-: Good afternoon, everybody.
Thanks for joining me this afternoon.
And I want to thank David Keane,
who most of you probably sat in
on that earlier presentation.
He did a very good job of covering a lot
of important information,
and we'll probably be touching again on a lot
of that information, because as David mentioned, you know,
some of the information you covered was very basic stuff,
but we see a lot of mistakes that are made
on this basic stuff.
So hopefully by going through this presentation,
we can resolve some of those issues
and get you applications out in a more timely manner.
So the presentation will be available online
at the URL that you see on your screen here,
it's also placed in the Q and A section.
So you can go grab it from there if you need to.
This afternoon David and Aaron Pratt
from the drilling permits department
will be manning the Q and A portion.
So feel free to post any questions you'd like there.
And we also have an attendance Jacqueline Teseney,
who's a team lead into our well compliance department
because sometimes a lot of the information that we cover
can kind of morphing and move into different areas.
And if you've got something that could potentially be
well compliance related, she's going to be available.
And hopefully can answer that question for you.
So we're going to go ahead and get started,
and some of the things that we've noticed where we have a
lot of our issues is concerning terminology,
how we speak to each other.
You in industry use certain terms that may be different
the way the Commission uses it,
or you don't use some of the terms that the Commission uses.
And so hopefully we'll go over some
of those and clear up what we're, what we mean and what we,
what we need from you concerning some of those issues.
We're gonna talk about plain old issues with our W1s,
our plats notification issues.
And then we'll end this all up
with our exception resolutions discussion.
So David did a really good job of covering some
of this, but again, just to explain what some of these are.
So a new drill is any proposed new operation,
you know, there should be currently no propose
or existing wellbore at that location.
If there is,
and you're attempting to go back in and do some work,
then that would typically be a re-completion.
So the well has already been completed and you're attempting
to plug back or deepen into a different regulatory zone.
A new permit would be needed for that operation.
And where we see a lot of disconnect
between industry and the Commission
is in between what a re-completion is and what a reentry is.
So remember if you're filing a re-entry,
that permit is going to be for a permit
to go back into a well that has been plugged to surface.
And that's the important key, there are re-completion that,
well as to that, there is still on schedule.
It may be shut in and may be completed in a different field,
but it hasn't been plugged to surface.
A re-entry has been plugged to surface,
and therefore it should be,
your purpose of buying would be a re-entry
for that type of operation.
And these again are all things
that are actively being done by you.
There's actual work going to be done to these wells.
The next examples are more to correct the classification
of a well where there's no work being done.
We're just trying to correct the records
that we currently have, and that could fall under
as a re-class, which it means that we're changing say
an oil well to a gas well,
and specifically in a field where the rules are different.
We can be going from a disposal
or injection well to a producer.
We could be going to vice versa from injection producer
to injection, but we may need to put it in a different field
to carry it in our own schedule.
So typically we're changing the classification of the well,
but we're not necessarily doing any work to the well.
And then we have a field transfer.
So a field transfer is we have a well that's
on schedule and an existing field.
And for whatever reason you think that now that well
should be put into a different field that maybe the rules
are a little bit better.
You thought you, when you targeted a field,
that it would be field A and you ultimately needed
field B and so now, you want to correct the information.
So you would go through our engineering unit
and submit a request for permission to file a permit.
Cause again, this is a twofold thing.
You get your permission from those guys
to move it from fuel data fuel,
be they're going to review your documentation to make sure
that it is a valid reason to transfer that well,
you will submit a permit application
to get an approved permit for that field.
And then you'll be filing completion paperwork to ultimately
get that well into the appropriate field
that you want it to be in now.
So a lot of what we see
when we're working on applications, you know, the,
it has flipped in the last 10 years, you know, 10 years ago,
we were predominantly doing vertical wells, now, you know,
75% of the applications we're processing
are horizontal wells.
And so it's really important
the understand the basics of a horizontal wells
because this falls into issues with the plats issues,
with information on the W1
and issues as it pertains to rule 37,
so it's really important to understand
these five basic components of a horizontal well.
We have the service location, we've got a Penetration Point.
We have a first and last take point
and we have a terminus location.
Now these could be five distinct points on that well,
or they could be combined.
You know, sometimes we have the surface
and Penetration Point at the same location, you know,
we could have the Penetration Point and the first take point
at the same location.
And we've had the last take point and the terminus location
at the same location.
But what's important is that if they are distinct
or they are combined unit clearly labeled those
on the plat, because if they're not labeled,
then you could potentially give us information
that is incorrect for the question being asked
and could trigger a rule 37, and as David showed you
in that last slide, when those last slides,
if you give us the wrong information,
that triggers an exception,
well that's money that doesn't get returned back to you.
So again it's important to understand
what it is we're asking and what you're trying,
what information you're trying to give us.
And so we have a horizontal drain hole.
How's that difference from a horizontal well?
Well for us at the Commission,
that drain hole is that portion of the well that you can
actually produce from within the corelative interval
of the field you're applying for.
So you'll see field rules
where it talks about acreage assignments
and it's based on that affected drain hole link,
whatever you you're able to perforate in that well,
that's what helps determine what aprons you can assign
to a well, and also
it's that portion of the well where those take points are,
which are perforations within your well
that allow hydrocarbons to flow into your well.
And it's those points that we're evaluating
for rule 37 to ensure you're meeting the requirements
of the field the well's being drilled into.
So again, that here's an example,
and this is one that you probably saw
with David's presentation.
We had this descriptive diagram of a horizontal well,
and so we clearly can see where the well penetrates the
formation, which is that top of the pink box.
We see where the first and last take point are on the well.
And we clearly see where the terminus is located, so again,
if these are going to be
distinct different points on the well,
we need to make sure they're clearly identified on the plat.
So when we're talking about exceptions
and sometimes we'll send out problem letters
and we'll get a response back, what's an offset,
don't understand what an offset operator is.
well, when we're referring to an offset and this could be
in relations to a rule 37, 38 exception,
it could be in relation to an off-lease Penetration Point,
or it could be we're a rule 40 notification,
but it refers to any operator,
lessee of a tract or the unleased mineral owner of the tract
in which is being affected, so if it's a rule 37,
it could be the tract adjacent
to the well, if it's a rule 38,
it could be any one of those parties
around the entire lease or pooled unit.
If it was a rule 40,
it could be somebody that's within a half mile
of the wells, but that's what we're referring to
when we're talking about an offset.
It's those affected parties that are being
have required to be noticed,
or that you're going to have to provide a notice to
based on whatever exception or rule is requiring that.
A waiver is a letter that you're sending
to those affected parties,
requesting that they waive their rights
or give you the authority to do something.
So it's a rule 37.
It could be a simple as you asking them
to waive their rights for the rule 37 exception.
If it's a Penetration Point issue,
then you're sending that letter, you know,
explaining what it is you're trying
to do, why they need to sign that letter
and what's going to happen if they do sign that letter.
And then again the effected party is determined
by whatever Statewide rule or fuel rule.
The reason for the notification or exception is required.
But those affected parties or those offsets, one in the same
that are an operator, a lessee or only some mineral.
So those are very important concepts to remember because,
you know, Chris Houston who primarily works on exceptions
sends out problem letters daily on this topic.
And so if we can get this kind
of issue resolved and get it up front,
then we can be more quick and efficient
in getting you an approved permit or a notice that goes out
that you then need to wait a timeframe in order
for that to run and then hopefully not get protested.
And then you're able to drill a well.
All right, so now we're gonna kind of jump
into our form W1 issues.
So what I like to tell folks
when I get new employees coming in,
or when we're talking to you filers
is that plat is a mirror of your W1.
The majority of the information that is required
on the plat is being captured on the form somewhere.
And so they need to match up.
So you need to understand what state module five is.
And David explained some of what that is earlier and verify
that your plat satisfies the requirements of that rule.
And use that information that is on the plat
to fill out your W1, because if you're pulling information
from someplace else and it isn't on the plat,
that's one of the first things we're going to do is send you
a problem and say, wait a minute,
we see this information on your W1.
We don't see that information on the plat.
We see different information, which is correct, you know?
So be cognizant of that, and then remember that again,
that most of that information that's on the plat is going
to be required on that W1 someplace.
And so here's some of those requirements
that are listed under Statewide rule five.
Now your plat must be of a specific scale.
Hopefully a whole number scale, one inch to a thousand,
one inch to the 2000, one inch to 500, you know.
We don't want to see a plat that's one inch to 383 feet
cause we don't have an engineering scale that we could use
to determine if the information you're giving us
is correct and accurate.
We need to see a scale because obviously we need
to know if we need to measure what we're measuring against.
We need to know, see the north arrow,
cause we need to make sure
that we have your plat aligned in the way it should be
to determine if it's matching what our systems are showing.
We need to make sure that the current operator,
the current lease name,
the size of the unit or lease the county at the well, is in,
is clearly labeled and on the plat.
And this is really important because you know,
there's a lot of folks who take over leases are coming in
and filing re-completions permits,
or re-entry permits on existing wells and are just going
back into the old well files and trying to reuse older plat
that was submitted back in 1970,
which isn't a problem as long as you clearly label
and identify all the current information
because I don't care or want to know that it was John Smith
who filed this plat 20 years ago.
I want to know that it was Mary Jane today
who was filing for this application.
So it all must reflect the current operator,
lease name, acreage, and again, the pertinent information
that's required under Statewide rule five.
If the plat is supporting the first well
on a lease or a pooled unit,
then we need to make sure that if the plant
that you're using doesn't show the entire lease or unit,
we need to have an accompany plat that does
cause we need to be able to see the entire boundary,
have that on record for that first well
on that lease or unit.
If you're in a oddly shaped, you have an oddly shaped lease,
then we would like to see that there's some sort
of highlighting or hatching around the boundary
that's going to help describe it, you know,
very typically we'll see a plat
that's showing a 640 acre section.
And then the application states, it's a 320 acre lease.
Okay, well where within that 640 acres
is your 320 acre lease
if you're not clearly identifying that?
So again, make sure that you clearly identify
where your lease is.
And most importantly, this is a fairly new requirement.
We've had this for about five years or so.
You need to have the GPS coordinates
of the service location on the plat.
And then as David mentioned that the form
that is on the plat should be the form
that you're using on the W1.
You know, we see, like David said,
I don't understand how are you getting the information
if it's not from the plat,
but you're using something completely different.
We have degrees, minutes, seconds on the plant,
but then you're using decimal degrees on the form W1.
And so it's like, okay, well,
where does this information coming from?
We're going to probably ask you to verify what it should be.
So to make it easy,
make sure you're using the information that's on the plat.
And again, David did a really good job with this,
but we're going to harp on it again and I say harp
but we're going to talk about it a little bit more
because it is important.
And it's understanding what perpendicular
and where that perpendicular call must be from.
So as David stated under Statewide rule five,
and we're trying to capture information where those points
on the, well, if it's a vertical well,
if it's a directional well, we're looking at that,
the surface and the bottom hole, if it's a horizontal well,
then we're looking at those five points
that we're talking about.
The calls are coming from the line that we're using,
be it a survey line, or at leased line,
and as close to a 90 degree angle,
as we can to that point on the well.
And that's because if you know,
we were 20 years ago before we had GIS,
and before we had electronic maps, you know,
this information was plotted out on a Linden map, you know,
we actually had big old Linden maps that we use portrayed
as information on, and so if you're giving us a call,
that's coming up at a 45 degree angle,
how accurate are we going to be able to spot that
in there, but we can be if it's coming at a 90 degree angle
from those lines.
And so that's why the requirement is
in there for that 90 degree description
in the information for Statewide rule five.
But then again, now when we're talking about rule 37,
depending on the type of field you're applying for,
that 90 degree angle is flipped.
And now we're talking about from that point on the well,
to the appropriate line that we're identifying in this case,
typically a leased line that we need to have that 90 degree
angle from, you know, very typically you may have,
you're familiar with Spraberry Trend field, for instance,
we have a hundred foot first and last take point
and 330 perpendicular.
So we need to know along that wellbore path that you're
330 feet away from any potential external lease line
or internal lease line if this was a pool unit.
We don't care that it, where,
you know, you could be providing calls that are the same,
because if you're in a perfect square
and you're running at a perfect angles from those lines,
those calls could be one and the same,
but we'll see an example where if I'm in an irregularly
shaped survey and I have an irregularly shaped lease,
that that's not going to be the case.
So here we go, so if we look at,
we look at this information here,
so what we have in red here,
it's hard to see, it's that line,
but there's a line that's coming right through here,
and that's my Statewide rule five call.
So I'm 278 feet from this point to that line.
Or that line to that point, I should say,
but for rule 37 purposes, this is my first take point,
I need to be 330 feet perpendicular.
So you can see that line there that's perpendicular
and at 330, so if I were to have just to put 278,
that would have triggered a rule exception
because you had to be 330
and you would have been given us money, right?
And we don't want you to give us money unless you have to.
But if you would only use 330, if you know,
for whatever reason we had to use this information
to input that location into a map, it would be off
because again, we're spotting in our systems,
you usually take that information and plot it
at a 90 degree angle from the lines we're trying to use.
So that's why it's important that we have
that as close to 90 degree call as we can.
And here in the second example, the angle is such that,
you know, we're almost the same, you know,
here's my rule five call at 927 feet.
Here's my rule 37 call.
You can see that set a 90 degree angle
to that point it's 937.
So it was very close.
It one were to have you just one of these,
that may not have been so bad
because neither call would have triggered a rule exception.
And so we, you,
we probably could have just used one of these calls,
but in the case of the first example, you know,
we need to make sure we have both,
because one of those calls would have triggered a rule 37
if it was used in appropriately,
so we kind of say, it's very,
it could be a little complicated
when we're looking at these types of issues.
So again, we're talking about our plats, you know,
we're talking about making sure that the boundaries are
clearly identified on the plat.
For horizontal wellbores, making sure those five main parts
are identified on the plat.
Again, if my Penetration Point is labeled on the plat
and my terminus location is labeled on the plat,
but there are no take points clearly labeled, you know,
we're going to assume that the penetration
and terminus are take points, and if those trigger
an exception, then you're going to have to come back in
and resolve that, or provide us a plat
that clearly shows where those take points are.
So again make sure that information is on the plat.
And that those perpendicular calls are on the plat, again,
a lot of times what we're getting
are angles coming at something other than 90 degrees.
And again, per rule five, they need to be perpendicular.
Another thing we're looking at, especially
when we're looking at pooled units, that the tracts,
the acreage that you're associated to that tract on the plat
doesn't match the associated forms that are being supplied
with the application, so in this case, the form P12.
Or it could be vice versa,
the tract could state that tract A has a hundred acres,
but the label on the plat says 98, you know.
Everything has to match up.
And also that the identifiers match up, it doesn't help us
if on the plat, we see tract 1, 2, 3, 4, 5, and then
you fill out the P12 stating tracts A, B, C, D, and E.
Okay, well, which one's A? We don't know, you know.
And if you know,
there's acreges needed that don't match up either,
then it's even doubly hard to figure out what's going where.
So make sure that if you are in a pooled unit
that you're using consistent labeling
on both the form and the plat.
But again, as I said earlier,
we want to make sure that the current information
for the applicant is listed on the plat.
We want to make sure that the current lease name
is on the plat, where we see this as, you know,
we could be recompleting a well for field A into field B,
I may have an established lease name
in field A and a different lease name
and field B, but I'm using my original plat, which is fine.,
you can do that, but again, you're not in field A anymore,
you're attempting to get a permit for field B.
So we need to make sure that the information associated
that field is correct so that would mean new lease name
and a potential new well number
so making sure that all that matches up.
Make sure that the acreage identified on the plat
is supported by what you're filing, and again, you know,
we're seeing tracts that have one thing,
the form P12 says something different.
The four P16 we're looking at the total acreage
has something different that's on the plat, so again,
these are all supposed to be a mirror of each other.
The information on one, if it's captured
on another form, it should be the same, all right?
So make sure that all that matches up.
And then again,
making sure that the coordinates are all represented
for the surface location at a minimum on the plat.
And this is problematic for folks who are trying
to reuse older plats from their will files
because typically, you know, GPS coordinates weren't common
until the late '80s, early '90s,
and so if you're using plats prior
to that, they're probably not going to be on there.
And so you're going to have to make sure that you supply
that information when you submit and use that plat.
When we're talking about rule 37, you know,
we'd want to make sure the distance to that leased line,
that you're using the correct distances.
And if we're talking about pooled units,
or if you're using a pulled unit for a PSA
or allocation well application,
and there are unleased interests in one of those internal
tracts that you're providing the distance to those.
Because those could be triggering a rule exception as well,
and also could affect when we're looking at notification.
So we want to make sure
that you've clearly identified those.
Make sure that you're providing the distance
to the nearest well,
and this specifically for the wells
that are in the fields you're applying for.
So what we'll see a lot of times is I permit a well
in field B there's a well that's in field A
that's 200 feet away, and that's the distance we're given.
But in reality the next nearest well
in the field I'm applying for is 400 feet away,
so it may not mean much,
but it could trigger an exception, and again,
that could require you to give us money
that you wouldn't have to, so again,
it's important to make sure that you're using
the appropriate distances to the wells
that are in the field that you're applying for.
And then once again, if a trigger is flipped
and you need an exception,
making sure that you're clearly identifying
who those affected parties are.
And we get a lot of times we'll focus mostly on my own
offset, well, the plat doesn't state that, you know,
you need to visually show that
on the plat, if that is the resolution you are seeking
to get and use to get that exception.
So you, it doesn't matter if it's you,
you still need to make sure you clearly label
your information on that plat.
All right so let's talk about notification
and David covered some of this as well.
And what we're going to talk about is, are the notices
that we will send out in support of the permit application
and those that you are responsible for sending out.
So we will send out the notification for exception
for Statewide rule 37 or 38.
So those are the, you supply us that service list.
We're going to generate that notice and get those out.
If we don't, if we do receive a notice back
then, we're going to also send out supplemental notice
if you're able to give us a new and updated address.
What you're responsible for
is for off-lease Penetration Point issues.
So if you're attempting to permit a well
with an off-lease Penetration Point,
you will have to identify the affected party.
There's that word again, affected party.
And then you will be required to send them a notice
that gives them 21 days to evaluate your request.
And if after 21 days, they have not responded
to you, then you can submit the application,
and we could potentially approve that permit with
that notice being sent out and no protest being received.
The importance of you waiting is if they do protest,
then you get to work it out and you get
to figure out what you're going to be able to do.
And then you can send an application
that we can then work on.
What we don't want to have happen is you submit something,
and then the application completely changes because you have
to come to some sort of different agreement
with an affected party in order to resolve a protest.
So we want to make sure all that is done beforehand
before that application is submitted,
that way we can just process that permit.
And then you do have the option if you cannot come
to some sort of agreement to request a hearing.
So that's how that could be resolved.
And then a rule 40.
So if you're attempting to get an amended or administrative,
I should say approval for a Statewide rule 40
double sign of acreage because of depth severances
with any tract, then you would be required.
to send that notice out, but in this case,
you're not required to wait for any length of time
after you send the notice.
But what you do have to do
is make sure you send that notice out 15 days,
no more than 15 days before you submit the application.
So you can't send that notice out today
and then wait six months to file your permit,
then that wouldn't work.
But you could send them out today
and submit your permit today,
and then you would be meeting the requirements of the rule.
All right, so we have our resolutions to some exceptions.
Okay, so again, clearly identifying on the certified plat.
So that's an important word right there, certified plat,
all affected parties.
And what that means is it's either
the certification is from your surveyor,
who hasa prepared your plat
and then put in all the permanent information.
Or it's a representative of the company who has added
that information on and is attesting to its accuracy
by putting your signature on that plat.
Once you have run a publication on your exception requests,
then you need to make sure that you get that into us.
We run those and we get them and rate up to
approve those guys, and we haven't received your affidavit.
So they're just going to sit there until we get it.
And so we'll send you a problem letter to request those.
So as soon as you get them forward them to us, even though
if the application is not ready to be approved yet
the quicker, you get them to us, we get them attached.
And then as soon as we're able to approve them, we can,
as long as there are no protests.
And then the big issue that we see here,
especially with the types of applications that we see,
folks are having to publish a lot of these notices.
And so we are seeing a higher number than usual issues
in which applicants are failing to run the publication
in the appropriate timeframe or that the notices
are being run consecutively, so they'll run it one week,
a week is skipped, and then they'll run it again.
So we need to make sure that you're working
with your newspapers and explain to them
that it needs to be consecutive.
That that first data publication must be
within seven days of the issuance date.
And that's important because that's in the rule,
that is under Statewide will one those requirements.
And so those are very important during the instruction.
Then it's explained to you what you need to do
if you do miss the date.
An easy thing to do, that'll help us out,
and hopefully help you out is if you know the days
of the week that the newspaper you're using
accepts the information from you
and when the information will be published,
because then we can set the issuance date
to help you meet that timeframe.
If we don't know that we're going to issue it for tomorrow,
and if you can get in for a week and a half
well, then you know,
that means if you don't contact us to get it redone,
you're going to have to spend another 2,500 bucks
to rerun it correctly, so it it's, you know,
communication is what's going to work with this aspect
of the publications, give us that information,
and we can help you out by setting up those notices
so that you can meet the requirements
that the papers are placing on you.
And when you do submit information like affidavits
of publication or anything like that,
and make sure that you put in the subject line,
the status number of the application,
sometimes we'll just get stuff sent into us,
and it's not clear as to what this affidavit is going to,
make sure you send it to the correct email address.
Anything that's related to a Statewide rule exception
should be being sent to that Statewide rule 37
email address that you'll see on the notice
or on the publication instructions
and make sure all of that information goes there,
because if you send it to the problem W1,
well, the person who's working
in the sections, isn't going to go looking
for those there, because those aren't problems, right.
He's looking for information coming in
to that specific email box to help him resolve
the application he's been working on.
Okay.
So does anyone have any questions concerning that?
Or is there stuff that you David and Aaron wanted
to discuss that you haven't been able to answer?
Attendee: We are clear for now.
-: Okay, well then we'll get to the next section.
We're going to start talking specifically
about rule 37 and 38 exceptions.
I'm going to talk about what are some triggers
that create one of these exceptions.
We're going to talk about Non-Perforation Zones
and how they can be used to stop
that trigger from happening.
We're going to go through,
go over some of the exception checks, and again,
this is some information that David showed you earlier,
but again, we'll reemphasize some of this information.
Plat requirements, and again,
we'll go a touch a little bit more.
I won't go as in-depth into that
'cause we've kind of covered a bunch of that information
here in the first part of the presentation.
We'll go through some more of the resolutions
and talk about notification and how you figure out
where you need to look for an effective party.
And then we'll talk a little bit more
by about, in a way publication requirements.
So what doesn't trigger a rule exception?
There are a lot of times that we get folks who will flag
their application with an exception when it is required.
And they're doing that because a Penetration Point
may be too close to a lease line.
Remember if you've clearly identified a take point,
a first take point,
then that's the part of the well where we're beginning our
checks for rule 37 on not the Penetration Point.
So make sure if you they're both one and the same,
then they should both should be clearly labeled.
And it's really the lat, the first take point,
which is also the Penetration Point
that is triggering the exception.
Just because you have an off-lease Penetration Point
does not mean you need a rule exception, okay.
So we see that as well,
where folks are filing for an off-lease Penetration Point
and then checking that the rule 37 is required
and the well is completely illegal
to all the line that would not really require an exception,
and again, back to what David spoke about earlier,
there are no refunds, and so that would be money
that is going to go away and not be seen again.
Off-lease surface locations don't trigger a rule exception,
and then if you're using Non-Perforation Zones correctly,
then those could also keep a rule 37 from being triggered.
And we're going to see some examples of
how and when to use a Non-Perforation Zones here shortly.
All right, so what does trigger an exception?
So if my productive portion of my well
is too close to an exterior lease line,
if it's a vertical well, is where that surface location is.
If it's a directional well,
it's where that bottom hole is in relationship
to an exterior lease line or to an interior tract line
if I have a pooled unit.
It could also be how close I am to another well,
'cause we've got to remember there are two different aspects
of rule 37, there's the lease spacing aspect
and then between well spacing aspects,
so my well could be too close to another producing well
in the field, on my lease,
and that's gonna trigger and exception.
And again,
as I mentioned that if I have an interior tract line,
my horizontal well, any within drain hole where I,
where I had my first and last take point is too close
to an into your tract line.
That bottom hole for directional well is too close
to interior tract line could be
what's triggering an exception for rule 37.
Okay, so here's a basic straightforward example
of how to use an NPZ when I'm trying to isolate one tract
that has an unleased mineral interest in it.
So one thing you remember is that your NPZ
are always going to be in the tract
that you have a hundred percent of the interest in.
It's not in the tract where the unleased interests are.
Okay?
And that's because what's triggering the exception
would be a take point that's less than the field rules
allow me to be to a lease line
or a tract with unleased interest.
So for instance, we'll say this is a Wild Cat Well.
So in Wild Cat, you need to be 467 feet from a lease line
or an interior tract line.
So this NPZ down here needs to be 467 feet long,
and this one has to be 467 feet long.
Once I'm 468 feet away from that line,
I can begin perforating that well again,
because now I'm at a legal distance from this tract
If this was the Eagleford,
this would then be a hundred feet
'cause I'm going on the long axis of the wellbore.
If I were to stop,
then I need to be 100 feet away from an impacted tract.
And so this NPZ would be a hundred feet here.
And then this one would be a hundred feet there.
Now we're going to throw a little complication into this,
and we have multiple tracts.
And again you'll notice my NPZs
are in the tracts where I don't, right,
where I have a hundred percent of the interest under lease
because I am protecting the collective rights
of those folks who aren't under lease.
So again, if this was the Eagleford,
I have a hundred foot take point there,
a hundred foot take point there,
and a hundred foot take point there.
And that would keep a rule 37 from being triggered
to those tracts with unleased interests.
So now we get a little more complicated.
I'm not going through a tract that has unleased interests,
but I'm running parallel to a tract with unleased interests.
And again, this example will be under Wild Cat.
And so Wild Cat, again,
I need to be 460 feet from that tract line.
So this distance, because I'm less than 467,
I need to show my NPZ covers this tract line here.
But then I also have to be 467
or up to 467 feet away past
because now I've got to make sure
from here to here, that it's 467 feet,
and the same down here.
So it's going to extend further because
this field doesn't have special rules for horizontal wells.
And the next example we do,
so this could be the spray barrier.
This could be the Eagle bird,
this could be a Phantom Wolf Camp
where I have a hundred foot axial heel and toe distance
plus a perpendicular distance.
But again, there's a little caveat to this.
So in this particular example,
and we're gonna say we're in the Spraberry Trend,
so we're looking at 100 foot and 330 foot spacing.
My wellbore is more than 100 feet from this line.
Therefore, all I need to show
for my Non-Perforation Zone is wherever
that if I were to take a perpendicular distance
from this wellbore, I would hit that tract line.
So you can see my NPZ mirrors that tract.
Okay, and that's because I'm over 100 feet,
but less than 330 to that tract line.
And this next example, I'm less than 100 feet to this line,
so now I had to incorporate my heel and toe,
'cause again, if I had to stop,
we're looking at 100 feet around that point.
And if that point were to touch this line,
then it would trigger an exception,
so now you have to extend that Non-Perforation Zone
further up, up to where you wouldn't be hitting that line
if you were to draw that 100 foot radius around the well.
So that's an important thing to remember
that it's not only the perpendicular distance,
but the axial distance as well here that comes into play
because of how close my well is to that unleased tract.
Here, we're not in a perfect square,
so this kind of throws a kink in the works here.
So down here, we're looking good.
We're going to say we're talking about Wild Cat for instance
so here's my 467 foot NPZ zone
showing that I'm regular
from this part of the well to the unleased interests.
And I'm thinking great, all I need is 467 feet on this side,
but we have to remember look at this line here.
Is this distance 467 feet away?
If it isn't, then this is going to have to extend further up
until you're 467 feet from this line,
so again, it's important to look at your plat,
look at those tracts that have these unleased interests
to make sure that the NPZ zone you're using
is truly keeping that rule 37 from being triggered, okay.
Cause if you were to file this and then we're going to say,
you still need a rule 37
because you're failing this part up here.
So you would then need to send in a revised plat
extending that Non-Perforation Zone in order to be regular.
So here's another one that's weird, you know,
we're going from one tract at a angle
and ito another tract that has unleased interests.
So again, we're looking perpendicular to this
from this well to this line,
so if this were Spraberry Trend,
wherever I can have a point that's 331 feet to that line,
then everything below that should be covered
by a Non-Perforation Zone
to keep that exception from being triggered.
All right.
So David, you said there was a question that came in?
What exactly was the question?
David: If you elaborate on the take points
and everywhere in between being assessed for rule 37 spaces?
-: Yeah, that should be covered here
in the next few slides, if you can reach out
to that person, once I get through this next portion,
if they still have a question,
then we can cover that when we're done with this part.
So here, we're going into the different profiles
of the wells and how we're looking
at assessing for a rule 37.
So under rule 37 to figure out
who an affected party is,
you need to understand where to look for them.
So under rule 37, it states that offsets with
within the greater of the lease line distance
or one half of the between well distance
is an affected party.
So that changes a little bit when we have fields
with special horizontal rules,
because many of those fields don't have any
between well spacing,
and then they even have special take point language
within them, so that could change how you look at
and determine who's an affected party.
So in some of the examples that we'll be looking at
should help me cover that up.
And then if we're talking about the vertical well,
that you were applying for that trigger an exception and
like in the Spraberry, there is no between well exception,
then it's going to be whatever the lease line distances.
So it would be anybody
within 330 feet of that well, for instance.
So as David showed earlier that the information
that we're gathering in the box that's being identified here
is what the system is evaluating for a vertical well.
So that distance there needs to be greater
than whatever the minimum distance required
by the field or fields you're applying for.
So you could have 20 fields that you're applying for,
and only exception in one,
or you may need an exception in all 20
based on the field rules that are set up
for that particular field.
And so if you were to trigger that exception,
this is what it would look like.
So we're going to say that this is a Wild Cat.
And so half of the between well distance
for Wild Cat is 600 feet,
'cause it's under Statewide rules and that's 1200 foot
between well distance, so half of that is 600.
The lease line space is 467.
So the greater of those two values is 600 feet.
So you would then be required
to identify, and this is the easiest way to do it
and what we tell folks is once you know what that radius is,
draw around the well and wherever falls outside the lease,
or if it falls within a tract that has less
than 100% interest under lease, that's who, you know,
you need to identify, so in this example here,
the effected parties are these folks
in this offsetting tract
where the radius falls outside of the lease.
So for our directional well,
again, as David explained earlier,
this is information that we're capturing,
that our system is going to use
to run its rule 37 validations against.
So we trigger an exception based on this.
So how do we figure out who's an effective party?
So basically the same way we did as a vertical well,
but that radius that we're using
is shifting to the bottom pole.
So we're going to say this is still a Wild Cat Well,
and so we're going to shift that 600 foot radius
from the surface location to the bottom hole,
because that's what's triggering the exception.
And wherever that falls out
is where you had to identify the effected parties.
So these folks here would be the ones that you would need
to clearly identify on your plat,
and if it's not you, then provide service list or waivers
for continued process and to get that exception granted.
So here we have the example of a horizontal well
that's in a regular field with no special rules.
So we've triggered the exception again,
we're going to say this is Wild Cat.
So this sausage-looking example here
is 600 feet around the productive portion of the well,
so here's the first take point.
Here's the last take point, so,
because remember, this is the point of the well,
from the first take point to the last take point,
and you can stop and perforate anywhere,
'cause again, this is a permit and this is a proposal.
You haven't done anything yet.
So we're looking at a worst case scenario
that you could perforate the entire length of that well.
So therefore the entire length
of that well needs to be legal.
And so that's why, when we're looking at this,
we've got identified this circle here,
and these are the effected parties out here
if this were just a lease.
Hopefully, our example is pretty simple,
these are just leases,
and so these are the effected parties here.
So I'm hoping that answers the question
that came in earlier, but if not,
we can always elaborate more as we get further along.
So now we have our
special horizontal dual lease line fields.
So now we're looking at two different distances
that we're evaluating your well against.
And David had a really good diagram showing, you know,
here's my first last take point.
Here's my first last take point.
And then here's my perpendicular through that take point.
And through that take point here.
So if this box were to fall outside anywhere of my lease
or pooled unit, it would trigger the rule exception.
So that's what that would look like,
but it also would look the same
when we're trying to figure out who's an affected party.
So if we're using the Spraberry Trend as an example,
there is no between well spacing and for a horizontal well,
the rules state that, you know,
we're looking at a first and last take point
of 100 feet and perpendicular 330.
So this would also then really be our notification area
that we're looking at.
So anywhere where that would fall outside our lease
would identify those affected parties that you would have
to identify on the plat
and provide some sort of resolution for.
And this is where that information resides,
so if you're not familiar with this screen,
this is going to be very helpful to you.
It's going to show you
what those are first and last take point provisions are.
If there's special distance provisions or profiles of well
so in some fields you may have
zero horizontal-to-horizontal well
zero vertical-to-vertical,
but if it's a horizontal vertical,
there could be a distance.
So this is very important to kind of find that information
that's going to be useful to you
when you're applying for your well.
And then down here, you'll see,
we include the orders for these fields
that start establishing these special horizontal rules.
And this particular field,
there may be 10 other orders prior to this,
but we're only going to list starting
when the first order came in
with these new special horizontal rules.
And so here's the example of my first take point
was less than 100 feet to the lease line.
But when I'm trying to figure out who is the pickup party,
well, it's those folks right over here
because everywhere else,
I'm within the boundaries of my lease.
If I had the special horizontal rules again, here, you see,
that's the part that's outside my lease.
So these are the effected parties here.
If we have an oddly shaped lease boundary, I'm okay here,
but this is where I'm triggering the exception.
And so these, the folks over here on this adjacent tract
that are the affected parties.
What we see a lot of times we'll folks are going
to look at on their plat, well, what's my first take point,
what's my last take point?
And that's the information I'm going to use,
and they're failing to evaluate
the entire length of the wellbore.
So as we can see here,
this is less than the field rules required,
or this is a legal distance here, but here it isn't.
And so this would be the distances
they should be using, not what's up here,
'cause this is the appropriate distance
and that's going to trigger the exception
so that way you'll know to provide us
with the appropriate information
to get this resolved in a timely manner.
All right.
So we're going to jump into this next part real quick.
And a lot of this has been discussed already,
so I'll stop at the ones that I think that we need
to spend couple of moments on and finish this guy up.
So between well, as you may know,
is the distance between two wells,
on the same lease in the same field.
So the field rule requires me to be 1200 feet apart.
If this distance is less than 1200,
I'm triggering that between well exception,
very straightforward.
The notification parameters for between well exception
are all offsets around the entire lease
or pooled unit and any that are within half
of the between well spacing.
So we'll cover that here shortly
'cause that's kind of confusing.
And then you have to realize in some fields in your orders,
you may have special notification requirements.
It's really important to understand if in your field rules,
there are different notification requirements rather
than what's under Statewide rule 38 or 37.
So rule 38 is basically,
I've got too many wells on my lease.
That's a bad problem to have,
but there's a way to get an exception.
And then depending on if I'm in a UFT field or not,
I may need not have an exception because my vertical wells
don't count against my horizontal wells and vice versa.
So this is, again,
we don't see a lot of traditional rule 38s anymore
because of the fact that we're drilling a majority,
the majority of the wells being drilled are in these
UFT fields where the vertical wells don't count
against your well count, so this is still ongoing.
And so here's what the requirements are,
but we'll look at the example here, the diagram here.
So here's my lease.
And so the rule says that all tracts adjacent
to my lease are where I have to look for affected parties,
but I also had to do
a half of the between well spacing radius around my well
because this could be a very narrow lease here
and there could be another lease on this side
that could still fall within the drainage area of this well.
And so those folks would be entitled
to notice, because again,
between well exceptions or rule 38 exceptions
or drainage issue, and we want to make sure
that those folks who were potentially could be impacted
have a right and get notice concerning your request
for an exception of that.
So again, you know four things
that we need to get out of what the plat needs to show.
If it's not certified by a surveyor
then we should see some sort of certification
from the folks who are submitting the application.
We need to make sure that affected parties
are clearly labeled on the plat.
And if this plat is being filed
in support of a PSA or allocation well,
that all the tracts that are being developed
are clearly labeled and outlined on the plat.
So we send out quite a few problems
because we're not seeing the entire boundary.
And if we can't see the entire boundary,
then we're not able to ensure the density is being met
and that your P16s are being filled out correctly.
So how can I resolve my exceptions?
Well, there's a couple of paths we can take
and let's kind of quickly go over a couple of those guys.
We can do Non-Current Productions.
So that means that you can tell the Commission
that those wells that are triggering
the between well exception or the rule 38 will be shut in
at the time of completion of the current well.
So therefore they wouldn't be in violation of the rule and
any well that could potentially trigger that exception
would be a well, that would need to be shut in.
So it could be one, well, it could be multiple wells,
but that is an option for you as the applicant to take,
without having to go through a full-blown exception.
If it's a lease line exception, and we get this question
a lot, can I use a Non-Perforation Zone
to satisfy a between well exception or a rule 38?
No, The Non-Perforation Zone
is for rule 37 lease line exceptions only.
So again, if you clearly label and use it appropriately,
that could resolve the need to go through an exception.
If I have a between well issue,
I may have an Entity For Density.
So if you're operating in an older field
and maybe you're in a waterflood unit,
you may have an approved Entity For Density for your unit.
And therefore that's what you would use
to resolve a between well exception issue.
But be aware that sometimes some of these old dockets
had specific lease line requirements
that are different from the normal rules
and so you need to make sure that you're well is compliant
to any of those special requirements.
If I am going through and getting a resolution
with an exception, I can choose to be my own offset
if you are the owner of the interest
in the offsetting tract,
you must clearly label that on the plat.
We've talked about waivers.
You can provide a waiver from the effected party
and they, you provide them a plat and show them
what they're waiving their rights for.
And that can be used to resolve your exception.
And then you can also, if, we see this a lot,
formed a joint operating agreement with somebody,
then part of that should be addressing
the need for rule 37s potentially,
and the idea of acreage assignments,
because if you're buying the permit and you're assigning
the acres, well, then they're not going to be able to,
if they are still buying permits to use that same acreage
again, without would be in violation of rule 40.
So that's something that you need to be aware of
if you're going into these types of specialized agreements
with other operators.
So here's a very straightforward example of a waiver.
You know, it can be as simple as this,
or we've seen multiple page documents that are being used.
So it's up to you as long as it covers
and talks about what it is being waived.
Is it a rule 37, is it rule 38,
is it an off-lease penetration point,
whatever the case may be,
it just needs to be clearly indicated
as what the waiver is for.
There are some instances
where you can claim unaffected status
and that could be used if the effected party is
in another state or another country.
So that could be used to not require you to have
to potentially notify anybody
in New Mexico, Oklahoma, or Mexico.
You could also use unaffected status
for between well and a rule 38 exception,
but you have to provide a little bit more information
and you have to request that specifically
from the Commission.
And that request would be reviewed
by our engineering unit to determine
if what you're providing and what you're showing
on the supporting documentation warrants
the approval of that request or not.
Remember, again, some of these fields
have special notification requirements.
So if your field does, and that's what you're using,
you need to make sure you check yes
'cause if you, if you don't check, yes, the default is no.
And we're going to review that exception request
against standard Statewide rules.
And if you haven't provided the necessary information,
then you'll get a problem letter
from us because you'll be required to submit geologic data
and so forth to gain that exception, so make sure,
especially if you're in a UFT field and you're applying
for a rule 38 and you're using
those special notification parameters
that you make sure you check that, yes.
And then if we're resolving with the notice,
so you'll provide us that service list,
we're going to get best services out
to all the folks you've identified.
We're going to wait 21 days, and if nobody protests,
then we can approve that application.
The same with publication,
we'll send out the notice to those folks
that we do have a good address for.
We'll provide you the notice that you will
then publish for the specified length of time.
But we also ask that you provide a due diligence letter
with that request to explain
why you need to be able to publish that notice.
Okay?
And really important, the four things you need
to remember about when we're looking at the NOA,
the issuance date and that term out date.
Because again those timeframes,
that seven days from the date of issuance
or the seven days prior to the term out date
are very important when it comes to making sure
that you publish your notice in the correct manner,
which are those guys right there.
And there are the instructions making sure that again,
we try to give you as much information as we can,
but we can't help you if you don't help us.
So as David said earlier, you know,
we're working with this together with you to make sure
we serve you as best we can.
And if you don't meet this requirement, you will be told
to re-notice and re-publish that notification request.
And so if you know, you're going to miss it,
let us know, we can regenerate and get you a new notice
that will help you meet those requirements.
But if you don't let us know,
there's no way we can help you.
And so, you know, I won't bother you with this.
Again, if you are doing a rule 38 in a non UFT field,
you need to remember to supply
certain data that our engineering unit will evaluate.
And here's the example of what some of that information is.
That's there for you to look at.
Here's an example of some data
that was supplied for request.
Rule 38 could be resolved with a form W1A,
this will work for the first well on a lease
or the last well on the lease as long as you have
the require tolerance acreage
that stated in your field rules.
And this will work if that tract took its size and shape
prior to the establishment of field rules in that area.
So this could be a way that you can gain
an exception if it meets one of those two criteria.
And there's a copy of what that looks like.
And that is the end of this presentation.
I'm thankful if you stayed us the entire time.
I know a lot of you get out at four o'clock
and hopefully I haven't delay you too long.
If you have any questions
about any of the information that you've seen on here,
or want to get back with us at a later time,
feel free to email us.
We'll be more than happy
to answer any specific questions you may have.
Is there anything that we need
to cover David that came in on the Q and A?
David: No, we have taken care of the questions,
just a few, you know, thank you, excellent presentation.
So we are solid.
Instructor: Okay, and as David mentioned earlier,
you know, we do this for you because again,
we're in this together and we work jointly together
with you to make you successful,
and if you're successful, we're successful, so, you know,
let us know what we can provide you with extra services.
We can provide you a link to this video
will be on our website so that you have folks
in your office who were not able to attend, you know,
download it for them and pass around your office, you know,
these are all informational
for you when again is to get you the information you need.
So you can get from us what you need, (laughs)
if I can say it that way.
So once again, thank you very much.
Thanks for the folks here in our support division,
our communication folks, Michelle Banks, and Dave McElwain.
Who've helped present these themes
and Jenny and Molly who helped set all this information up
and who many of you deal with on the back end of all this.
So thank you all very much and y'all have a great night.