1. Statewide Rules 10 (Downhole Commingling) and 32 (Venting and Flaring)
Rick Behal and Travis Baer - August 2017

2. Class Synopsis Rule Exception Application Online Completions
Statewide Rule 10 (SWR 10)
Rule
Exception
Application
Online Completions
Frac Port Completions

3. Applicable Statewide Rule
Applicable Statewide Rules:
Statewide Rule 3.10 (SWR 10)
This rule prohibits production from different strata through the same conduit
different strata means two or more different commission-designated fields
On SWR 10 datasheet “zone” = field
General prohibition. Oil or gas shall not be produce from different strata through the same string of tubulars except as provided in SWR 10. As used in this section, “different strata” means two or more different commission-designated fields.

4. Exception to SWR 10 Exception
SWR 10 allows for an exception to the rule
An exception permits downhole commingled production from different commission-designated fields
Requires notice and opportunity for a hearing
Prevent waste or promote conservation or protect correlative rights
Exception. After notice and an opportunity for a hearing, the commission may grant an exception to permit production from a well commingling oil and/or gas from different strata (i.e., downhole commingling) if commingled production will prevent waste or promote conservation or protect correlative rights.

5. Wellbore Schematic

6. Down-Hole Commingling
Down-hole Commingle vs. Multi-completion
Both involve completing two or more fields
down-hole commingled: all intervals/fields are producing up the same conduit
Multi-completion: each interval/field is producing up a separate conduit

7. Multi-Completion vs DHC

8. Requesting an Exception
Application procedure
Fill out the 19-question datasheet:
Serve notice to affected offsets.
Mail to the Engineering Unit in Austin
$375 application fee
One well per application
Fee: Exception fee of $150 plus 150 percent surcharge for a total of $375 as required by SWR 78.
SWR 78(b)(4): With each individual application for an exception to any rule or rules, the applicant shall submit to the Commission a nonrefundable fee of $150.
SWR 78(n)(3): requires a surcharge of 150 percent on all fees required

9. Filling out the datasheet…

10. General Information Application (Items 1, 2, 3)
Operator and well information
Field information
See O&G proration schedule
Online Research – Field Rules Query
Hydrogen Sulfide (H2S) Fields and Concentration Listing

11. Notice Categories Application Requirements (Item 4)
Notice Requirements. One of three notice categories will apply:
Initial
Non-initial
Final order (blanket)
How to determine category:
Statewide Rule 10 exception database. Central Records ( )
SWR 10(a): General prohibition. Oil and gas shat not be produced from different strata through the same production string.
SWR 10(b): Exception. After notice and an opportunity for a hearing, the commission may grant an exception to allow for downhole commingling.

12. Notice - Affected Operators
Application Requirements (Item 4)
Initial
All operators in each field are considered affected
Non-Initial
All offset operators in the field are considered affected.
Final order (Blanket)
No notice required
Fill out only items 1-4 and 8 on the application

13. Notice Requirements Application Requirements (Item 12)
Service list and certification
Signed & dated statement that all affected operators have been provided notice via copy of the application
Notice period is 14 days.

14. Drilling Permit Requirements
Application Requirements (Items 5,6,7)
Drilling permit & schedule history
All fields must be permitted (Form W-1)
Is the well currently on schedule in each field (multi-completion)?
All fields at regular locations (SWR 37)?

15. Royalty and Working Interest
Application Requirements (Item 8)
Zone ownership
Royalty and working interests of proposed combined fields must be identical. If not, hearing is required

16. Top of Cement (SWR 13) Application Requirements (Items 11)
Wellbore diagrams (current and proposed)
Indicate where tubing will be set.
Indicate the tops of cement for each casing string. TOC must comply with SWR 13
Indicate perf range in each field.

17. Wellbore Diagram

18. Shut-in and Flowing Pressure
Application Requirements (Items 9, 13)
Pressure information
Shut-in pressure
Flowing pressure
Capable of flowing without artificial lift?
For wells in low-pressure zones / well-developed areas, it is reasonable for estimates to be provided

19. Down-Hole Commingling
Application Requirements (Item 15)
Crossflow and migration
The well must comply with SWR 3.7 (Strata to be Sealed Off)
A down-hole commingling exception should not be proposed as a resolution to a violation of cementing and isolation requirements.
SWR 7 requires that fluids shall be confined in its original stratum until it can be produced and utilized without waste.

20. Production Capabilities
Application Requirements (Item 10, 17)
Production information
Producing capabilities of each field
Economic limit and ultimate recovery without commingling
Economic limit and ultimate recovery with commingling
Ultimate recovery for each zone=higher with commingling than without

21. Justification for DHC Application Requirements (Item 14, 18)
Why not multiple completion?
Mechanically impractical?
Economically impractical?
Plan if application not approved?
Examples: Will not be economical to complete; complete one zone and leave the other(s) unrecovered; complete one zone at a time; etc.
Exception to SWR 10 may be considered if the commingled production will prevent waste or promote conservation or protect correlative rights.

22. Fluid Compatibility Application Requirements (Item 16)
Evidence of fluid compatibility
Operators are responsible for:
Produce in a practicable manner
Accounting for scale build up and treatment

23. Reporting Field Selection
Application Requirements (Item 19)
Reporting field selection
Operator request is accommodated if possible
Gas wells: Field with most restrictive gas allowable unless all fields 100% Absolute Open Flow (AOF)
Oil wells: Field with lowest allowable
Horizontal/vertical commingled completions: Field with horizontal is reporting field

24. Completion Report (Form G-1/W-2)
Completion Report Requirements
SWR10 Exception should be approved before the completions are filed.
A well is considered non-compliant if the exception has not been approved
The operator should reference SWR 10 approval date in the remarks section of the completion

25. Completion Report (Form G-1/W-2)
Completion Report Requirements
Must report formation tops, perforations and completion interval for each field
Commingling at a later date?
“leave permit open for future SWR 10”
The SWR 10 approval letter must be attached and the fields must match the drilling permit.
Approved fields should be valid, i.e. not consolidated .

26. Oil Wells (Form W-2) Completion Report - Oil Wells (Form W-2)
Must have approved Drilling Permit
File one W-2 for the reporting field only.
For oil wells, only 1 lease number will be carried on schedule at a time
Existing lease number should be listed in the work over section of the Packet Data.

27. Gas Wells (Form G-1) Completion Reports - Gas Wells (Form G-1)
File a G-1 for each field.
“Initial Potential” for the reporting field
“Well Record Only” for each non-reporting field.
A combined G-10 test for all producing intervals is required.
All production filed under the reporting gasID#. Non-reporting fields are carried on schedule with a SWR 10 code that are not eligible for an allowable.
If the commingled well tested as a gas well.

28. Frac Port Completions
What questions does this raise with regard to down-hole commingling?
The technology allows multi-stage fracture stimulation without cementing the production liner
Uses open-hole packers for interval confinement
Statewide Rule 13 does not recognize open-hole packers for vertical confinement

29. Frac Port Completions
Field 1 is exposed to uncemented pipe. SWR 13 violation.
Field 1 is not considered down-hole commingled because field 1 is not completed in the production string.
A SWR 10 exception cannot resolve this issue.

30. Frac Port Completions Completion Report (Form G-1/W-2)
Report the “range” capable of production as the producing interval
The range is evaluated for proper field designation and audited for SWR 10 compliance
Indicate the use of a frac port or open hole packer system in the remarks section

31. CONTACT US
For Technical Questions related to the SWR 10 Exception to Down-hole Commingle contact the Engineering Unit :
For Questions related to Completion filings for SWR 10/Down-hole commingled wells contact the Well Compliance Unit:

32. Statewide Rule 32:
Venting and Flaring
Presented by:
Travis Baer

33. RRC Mission
Our mission is to serve Texas by our stewardship of natural resources and the environment, our concern for personal and community safety, and our support of enhanced development and economic vitality for the benefit of Texans.

34. Statewide Rule 32

35. Session Description Exemptions from the rule
When does SWR 32 not apply? No metering required!
Authorized Flaring and Venting (PBR)
Flaring without a permit under special conditions. Meter all gas and report on Production Report.
Flaring Exceptions (permits)
What is required for an exception and what does it do for an operator?
Other Information and statistics

36. Introduction
Gas must be used for lease operations or sold if it can be readily measured by devices (meters) routinely used in the operations of oil wells, gas wells, gas gathering systems or gas plants.

37. Exemptions Tank vapors from: Fugitive emissions of gas
crude oil storage tanks
gas well condensate storage tanks
salt water storage tanks
Fugitive emissions of gas
Amine treater, glycol dehydrator flash tank, and/or reboiler emissions
Blowdown gas from gas handling equipment for construction, maintenance or repair

38. Exemptions (cont.)
Gas purged from compressor cylinders or other gas handling equipment for startup
Gas released:
at a well site during drilling operations prior to the completion date of the well must be separated from drilling fluids using a mud-gas separator, or mud-degasser
During completion or re-completion (hydraulic fracturing)

39. Statewide Rule 32 Exemptions from the rule
When does SWR 32 not apply? No metering required!
Authorized Flaring and Venting (PBR)
Flaring without a permit under special conditions. Meter all gas and report on Production Report.
Flaring Exceptions (permits)
What is required for an exception and what does it do for an operator?
Other Information and statistics

40. Gas releases to be flared or vented
The Commission may require flaring of releases of gas not readily measured if the Commission determines that flaring is required for safety reasons (e.g. high concentrations of H2S).
All gas releases >24 hours duration shall be burned in a flare, if the gas can burn safely
All gas releases of <24 hours duration may be vented to the air if not required to be flared for safety reasons (contact District Office for verification)

41. Gas Releases Authorized by Rule
Authorized gas releases during production operations must be measured (metered) and be reported on monthly Production Reports. Flaring beyond the limits set in the following scenarios requires an exception (permit) to be granted.
Produced gas not to exceed 10 producing days after initial completion, recompletion in another field, or workover in the same field.
Gas that must be unloaded from a well may be vented up to 24 hours in one continuous event or up to 72 cumulative hours in one month

42. Gas Releases Authorized by Rule (cont.)
Gas from a lease production facility may be released for up to 24 hours in the event of a pipeline or gas plant upset.
Gas contained in waste stream from molecular sieve or membrane gas treatment unit, provided at least 85% of inlet gas is recovered and directed to legal use
Low pressure separator gas, up to 15 mcfd for gas wells, 50 mcfd for oil leases or commingled points (gas must pass through separator, heater-treater, free-water knockout, or other low-pressure equipment prior to release)
Notify the local District Office in the event of an upset condition. If flaring required for more than 24 hours, operator must file exception request within one business day after first 24 hours of release.

43. Gas Releases from gas gathering system or gas plant
May be released for up to 24 hours in the event of a pipeline or gas plant upset. Notify the local District Office as soon as reasonably possible after release begins.
If gas plant operator presents information that shows necessity of release is justified beyond 24 hours, operator may continue to flare gas. Operator must file exception request within one business day after first 24 hours of release.
May be released for up to 24 hours in the event of a pipeline or gas plant upset. Notify the local District Office as soon as reasonably possible after release begins.

44. Statewide Rule 32 Exemptions from the rule
When does SWR 32 not apply? No metering required!
Authorized Flaring and Venting
Flaring without a permit under special conditions. Meter all gas and report on PR.
Flaring Exceptions (permits)
What is required for an exception and what does it do for an operator?
Other Information and statistics

45. Exceptions (a.k.a. “Flare Permits”)
Exceptions are good for 45 days up to a total of 180 days
May be indefinitely approved administratively with adequate justification if less than 50 mcf/day
Exceptions for more than 180 days may only be granted through a final order (hearing) signed by the Commission.

46. Exceptions Documentation required for permanent exception
cost benefit analysis
map showing nearest pipeline capable of accepting gas
estimate of gas reserves
Fee of $ per gas well, oil lease, or commingled vent/flare point
Exception may be sent by fax or , provided a signed original request, accompanied with fee, is received by Commission within 3 business days

47. Exceptions
If additional time is requested, operator must re-file within 21 days BEFORE the expiration of existing exception.
If re-filed within 21 days, the operator is authorized to continue flaring/venting until final approval or denial of the requested permit extension.
If operator files for extension less than 21 days before expiration or after expiration of the permit, continues to flare during processing of request and the request is denied, operator may be subject to administrative penalties

48. Exceptions Not transferable upon a change of operatorship
Operator has 90 days to re-file the exception once the P-4 transfer has been approved

49. Statewide Rule 32 Exemptions from the rule
When does SWR 32 not apply? No metering required!
Authorized Flaring and Venting
Flaring without a permit under special conditions. Meter all gas and report on PR.
Flaring Exceptions (permits)
What is required for an exception and what does it do for an operator?
Other Information and statistics

50. Additional information
An automated system check for permits if flaring is indicated on Production Reports
If flaring production is not permitted, operator will automatically be sent a Notice of Violation (30 days), a Notice of Intent to Sever by certified mail (30 days), and then a severance letter, if compliance is not achieved.
A permit extension may be denied if no progress is made to eliminate necessity for flaring.

51. January 2014 Notice to Industry
…unauthorized venting or flaring of gas may constitute waste. SWR 32 prohibits venting or flaring of gas under certain conditions unless authorized by the Commission. … Any venting/flaring of casinghead gas or gas well gas not authorized by SWR 32 or by permit may be subject to administrative penalty action.
An operator whose application to vent or flare gas is denied in whole or in part has the right to request a hearing before the Commission.

52. Flaring Permits

53. Statewide Flaring Percentage

54. Flaring Frequently Asked Questions:

55. Oil and Gas District Offices
Abilene Corpus Christi Houston Kilgore Midland Pampa San Angelo San Antonio Wichita Falls

56. District Offices District City Address Phone 1 & 2 San Antonio
112 East Pecan St, Suite 705 San Antonio, TX 78205
(210) 3
Houston
1706 Seamist Dr, Suite 501 Houston, TX 77008
(713) 4
Corpus Christi
10320 IH 37 Corpus Christi, TX 78410
(361)
5 & 6
Kilgore
2005 North State Highway 42 Kilgore, TX 75662
(903) 7B
Abilene
3444 North First St, Suite 600 Abilene, TX 79603
(325) 7C
San Angelo
622 South Oakes St, Suite J San Angelo, TX 76903
(325)
8 & 8A
Midland
10 Desta Dr, Suite 500 E Midland, TX 79705
(432) 9
Wichita Falls
5800 Kell Blvd, Suite 300 Wichita Falls, TX 76310
(940) 10
Pampa
200 West Foster, Room 300 Pampa, TX 79065
(806)

57. Travis Baer, P.E.
District Director – San Antonio District Office
Phone: (210) (x15)