No. 39028 (Amendment): Rule R649-3. Drilling and Operating Practices

(Amendment)

DAR File No.: 39028
Filed: 12/24/2014 09:36:33 AM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose of this rule is to establish standards for the drilling and operating of crude oil and natural gas wells, ranging from initial permitting to final reclamation. The reason for the amendment is to provide an alternative method for division approval of directional drilling permit applications, rather than a longer process involving the board for approval.

Summary of the rule or change:

The proposed rule amendment pertains to a proposed directionally drilled well with a surface location to occur outside the tolerances established by board rule or board order. If the well operator files a certification that such a well will not be perforated and completed in any zone outside of the noted tolerances, and thus not produced from the zones outside of the tolerances, then the division may approve such an application, and the well would not require exception location approval. The amendment primarily affects Section R649-3-11 and also includes a cross-reference within Section R649-3-3.

State statutory or constitutional authorization for this rule:

• Subsection 40-6-5(3)

Anticipated cost or savings to:

the state budget:

Well operators will have an alternative for a directional well application approval by the division in specific situations rather than approval by the board. Consequently, the directional well application will be allowed to be issued in an improved time frame, but specific cost savings to the division are not able to be specified since the application would be awaiting board approval.

local governments:

Local government is not impacted by this rule amendment because oil and gas well operators in Utah are the parties regulated by this rule.

small businesses:

Over 96% of the oil and gas wells permitted in 2012 in Utah pertain to businesses larger than small business. Also, directional wells are more expensive to drill than vertical wells. Small businesses are not expected to be impacted by this rule amendment.

persons other than small businesses, businesses, or local governmental entities:

Persons other than small businesses, businesses, or local government entities are not impacted by this rule, since the rule impacts oil and gas well operators in Utah.

Compliance costs for affected persons:

Well operators in Utah would not encounter compliance costs as a result of this rule amendment for directionally drilled well applications. Such well operators would encounter a reduced time to receive approval for their permit application since the board approval is a longer process. Also, such well operators would encounter less attorney and related costs for submittal of a matter for board approval. The Division does not have access to industry expenditures for board hearings so a specific cost savings cannot be calculated at this time.

Comments by the department head on the fiscal impact the rule may have on businesses:

This proposed rule amendment will save time for a well operator to receive approval of specified directional drilling well applications and also reduce their expenditures for attorney and related costs for submittal of a matter for board approval. These future savings are a result of a collaborative effort among the division, industry, and the board with opportunity for additional input from a variety of stakeholders, prior to this formal rulemaking proposal.

Michael Styler, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Natural Resources
Oil, Gas and Mining; Oil and GasRoom 1210
1594 W NORTH TEMPLE
SALT LAKE CITY, UT 84116-3154

Direct questions regarding this rule to:

• Steve Schneider at the above address, by phone at 801-538-5328, by FAX at 801-359-3940, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

02/17/2015

Interested persons may attend a public hearing regarding this rule:

• 01/28/2015 09:00 AM, DNR, 1594 W North Temple, Salt Lake City, UT

This rule may become effective on:

02/25/2015

Authorized by:

John Baza, Director

RULE TEXT

R649. Natural Resources; Oil, Gas and Mining; Oil and Gas.

R649-3. Drilling and Operating Practices.

R649-3-3. Exception to Location and Siting of Wells.

1. Subject to the provisions of R649-3-11.1.2, [T]the division shall have the administrative authority to grant an exception to the locating and siting requirements of R649-3-2 or an order of the board establishing oil or gas well drilling units after receipt from the operator of the proposed well of the following items:

1.1. Proper written application for the exception well location.

1.2. Written consent from all owners within a 460 foot radius of the proposed well location when such exception is to the requirements of R649-3-2, or;

1.3. Written consent from all owners of directly or diagonally offsetting drilling units when such exception is to an order of the board establishing oil or gas well drilling units.

2. If for any reason the division shall fail or refuse to approve such an exception, the board may, after notice and hearing, grant an exception.

3. The application for an exception to R649-3-2 or board drilling unit order shall state fully the reasons why such an exception is necessary or desirable and shall be accompanied by a plat showing:

3.1. The location at which an oil or gas well could be drilled in compliance with R649-3-2 or Board drilling unit order.

3.2. The location at which the applicant requests permission to drill.

3.3. The location at which oil or gas wells have been drilled or could be drilled, in accordance with R649-3-2 or board drilling unit order, directly or diagonally offsetting the proposed exception.

3.4. The names of owners of all lands within a 460 foot radius of the proposed well location when such exception is to the requirements of R649-3-2, or

3.5. The names of owners of all directly or diagonally offsetting drilling units when such exception is to an order of the board establishing oil or gas drilling units.

4. No exception shall prevent any owner from drilling an oil or gas well on adjacent lands, directly or diagonally offsetting the exception, at locations permitted by R649-3-2, or any applicable order of the board establishing oil or gas well drilling units for the pool involved.

5. Whenever an exception is granted, the board or the division may take such action as will offset any advantage that the person securing the exception may obtain over other producers by reason of the exception location.

 

R649-3-11. Directional Drilling.

1. Except for the tolerances allowed under R649-3-10, no well may be intentionally deviated unless the operator shall first file application and obtain approval from the division.

1.1. An application for directional drilling may be approved by the division without notice and hearing when the applicant is the owner of all the oil and gas within a radius of 460 feet from all points along the intended well bore, or the applicant has obtained the written consent of the owner to the proposed directional drilling program.

1.2. An application pertaining to a well with a surface location outside the tolerances allowed by R649-3-2 or the appropriate board order, but with the point of penetration of the targeted productive zone(s) and bottom hole location within said tolerances, may be approved by the division without notice and hearing conditioned upon the operator filing a certification included with the application that it will not perforate and complete the well in any other zone(s) outside of said tolerances without complying with the requirements of R649-3-11.1.1. Under these circumstances, no additional exception location approval under R649-3-3 is required.

1.[2]3. An application for directional drilling may be included as part of the initial APD for a proposed well.

2. An application for directional drilling shall include the following information:

2.1. The name and address of the operator.

2.2. The lease name, well number, field name, reservoir name, and county where the proposed well is located.

2.3. A plat or sketch showing the distance from the surface location to section and lease lines, the target location within the intended producing interval, and any point along the intended well bore outside the 460 foot radius for which the consent of the owner has been obtained.

2.4. The reason for the intentional deviation.

2.5. The signature of designated agent or representative of operator.

3. Within 30 days following completion of a directionally drilled well, a complete angular deviation and directional survey of the well obtained by an approved well survey company shall be filed with the division, together with other regularly required reports.

 

KEY: oil and gas law

Date of Enactment or Last Substantive Amendment: [January 23, 2013]2015

Notice of Continuation: February 3, 2012

Authorizing, and Implemented or Interpreted Law: 40-6-1 et seq.; 40-6-5; 40-6-20; 40-6-21

 

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