
quantity of oil in lease storage at the end of a proration period in excess of
five days allowable plus any rerun allowable oil is a violation of
19.15.20.9 NMAC, unless the
operator reports the possession in the manner and within the time provided in
Subsection C of
19.15.20.9 NMAC for filing form
C-115.
E. Storage
records. Producers and transporters of oil shall maintain adequate records
showing unrun allowable oil in storage at the end of each proration period. The
storage oil shall be the amount of oil in tanks from which oil is measured and
delivered to the transporter.
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