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Part 550: Promulgation and Enforcement Of Rules and Regulations

(Statutory authority: Environmental Conservation Law, §§ 23-0305[8] [9])

[Effective date: May 28, 1985]

[page 1 of 1]

Contents:

Sec.

§550.1 Policy

The Department of Environmental Conservation, having been entrusted with the basic responsibility for administering to and regulating activities relative to the natural resources of oil and gas within the State, does hereby promulgate the following rules and regulations. These have been formulated after consultation with landowners, producers and other interested persons involved and a public hearing relative thereto. The rules have as their objectives:

(a) the fostering, encouragement and promotion of the development, production and utilization of the natural resources of oil and gas in such a manner as will prevent waste;

(b) the operation and development of oil and gas properties in such a manner that a greater ultimate recovery of oil and gas may be had;

(c) full protection of the correlative rights of all owners and the rights of all persons, including landowners and the general public;

(d) similar provisions for the underground storage of gas.

§550.2 Organization

(a) To carry out the functions outlined in section 550.1 of this Part, the Department of Environmental Conservation has created a Bureau of Mineral Resources.

(b) The Bureau of Mineral Resources is headed by a chief who is responsible for the administration and enforcement of all rules, regulations, orders and amendments thereof of the Department of Environmental Conservation relating to the exploration and drilling for, and production, transportation, purchase, processing and storage of oil and gas and the prevention of any pollution resulting therefrom.

(c) The chief of the Bureau of Mineral Resources shall be responsible for the directing, supervising and proper performance of the Bureau of Mineral Resources.

(d) The chief of the Bureau of Mineral Resources is aided by an assistant chief who acts in the former's absence. At those times, the assistant chief bears both the responsibilities and authorities of the chief.

(e) To carry out field responsibilities, the Bureau of Mineral Resources is organized into several regions, each headed by a regional supervisor, who acts as the chief's deputy in all relevant matters.

§550.3 Definitions

Unless the context otherwise requires, the words defined below shall have the following meaning when used in the rules, regulations, orders or amendments thereof of the Department of Environmental Conservation relative to the natural resources of oil and gas:

(a) Administrative basis shall mean an action taken by the department without first holding public hearing relative thereto.

(b) Barrel shall mean 42 U.S. gallons.

(c) Blow-out shall mean an uncontrolled, sudden or violent escape of oil or gas as from a drilling well when high formation pressure is encountered.

(d) Blow-out preventer shall mean a device attached immediately above the casing which can be closed and shut off the hole should a blow-out occur.

(e) Bridge shall mean an obstruction placed in a well at any specified depth.

(f) Brine is synonymous with salt water.

(g) Casinghead gas shall mean any gas or vapor, or both gas and vapor, indigenous to an oil stratum and produced from such stratum with oil.

(h) Chief shall mean the chief of the Bureau of Mineral Resources of the Department of Environmental Conservation.

(i) Common reservoir is synonymous with pool.

(j) Completion date shall mean that date when a well is first capable of producing oil or gas into tanks or pipelines, or in the case of a dry hole, the date on which plugging is completed.

(k) Condensate shall mean liquid hydrocarbons that were originally in the gaseous phase in the reservoir and liquids recovered by surface separation from natural gas.

(l) Converting shall mean any operation whereby the status of a well is changed from producing to input or vice versa.

(m) Cubic foot of gas shall mean the volume of gas contained in one cubic foot of space at a standard pressure and temperature base. The standard pressure base for the application of these rules and regulations shall be 14.73 pounds per square inch absolute and the standard temperature base shall be 60 degrees Fahrenheit.

(n) Day shall mean a period of 24 consecutive hours.

(o) Department shall mean the Department of Environmental Conservation.

(p) Field shall mean the general area underlaid by one or more pools.

(q) Gas shall mean all natural gas, manufactured, mixed and by-product gas, and all other hydrocarbons not herein defined as oil or condensate.

(r) Gas-oil ratio shall mean the ratio of the volume of gas produced in standard cubic feet to each barrel of oil produced concurrently during any stated period.

(s) Input well shall mean any well drilled, deepened, plugged back or converted in any pool, or underground stratum or horizon for the purpose of injecting, disposing or storing fluids or gaseous substances.

(t) Intake well is synonymous with input well.

(u) Lease shall mean a tract or tracts of land which by virtue of an oil and gas lease, fee or mineral ownership, a drilling, pooling or other agreement, a rule, regulation, order or amendment thereof of a governmental authority, or otherwise, constitutes a single tract or leasehold estate for the purpose of the development or operation thereof for oil or gas or both.

(v) Mouse hole shall mean any shallow service hole dug in connection with the drilling of a well for the purpose of holding joints of drill pipe or other tubular goods to facilitate the connection of successive joints thereof.

(w) Multiple completion shall mean a mechanical arrangement permitting the segregated injection and/or production into or from two or more pools or zones through a single well bore.

(x) Native oil and gas shall mean the total volume of oil and gas indigenous to and still remaining in the storage reservoir at the time injection of extraneous gas is started. This includes the volume of both commercially recoverable native oil or gas, if any, and commercially unrecoverable native oil or gas within the storage reservoir.

(y) Offset operator as applied to any lease or lands in these rules shall mean the owner or operator of a lease or lands touching, adjacent or contiguous to such lease or lands.

(z) Oil shall mean crude petroleum oil and all other hydrocarbons, regardless of gravity, that are produced at the wellhead in liquid form by ordinary production methods and that are not the result of condensation of gas.

(aa) Oil and gas shall mean oil or gas or both.

(ab) Operator shall mean any person who is in charge of the development of a lease or the operation of a producing well.

(ac) Outside casing shall mean a string of casing within which is contained another string of casing extending to the surface.

(ad) Owner shall mean any person who has the right to drill into and produce from a pool and to appropriate the oil or gas he produces therefrom either for himself or others or for himself and others.

(ae) Person shall mean and include any natural person, corporation, association, partnership, receiver, trustee, executor, administrator, guardian, fiduciary, or other representative of any kind, and includes any department, agency, or instrumentality of the State or any governmental subdivision thereof. The masculine gender, in referring to a person, includes the feminine and the neuter genders.

(af) Plugging and abandoning shall mean the permanent abandonment of a well bore including the placing of all bridges, plugs and fluids therein and the restoration of the surface in the immediate vicinity to a reasonable condition comparable with the adjacent terrain.

(ag) Pollution shall mean the throwing, discharging, draining, running, flowing, or pumping of any organic or inorganic materials onto the surface lands or waters or into subsurface waters in such volume or manner as to make these lands and waters unfit for human or animal consumption or usage.

(ah) Pool shall mean an underground reservoir containing a common accumulation of oil and gas or both. Thus each zone of a structure which is completely separated from any other zone in the same structure is a pool.

(ai) Potable fresh water shall mean any water containing less than 250 parts per million of sodium chloride or 1,000 parts per million of total dissolved solids. (aj) Potential shall mean the actual or computed volume of oil or gas that a well can produce in a day as determined by a test made in conformity with methods acceptable to the department.

(ak) Pressure maintenance shall mean the injection of gas, water or other fluids into oil or gas reservoirs to maintain pressure or retard pressure decline in the reservoir for the purpose of increasing the recovery of oil or other hydrocarbons therefrom.

(al) Producer shall mean the owner of a well or wells capable of producing oil or gas or both.

(am) Producing well shall mean any well capable of the production of oil or gas or both.

(an) Product shall mean any commodity made from oil or gas, and includes refined oil, crude tops, topped crude, processed crude, processed crude petroleum, residue from crude petroleum, cracking stock, uncracked fuel oil, fuel oil, treated crude oil, residuum, gas oil, casinghead gasoline, natural-gas gasoline, kerosene, benzine, wash oil, waste oil, blended gasoline, lubricating oils, blends or mixtures of oil with one or more liquid products or by-products derived from oil or gas, and blends or mixtures of two or more liquid products or by-products derived from oil, or gas, whether enumerated herein or not.

(ao) Protect correlative rights shall mean that the action or regulation by the department should afford a reasonable opportunity to each person entitled thereto to recover or receive the oil or gas beneath his tract or tracts or the equivalent thereof without being required to drill unnecessary wells or to incur other unnecessary expense to recover or receive such oil or gas or its equivalent.

(ap) Proved oil or gas land shall mean that area which has been shown by development or geological information to be such that additional wells drilled thereon are reasonably certain to be commercially productive of oil or gas, or both.

(aq) Purchaser shall mean any person who directly or indirectly purchases or takes production for his account.

(ar) Rat hole shall mean any shallow service hole dug in connection with the drilling of a well to hold the kelly, drive stem, grief stem, bit, bailer or other related drilling equipment.

(as) Rules and regulations shall mean the body of rules, regulations, orders and amendments thereof promulgated by the department, either on an administrative basis or after public hearing, in carrying out its function of administering to and regulating activities relative to the natural resources of oil and gas.

(at) Salt water shall mean any water containing more than 250 parts per million of sodium chloride or 1,000 parts per million of total dissolved solids.

(au) Surface casing shall mean casing extending from the surface through the potable fresh water zone.

(av) Temporary abandonment shall mean the discontinuation of operations on or the closing in of a well not produced on a commercial basis without conducting plugging and abandoning operations.

(aw) Unit shall mean two or more leases which have been combined in such a manner that the combined leases may be regarded as a common lease.

(ax) Waste shall mean:

(1) physical waste, as that term is generally understood in the oil and gas industry;

(2) the inefficient, excessive, or improper use of, or the unnecessary dissipation of reservoir energy;

(3) the locating, spacing, drilling, equipping, operating, or producing of any oil or gas well or wells in a manner which causes, or tends to cause, reduction in the quantity of oil or gas ultimately recoverable from a pool under prudent and proper operations, or which causes or tends to cause unnecessary or excessive surface loss or destruction of oil or gas;

(4) the inefficient storing of oil or gas;

(5) the flaring of gas produced from an oil or condensate well after the department has found that the utilization thereof, on terms that are just and reasonable is, or will be within a reasonable time, economically feasible.

(ay) Water flooding shall mean the injection of water into a pool or reservoir through one or several wells of volumes of water for the purpose of increasing the recovery of oil therefrom.

(az) Well log shall mean the written record progressively describing the strata and any oil, gas or water encountered in drilling the well together with such additional information as volumes, pressures, rate of fill up, water depths, caving strata, casing record, etc., as is usually recorded in the normal procedure of drilling. The term shall include, if taken or performed, any electrical or other surveys and the details of all cores, and all drill stem tests, including depth tested, cushion used, significant time intervals, flowing and shut-in pressures, and recoveries.

(ba) Wildcat well shall mean a well drilled to discover a previously unknown pool or a well drilled one mile or more from a producing well. The term shall include the well commonly designated in industry as a core hole or strat test.

§550.4 Hearings and emergency orders

(a) Except as hereinafter provided, the department will promulgate no rule, regulation, order or amendment thereof, except in an emergency, without a public hearing upon at least 10 days notice, exclusive of the date of the service.

(b) The public hearing shall be held at such time and place as may be prescribed by the department. The hearing shall be conducted by the director or such of his staff as he shall designate. Testimony shall be under oath. The proceedings of all such hearings shall be recorded by a reporter designated by the department and a transcript of same shall be prepared and filed by such reporter as a part of the department's records. Alternatively, the proceedings may be recorded by tape or other mechanical device with the recording or a written transcript thereof forming the department record.

(c) The notice of hearing, which may be by personal service, newspaper publication or by mail, will specify the purpose, style and number of the proceedings, as well as the time and place of the hearing.

(d) In calling a hearing, the department may act upon its own motion or upon the application of any interested person, with hearings called in the latter instance to be scheduled without undue delay.

(e) The department will make its ruling within 60 days after the conclusion of any hearing.

(f) Except as hereinafter provided, unless there is a significant indication of changed conditions, the department will not hold a hearing on any matter which has already been the subject of a prior hearing.

(g) The department may further enter an emergency order without notice or hearing where it is demonstrated that immediate action is necessary to prevent waste, pollution or to protect correlative rights. No emergency order shall be effective for more than 15 days.

§550.5 Access to properties and records

(a) The department, including its employees, agents and representatives, shall have the right at all reasonable times to go upon or into and inspect any oil and gas property, tank farm, pump station, pipeline, gasoline plant, refinery and underground gas storage project for the purpose of making any investigation or tests to ascertain whether the provisions of the rules and regulations of the department are being complied with.

(b) The department, including its employees, agents and representatives, shall further have access at all reasonable times to all well records, wherever located, and shall be permitted entrance upon or into any lease or property for the purpose of inspection of the records of wells. If so requested by the owner or operator, information so obtained shall not be specifically disclosed to any persons other than employees, agents and representatives of the department, but may be used in any legal or official proceedings to which the department is a party, either directly, or as an advisor to another State or Federal agency.

§550.6 Offenses and penalties

Violations, evasions, falsifications, omissions, destructions, alterations, mutilations, and such other offenses as may be proved in connection with the rules, regulations, orders or amendments thereof of the department shall be punishable by fine and/or imprisonment as well as being subject to such civil penalties as are provided by law.

§550.7 Scope of rules

(a) The following rules and the forms referred to therein (including the instructions on said forms) shall be statewide in application unless otherwise specifically stated.

(b) Special rules pertaining to specific pools, fields, or areas will be issued when required and shall prevail over the statewide rules if in conflict therewith.