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Delaware General AssemblyDelaware RegulationsMonthly Register of RegulationsNovember 2013

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7 DE Admin. Code 7503
This Order considers proposed regulatory action to repeal 7 DE Admin. Code 7503: Regulations Governing Oil, Gas and Mineral Exploration, as a result of the Department's exhaustive review of its existing regulations, pursuant to Governor Markell's Executive Order No. 36 (hereinafter referred to as "E.O. 36"). In June of 2012, Governor Markell issued E.O. 36, which directed all state agencies, including DNREC, to perform a focused review of their existing, older regulations, identify and remove regulatory hurdles, and modernize and streamline any regulations that may be outdated or unnecessarily burdensome, while maintaining the state's commitment to improving public health and environmental performance.
The Department is proposed to repeal 7 DE Admin. Code 7503: Regulations Governing Oil, Gas and Mineral Exploration in its entirety at this time. This Regulation has been a part of the Delaware Code since 1971, and there is no record of an application for (nor has there been any decision upon) any permit under said Regulation. Therefore, pursuant to Executive Order No. 36, DNREC has reviewed this Regulation and recommends that it be repealed.
7.) The Department shall submit this Order approving the final regulation to the Delaware Register of Regulations for publication in its next available issue, and provide such other notice as the law and regulation require and the Department determines is appropriate.
“Applicant” Any person who files an application under these Rules.
“Barrel of Oil” Forty‑two (42) United States gallons of oil at a temperature of sixty (60) degrees Fahrenheit, with deductions for the full percent of basic sediment, water and other impurities present, ascertained by centrifugal or other recognized and customary test.
“Blowout” A sudden or violent escape of oil and/or gas from a drilling well, when high formation pressure is encountered.
“Blowout Preventer” A heavy casinghead control fitted with special gates or discs which may be closed around the drill pipe, or which completely closes the top of the casing if the pipe is withdrawn.
“Bottom Hole Pressure” The pressure in pounds per square inch at or near the bottom of an oil or gas well determined at the face of the producing horizon by means of a pressure recording instrument, adopted and recognized by the oil and gas industry.
“Casing Pressure” The pressure built up between the casing and the tubing when the casing and tubing are packed off at the top of the well.
“Casinghead Gas” Any gas or vapor, or both gas and vapor, indigenous to an oil stratum and produced from such stratum with oil.
“Christmas Tree” An assembly of valves and fittings at the head of the casing of a well to control the flow. Also spoken of as "wellhead connections."
“Circulation” The passing of an approved fluid down through the drill stem and up to the surface in the processes of rotary drilling, setting casing, cleaning, treatment or stimulation.
“Commission” The Delaware Water and Air Resources Commission or, if so designated pursuant to Section 6440, the State Geologist. May refer to Commission only or to the Commission and the Governor.
“Condensate” The liquid produced by the condensation of a vapor or gas either after it leaves the reservoir or while still in the reservoir. Condensate is often called "distillate," "drips," "white oil," etc.
“Conservation” The conserving, preserving, guarding or protecting of the oil and gas resources of the State by obtaining the maximum efficiency with minimum waste in the production of oil and gas.
“Controlled Deviations” Controlled directional deviation shall mean the intentional deviation of a well from vertical in a predetermined compass direction; and controlled random deviation shall mean the intentional deviation of a well from the vertical without regard to compass direction for one of the following reasons:
“Cubic Foot of Gas” The amount of gaseous hydrocarbons contained in a cubic foot of space at a base temperature of sixty (60) degrees Fahrenheit and an absolute pressure of 14.4 pounds per square inch plus four (4) ounces per square inch, which temperature and pressure are referred to as the base temperature and pressure, respectively.
“Day” A period of twenty‑four (24) consecutive hours from 7:00 a.m. one day to 7:00 a.m. the following day.
“Dry Gas” Natural gas obtained from reservoirs that produce gas only; or natural gas which does not contain the heavier fractions which may easily condense under normal atmospheric conditions; not casinghead gas.
“Exploration” Geological, geophysical and other surveys and investigations including seismic methods.
“Exploratory Well” Any well drilled to a depth greater than the existing freshwater strata for the purpose of securing geological or other information which may be obtained by penetrating the earth with a drill bit, coring equipment and similar tools.
“Field” The general area which is underlaid, or appears to be underlaid, by at least one pool; and “field” shall include the underground reservoir, or reservoirs containing oil or gas, or both. The words "field" and "pool" mean the same thing when only one underground reservoir is involved; however, "field" unlike "pool," may relate to two or more pools.
“Gas” All natural hydrocarbon gas, including casinghead gas, and all other fluid hydrocarbons not defined as oil, including condensate originally in the gaseous phase in the reservoir.
“Gas Lift” The lifting of liquids from a well by use of extraneously introduced gas.
“Gas Well” Any well producing natural gas not associated with crude petroleum at the time of production, or any well completed in the gas cap of an associated reservoir.
“Illegal Gas” Gas which has been produced within the State from any well or wells in excess of the amount allowed by any rule, regulation or order of the Commission as distinguished from gas produced within the State from a well not producing in excess of the amount so allowed, which is "legal gas."
“Illegal Oil” Oil which has been produced within the State from any well or wells in excess of the amount allowed by any rule, regulation or order of the Commission as distinguished from oil produced within the State from a well not producing in excess of the amount so allowed, which is "legal oil."
“Inspector” Any employee of the State duly authorized to act in that capacity.
“Lease Tank” The tank or other receptacle into which oil is produced either directly from a well or from a well through a gas separator, gun barrel or other similar equipment.
“Maximum Efficiency Rate” Commonly referred to as "MER," is the highest daily rate of production which can be sustained economically from a particular pool for a reasonable period without loss of economically recoverable ultimate production of oil from such pool.
“Mineral” Any natural inorganic substance with definite chemical and physical properties which is present in or at the bottom of a body of water, or anywhere within the earth's crust.
“Month and Calendar Month” The period or interval of time from 7:00 a.m. on the first day of any month of the calendar to 7:00 a.m. on the first day of the next succeeding month of the calendar.
“Mud‑Laden Fluid” A mixture of water and clay or other material which will effectively seal the formation to which it is applied.
“Oil” Crude petroleum oil and all other liquid hydrocarbons, regardless of gravity, which are produced at the well in liquid form by ordinary production methods; but does not include liquid hydrocarbons that were originally in a gaseous phase in the reservoir.
“Oil Well” Any well which produces crude petroleum oil as the term is commonly used in the industry.
“Owner” The person who has the right to drill into and to produce from any pool, and to appropriate the production either for himself or for himself and another, or others.
“Person” Any individual, firm, co‑partnership, company, business trust, association, private corporation, municipal corporation, public or quasi‑public operation, county, city and county, district, political subdivision, department or other instrumentality of government, receiver, tutor, curator, executor, administrator, fiduciary, trustee, guardian, or representative of any kind.
“Pool” An underground reservoir containing or appearing to contain a common accumulation of oil or gas or both.
“Pressure Base” An absolute pressure agreed upon or set as a base, or converting volume of gas metered to a correct volume.
“Pressure Maintenance (I) The reintroduction (in the early stages of field development) of gas or liquid produced from an oil or gas well to maintain the pressure of the reservoir. (2) The introduction of gas or fluid for the same purpose but obtained from an outside source.
“Producer” The owner or operator of a well or wells capable of producing oil or gas, or both:
“Reasonable Market Demand” The amount of oil reasonably needed for current consumption, together with a reasonable amount of oil for storage and working stocks.
“Recovered Load Oil” Any oil or liquid hydrocarbons used in any operation in an oil or gas well and which has been recovered as a merchantable product.
“Seismic Explorations” Any geophysical exploration method which involves the use of explosives or other energy sources.
“Separator” An apparatus for separating oil, gas, water, etc., with relative efficiency, as it is produced.
“Shot” The use and detonation of powder, dynamite, nitroglycerine or other explosives.
“Shut‑In Surface Pressure” The pressure noted at the wellhead when the well is completely shut‑in. Not to be confused with "bottom hole or reservoir pressure."
“Sour Gas” Any natural gas containing more than one and one‑half (1 1/2) grains of hydrogen sulfide per one hundred (100) cubic feet or more than thirty (30) grains of total sulphur per one hundred (100) cubic feet or gas which, in its natural state, is found by the Commission to be unfit for domestic or industrial purposes.
“State” The State of Delaware.
“Sweet Gas” All natural gas except "sour gas."
“Underground Water” Any supply of water which may be developed by any type of well or spring from beneath the surface of the ground whether the water flows there from by natural force or is withdrawn by pumping or other mechanical device or artificial process.
“Waste” In addition to its ordinary meaning, shall mean "physical waste" as that term is generally understood in the oil and gas industry. Waste shall include:
“Watercourse” Any lake, river, creek, cut or other natural body of water or channel.
“Well Log” The written record progressively describing the strata, water, oil or gas encountered in drilling a well with such additional information as to gas volume, pressures, rate or fill-up, water depths, casing strata, casing record, etc., as is usually recorded In the normal procedure of drilling.
5.3.25 The Commission shall reserve and may exercise the authority to cancel any lease upon which oil, gas, sulphur or other minerals have not been discovered in paying quantities, upon failure of the lessee after thirty (30) days' written notice and demand for performance to exercise due diligence and care in the prosecution of the prospecting of development or work in accordance with the terms of the lease. After discovery of oil, gas, sulphur or other minerals in paying quantities, on lands subject to any lease, such lease maybe forfeited and cancelled only by appropriate judicial proceedings upon failure of the lessee after ninety (90) days' written notice and demand for performance to comply with any of the provisions of the lease or of laws or regulations applicable thereto and in force at the date of the invitation for bids in pursuance of which the lease was awarded; provided, however, that in the event of any such cancellation the lessee shall have the right to retain under such lease any and all drilling or producing wells as to which no default exists, together with a parcel of land surrounding each such well and such rights of way through the leased lands as maybe reasonably necessary to enable such lessee to drill and operate such retained well or wells. In the event of the cancellation of any lease, the lessee shall have a reasonable time within which to remove all property, equipment, and facilities owned or used by the lessee in connection with operations under the lease.
7.4.3 Whenever it shall appear that the volume of hydrocarbons in place underlying any drilling unit is one‑half or less than the average volume of hydrocarbons to place under all the drilling units in the reservoir the Commission may, if in its judgment a well on such deficient drilling unit would not be economically justifiable, refuse to grant the requested exception. In lieu thereof, the Commission shall entertain a new application to incorporate the deficient drilling unit into an adjoining property, of either similar or alien ownership. After notice, hearing, and the issuance of an order approving such combination of units, the property to which such deficient unit is to be added shall be granted an increased allowable in proportion to the share of in place hydrocarbons under the deficient drilling, unit, and must have the capacity to produce the increased allowable. If the ownerships of the combined properties are different, the owners of the deficient drilling unit shall acquire, under the terms of such a pooling order, as to the royalty owners, an interest in the royalty under the enlarged property in proportion to the hydrocarbons in place, and, as to the working interest owners, an interest in the working interest share of the production from the enlarged tract, and in the wells and other equipment on such enlarged tract, in the same proportion. The working interest owner of the deficient drilling unit shall be required to pay, either in cash, or out of production, his proportionate share of the cost of such wells and equipment, on the following basis: the intangible portion of the cost of such wells, reduced by the percentage of the recoverable hydrocarbons under the theretofore producing property produced prior to the date of the administrative order; and the tangible portion of the cost of such wells valued at the market value at the time of the issuance of the order. In event payment is not made in cash at the time of the adjustment, reasonable interest shall be allowed to the creditor on all deferred payments. Prorated Pools. Prior to termination of the discovery allowable status of a pool, the Commission may require the submission of all reservoir data obtained and will hold a hearing to secure further evidence and the recommendations of operators for the future operation of such pool. The Commission shall determine the areal extent of said pool and the size of a drilling unit in said pool as soon as possible, based upon the best information available at that time. The Commission shall then assign to such pool a total pool allowable. The pool allowable may be determined from technical evidence pertaining to the maximum efficient producing rate of the pool, or from the number of productive acres divided by the acres in the applicable drilling unit times the applicable oil well allowable or equal to the total number of drilling units in said pool multiplied by the applicable daily well oil allowable as shown on the Commission's depth‑acreage yardstick allowable table for wells throughout the State. The total pool oil allowable, as determined above, shall then be distributed to each separate leasehold or pooled unit so as to allow each tract an opportunity to produce ultimately the liquid hydrocarbons which underlie it. These allowables shall be subject to the monthly market demand factor, if any. In event no Statewide death‑acreage allowable yardstick is in use, or where the operators in a pool may hold that the applicable yardstick allowable is too low or too high, and that a higher or lower allowable should be granted to the specific pool because of the unusual thickness or character of the producing formation, or the unusual efficiency of the drive mechanism, operators shall, upon notice and hearing, present to the Commission evidence to support a request for a higher or lower allowable, or MER (Maximum Efficient Rate of Production). Upon consideration of the evidence, if the Commission finds that a higher or lower daily per‑well allowable or MER for the pool is justified, and that the pool is capable of producing at such MER without avoidable waste, then such higher or lower allowable or MER may be authorized and used in determining the separate leasehold or pooled unit allowables provided for above.
8.9.6 The allocation of allowables to all wells, or to separate leaseholds or pooled units, in nonassociated prorated gas pools will be determined from the nominations submitted. However, in order to ascertain the reasonable market demand for the gas, nominations for gas shall be adjusted to actual production of prorated wells or separate leasehold or pooled units, by applying the difference between the latest total monthly production of prorated wells or leaseholds and the total nominations for gas from prorated wells or leaseholds for that month to the total nominations for gas for all wells, or separate leaseholds or pooled units, that have been submitted for the month of the proration schedule which is in preparation. The total nominations for gas from prorated wells, or separate leaseholds or pooled units, for any month shall be determined by subtracting the total allowable assigned to nonprorated wells, or separate leaseholds or pooled units, during the month from the total nominations for gas from all wells, or separate leaseholds or pooled units, in the pool for that month. Nothing herein shall prevent the Commission from making such further adjustments affecting gas allowables as in its judgement may be necessary for prevention of waste or protection of correlative rights. A prorated well or leasehold is a well or leasehold whose allowable is determined by the pool allocation formula. A nonprorated well or leasehold is a well or leasehold which is incapable of producing its allowable as calculated by the pool allocation formula.
8.9.9 Each operator of each gas well or leasehold subject to the hereinafter prescribed conditions, may produce the well or leasehold in excess of the monthly allowable allocated to it. Provided, that no well or leasehold shall in any one month produce at a rate in excess of one hundred twenty‑five (125) percent the daily average required to produce its normal current monthly allowable. Any well or leasehold overproduced as of a balancing date, which was also over-produced on the balancing date immediately preceding and remained overproduced for the entire period between the two balancing dates, shall be shut in until the overproduction, existent as of the later of such two balancing dates, is made up, unless exception is granted. The operator of a well or leasehold required to be shut in, may request a hearing before the Commission to determine whether shutting in the well or leasehold would damage it. Notice of the hearing will be given to all operators in the field. If, after consideration of the evidence submitted at the hearing, the Commission finds that the well would be damaged if shut in, or that the leasehold thereunder would be jeopardized, the Commission may allow the overproduction charged against it to be made up at a lesser rate than it would be made up if the well or leasehold were shut in. Except where a well or leasehold is shut in to make up overproduction, overproduction existent as of any balancing date shall be made up during the balancing period immediately following, and may be made up at any time during such period; i.e., a specified fractional part of such overproduction need not be made up during each month of such balancing period, so long as all of such overproduction is made up during such balancing period.
Last Updated: December 31 1969 19:00:00.
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