PSA & Allocation Wells - Texas RRC › media › 53246 › psa-and...STACKED LATERALS- RECORD WELL...

Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide)

PSA & Allocation Wells

Lorenzo Garza

August 2019

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PRESENTATION OVERVIEW

• How to qualify for Stacked Lateral status

• Requirements for PSA and Allocation wells

• Issues with PSA and Allocation well applications & completions

• Off-Lease penetration point issues

• Statewide Rule 40 issues 2


STACKED LATERALSStacked Laterals why all the fuss?

• For each well that qualifies as a Stacked Lateral well your overall well count will not increase when the RRC reviews your lease for density exceptions

• Remember that the wells must be completed in the same regulatory field by the same operator and be of the same well type to qualify as a stacked lateral

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PSA WELLS, ALLOCATION WELLS AND STACKED LATERALS

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STACKED LATERALS- COMPLIANCE (1 of 2)

Stacked Laterals- how to qualify

• 2 or more horizontal drainhole wells within a lease, pooled unit, or non-traditional drillsitedevelopmental unit in the correlative interval

• Horizontal drainholes are drilled from different surface locations

• Each surface location must be permitted separately and assigned its own API number

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STACKED LATERALS- COMPLIANCE (2 of 2)

Stacked Laterals- how to qualify cont.

• Plat must clearly show all wellbores attempting to qualify for Stacked Lateral status within the box as described in the rule

• The spacing parameters to qualify for stacked lateral status will be determined by your field rules or by statewide rules

• To be considered a “regular location” each well must comply to any minimum lease or between well spacing rules

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WHY IS THE RECTANGLE NECCESSARY?

Help Please…. Stacked Set Clearly Identified

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STACKED LATERALS-PROBLEMSStacked Laterals potential problem?

• The only instance in which a PSA/Allocation can have the same unique name is if it is filed as a stacked lateral and completed as an oil well

• If your well, when completed, does not remain within the established parameters for stacked lateral qualification an amended drilling permit will be required

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QUESTIONS CONCERNING THE RECTANGLE (1 of 4)

Question:

Are stacked lateral boxes allowed to overlap each other?

Answer:

Yes. The box is nothing more than a visual representation of the wells that comprise your stacked lateral set.

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Question:

Do the rectangles have to stay within the lease boundaries?

Answer:

No. One of the main requirements to achieve stacked lateral status is that there are two or more horizontal drainhole wells on the same lease, pooled unit, or unitized tract.

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OLDER RULES CURRENT RULES

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Question:Can the rectangle for stacked laterals be less than the 660’ wide as long as there is sufficient acreage for the parent wells?

Answer:

Yes. The rule sets the maximum width of the box to determine if a well qualifies as a stacked lateral.

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CHILD WELL ISSUES

PROBLEM

• My as-drilled well location is not entirely within my stacked lateral box.

• I drilled my well longer than it was permitted for.

SOLUTION

o Permit will have to be amended. You can try and associate the well to another stacked set or it will now be a density well. If a SWR 38 is required you will have to gain that exception.

o Refer to stacked lateral rules. As long as you can keep all take points in stacked lateral box you are compliant.

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STACKED LATERALS- RECORD WELL (1 OF 3)

THE FIRST LATERAL:

• The first well of a stacked lateral is set up on the Proration Schedule and processed in the same manner as any regular producing well.

• All of the standard required documentation should be filed for the well - drilling permit, completion, and associated forms.

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THE SECOND LATERAL:

• All of the standard required documentation should be filed for this well - drilling permit, completion, and associated forms

• Ensure the “Horizontal Wellbore Completion Type” is properly filled out on the completion(Form G-1/W-2

• Validate the “Stacked Lateral Record (Parent) Well Drilling Permit No.” is accurate on the completion

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SUBSEQUENT LATERALS:

• Any additional lateral wells (3rd, 4th) must submit the standard required documentation - drilling permit, completion, and associated forms

• Ensure the “Horizontal Wellbore Completion Type” is properly filled out on the completion(Form G-1/W-2)

• Validate the “Stacked Lateral Record (Parent) Well Drilling Permit No.” is accurate on the completion

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WHAT IF MY REPORTING WELL IS NOT COMPLETED?

If a child well is completed (ie: ready for initial potential testing or production) BEFORE the parent well, it can no longer be considered a child well, if you are attempting to put it on schedule.

i. Amended W1’s will be required, in this case, to change the well of record.

ii. If a well is not yet built to schedule, it’s parent well association can be changed by contacting the Drilling Permits manager. An amended W-1 would not need to be submitted in this case.

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REPORTING TESTS FOR STACKED LATERALS

ALLOWABLES :

The Well Status report (G-10/W-10) should include a combined test for all current producing laterals. The test should be filed using the reporting RRC ID number. Do NOT file a test for non-reporting ID numbers.

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REPORTING PRODUCTION FOR STACKED LATERALS

PRODUCTION REPORTS:

Production from all stacked laterals should be combined and filed under one Production Report using the reporting RRC ID number.

For stacked GAS wells, a Supplementary PR should be filed monthly to report individual production for each well.

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DIFFERENCE BETWEEN PSA AND ALLOCATION WELLS

What is the difference between a “PSA” well and an “Allocation” well?

• No agreements in place prior to submission of your drilling permit application. Your lease on the tract of land allows for a permit to be issued.

• It doesn’t allow you to incorporate tracts into your Allocation unit that the wellbore does not traverse and produce from.

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OTHER SUPPORTING DOCUMENTS

A Form P-16 (required for all horizontal wells) with the correct sections filled out.

i. Page one will have sections I, II, and IV filled out.

ii. If the well is being proposed as a PSA well, then in section IV, provide the % of mineral and working interest owners who have agreed to the PSA, in each tract.

iii. Page two will have sections V and VI filled out.

If one of your PSA or Allocation tracts is a pooled unit, then attach the Form P-12 used to establish that tract as a pooled unit to your application.

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PLAT REQUIREMENTS FOR PSA AND ALLOCATION WELLS

If there are any unleased interests within one of your PSA or Allocation tracts, they must be identified

i. If the tract is a single lease tract then clearly place a label of ULM within the tract.

ii. If the tract is a pooled unit then clearly represent that tract on your well location plat and provide a distance from the wellbore to that tract.

• Plats must have a certification by a professional land surveyor or by a registered professional engineer.

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PLAT FOR PSA OR ALLOCATION WELL

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EXCEPTIONS FOR PSA AND ALLOCATION WELLS

PSA or ALLOCATION WELLS

SWR Exceptions: Lease line• PSA and Allocation well applications will always

require an exception

Between Well• Normal notification procedures will be followed

Density Exception• Unless specified in the field rules normal

notification and data requirements will be followed

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PROPER USE OF NON-PERFORATION ZONES

Non-Perforation Zones can be used to keep a SWR 37 from being triggered and control who gets noticed for a SWR 37 exception.

Use of Non-Perforation Zone to keep SWR 37 from being triggered along the axis of the well.

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DON’T FORGET

Things to Remember

• When using the P-16 data sheet remember that Section VI must reflect current proration schedule acreage assignments.

• If multiple operators involved then waiver must be

attached for proration and exception resolution.

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COMMON ISSUES ON APPLICATIONS (1 of 5)

Selecting pooled unit and attaching a P-12 that covers the PSA or Allocation tracts.

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Not providing a P-12 to support any PSA or Allocation unit tracts that are pooled units.

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If there are unleased interests in a tract, they are not being clearly shown on the plat.

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Selecting “Interior Lease Line” SWR 37 exception on application.

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PSA and ALLOCATION WELL ISSUES

Operator Procedures for Completions of PSA and Allocation Wells

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REMINDERS (1 of 3)

TIPS

• Read the instructions found in our forms library and the supplemental handouts.

• A separate revised P-16 is required if updating proration acreage on an existing Allocation or PSA well utilizing acreage from a regulatory lease or undeveloped tract NOT listed in Section V.

• For PSA or Allocation all combined acres should be reported in Section II.

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REMINDERS (2 of 3)

TIPS

• If using the P-16 data sheet remember that Section VI must reflect current proration schedule acreage assignments and the acres being designated to the PSA/Allocation well.

• Proration acres will be updated based of information supplied on Section III and VI.

• Properly answer Y/N to SWR 38 Exception.

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REMINDERS (3 of 3)

TIPS

• Show only completed wells, Well Compliance need not be informed of proposed locations.

• Allocation/PSA wells will receive unique RRC ID numbers unless they are part of an oil “Stacked Lateral” group.

• If horizontal wellbore completion profile changes, the Drilling permit may need to be amended. EX. Allocation at time of permitting, PSA at time of completion or Parent well at time of permitting and Child well at time of completion.

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OFF-LEASE PENETRATION

SWR 86 issues (off-lease PP and off-lease TL):

• Notification will depend on the field where you are completing your well.

• Field rules establish the correlative interval of a field. For instance in the Alpine High (Cons) field the correlative interval is 10,425’ to 12,245’.

• Operators, lessees, and/or unleased mineral owners are entitled to notification when their interests are within the geologic markers used to establish the correlative interval of the regulatory field. 36


NOTIFICATIONS AND RESOLUTIONSOff-Lease Terminus:

• It is not allowed to propose an off-lease Terminus on a W1 application.

• Approval granted through RRC engineering group.

• Identified after directional surveys and logs have been run.

• No production can be off-lease.

Off-Lease Penetration Point:

• Own Offset• Waivers• 21 day notification

handled by applicant. Clock starts on the date the notification packet is received by the offset.

• Publication• Request a Hearing

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OFF LEASE POP NOTIFICATION

The Commission does not initiate this notification:

By Rule, notification is to be sent via USPS certified mail, return receipt requested.

The signed date on the mail receipt is the date the 21 day clock starts from, not the date it was mailed out.

All documents sent in the notification must be provided like notice letter, plat, and other supplemental documents.

If you use a service that is not identified by rule, you leave yourself open to contest or protest.

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COMMON OFF LEASE POP NOTIFICATION ISSUES

• PROBLEMS

– Return receipt not returned by USPS.

– Do I need to re-notice or get new waivers if well location is being amended?

– If POP originally permitted on-lease and as-drilled the POP is now off-lease.

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ANSWERS TO OFF LEASE POP NOTIFICATION ISSUES

• ANSWERS– Go to USPS website and provide a screenshot of

transaction history.

– If the well has not been drilled and the POP is changing then affected parties should be re-noticed especially if waivers were provided.

– If you are the affected offset clearly label plat, or provide waivers with your completion packet. If you have to provide notice then you will need to amend the drilling permit.

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Off-Lease POP Protest 1 OF 2

What to do if your Off-Lease POP notification is protested:

• This will be handled by the applicant and protestant working to an agreeable resolution.

• The Commission will only step in if a Hearing is requested.

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Off-Lease POP Protest 2 OF 2

If your W-1 is submitted before the full 21 day notification period has elapsed, and you are protested:

• You will be required to withdraw the application and re-file it, if changes need to be made to the application.

– If the POP needs to moved based on an agreement with the protestant.

– If the POP is to be moved to an on-lease location.

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ACREAGE ASSIGNMENTS 1 OF 2

In Unconventional Fracture Treated (UFT) fields:

• At the time of permitting we only need to see the wells on the lease that support the profile of the well being applied for. Your Form P-16 should reflect acreage assigned to completed wells.

– For permitted but not yet completed wells, the minimum acreage required to get a regular permit, in the field being applied for, should be shown.

• Form P-16 is required for all wellbore profiles in UFT fields.

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ACREAGE ASSIGNMENTS 2 OF 2

In Traditional fields:

• All wells count towards density calculations. All vertical, directional, and horizontal wells must be on the Form P-16 or Form P-15 acreage designation. The P-16 must be used when the application being filed is for a horizontal well.

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HOW MUCH ACREAGE CAN I ASSIGN?

If my field doesn’t have an approved formula for determining acreage assignments

Density is 40 acres or less Density is more than 40 acres

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WHAT IF ACREAGE HAS ALREADY BEEN ASSIGNED?

How could this happen?

1. I have completed a well in a field that does not take depth severances into account. Another operator has completed a well on the same tract and assigned the acreage to their well which is at a different depth in the field.

2. I don’t have 100% of the tract being developed but another operator, who has the remaining portion under lease, has drilled and completed a well and assigned all the acreage to their well.

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WHAT REMEDIES ARE AVAILABLE?

1. Verify that the wells are in the appropriate fields.

2. Come to an agreement to share acreage to develop.

3. Request a hearing to seek an exception to SWR 40 that will allow for the double assignment of acreage.

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USE THE PUBLIC GIS VIEWER

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FORMATION REVIEW BY WELL COMPLIANCE

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FIELDS AND FORMATIONS

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UFT AND NON-UFT FIELDS

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CONTACT INFORMATION

Lorenzo Garza 512-463-2184 [email protected]

Joe Stasulli 512-463-3905 [email protected]

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PSA & Allocation Wells - Texas RRC › media › 53246 › psa-and...STACKED LATERALS- RECORD WELL...

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