Okla. Stat. tit. 52, § 52-29: Production levels of gas wells - Rulemaking - Hardship

wells - Field rules.

A. Every corporation, joint stock company, limited

copartnership, partnership or other person now or hereafter claiming

or exercising the right to produce natural gas within the limits of

this state, as owner, lessee, licensee, or by virtue of any other

right or claim is hereby prohibited from producing from any gas well

an amount in excess of that prescribed by the Oklahoma Corporation

Commission.

B. Except as otherwise provided in this section, the

Corporation Commission shall have the power and authority to

promulgate production rules from time to time for all natural gas

wells producing within this state, or for such categories of natural

gas wells producing within this state as the Commission may deem

appropriate, establishing levels of production upon a finding that

the levels of production so established will be sufficient to

prevent waste as the same is defined in Section 86.3 of this title

and will protect the interests of the public against production of

the natural gas reserves underlying this state in amounts in excess

of the reasonable market demand therefor.

C. For thirty (30) months from the date of first production, a

discovery gas well, as defined in this subsection, subject to the

provisions of this section, shall have a production allowable which

shall be the greater of one thousand three hundred (1,300) MCFD or

sixty-five percent (65%) of the absolute open flow (AOF) as

specified by the Corporation Commission. Such discovery well

allowable shall not be available for any discovery gas well wherein

two (2) or more separate common sources of supply are commingled and

one (1) common source of supply would not qualify a new gas well as

a discovery gas well, as defined in this section.

Drilling and spacing units which are downspaced after June 1,

1997, shall not qualify for the discovery gas well allowable.

For purposes of this subsection, "discovery gas well" shall mean

a new gas well, which is not an off-pattern well, which is the first

well completed in a common source of supply within a drilling and

spacing unit and is at least one (1) mile from all existing gas

wells which are completed in the same common source of supply. In

the absence of spacing, a discovery well shall be the first well in

the governmental section completed in a common source of supply,

provided that the discovery gas well shall not be drilled closer

than one thousand three hundred twenty (1,320) feet from the

boundaries of the governmental section and is at least one (1) mile

from all existing gas wells which are completed in the same common

source of supply.

Allowables shall not apply, regardless of unit size, in the

instance of production of gas by reservoir dewatering to extract

said gas from reservoirs having initial water saturations at or

above fifty percent (50%).

D. The authority granted to the Corporation Commission by this

section is in addition to that provided for in Section 239 of this

title.

E. The Corporation Commission may, for good cause shown under

the exigencies of a particular case and after appropriate notice and

hearing, establish a production level different from the levels

provided by this section or established by rule promulgated by the

Corporation Commission.

F. Production rules promulgated by the Corporation Commission

pursuant to the authority granted in subsection B of this section

shall be promulgated pursuant to Article I of the Administrative

Procedures Act, Sections 250.3 through 308.2 of Title 75 of the

Oklahoma Statutes, including the provisions contained therein

prescribing the required notice and hearing for rulemaking.

G. The provisions of subsection A of this section and

production rules promulgated by the Corporation Commission pursuant

to subsection B of this section shall not supersede or invalidate

f the Administrative

Procedures Act, Sections 250.3 through 308.2 of Title 75 of the

Oklahoma Statutes, including the provisions contained therein

prescribing the required notice and hearing for rulemaking.

G. The provisions of subsection A of this section and

production rules promulgated by the Corporation Commission pursuant

to subsection B of this section shall not supersede or invalidate

the provisions of any rule or order of the Corporation Commission

establishing production levels for natural gas from a well which has

been expressly authorized by Corporation Commission order to produce

at a specified rate applicable only to that well where the basis for

the rate established is based upon a determination by the

Corporation Commission that reasonable cause exists to expect that

production below the rate would damage the well and cause waste, a

so-called "hardship well", or establishing field rules under Section

239 of this title governing the taking of gas from a specified

common source of supply or field.