Section 460.865. Taking of gas.

Rule 15. (1) Maximum withdrawal:

(a)   General. The maximum withdrawal during any 12 months'  period   from any gas well shall average on a daily basis not more than 17 1/2% of the current approved absolute daily open flow capacity of such well, such withdrawal being the allowable maximum annual withdrawal. Whenever a new open flow capacity test is made and approved by the commission, such new test will, upon notice to the producer and transmitter,  become   immediately effective in determining the maximum withdrawal. In

order to provide for a variable  seasonable  demand,  the  following  percentages of  the last determined allowable maximum annual withdrawal may be taken, but not exceeded: In any 6 consecutive months, 66%; in any 1 month, 12 1/2%; and in any 1 day, .6 of 1%.

(b)    Special. The maximum withdrawal from Monroe gas wells located in the Walker-Talmadge oil field shall not exceed 50% of the  last   officially measured open flow of each such well.

(c)   Special. The maximum withdrawal during any 12 months'  period  from any gas well in the Howell field shall average on a daily basis not more than 25% of the current approved absolute daily open flow capacity of such well, such withdrawal being the allowable maximum annual withdrawal.   The allowance for seasonable variation in the rate of take as set forth in subrule (1)(a) shall continue to be based on the annual maximum allowable withdrawal determined as 17 1/2% of the open flow, unless the allowance so determined shall be less than 25% in which case the 25%  allowance shall prevail.

(d)  Special. When a dry natural gas field has been depleted to such an extent that production has become merely a stripper operation, the commission may approve different maximum withdrawals than required by subrule (1)(a) if it finds that such different withdrawals will conserve gas and, in its opinion, support commercial production for  a longer  period than would otherwise be the case.

(2)   Acreage  factor.  The  acreage  or  area  from   which  any  well   is considered to produce or draw gas shall enter into the determination of the take of gas from such well, a well in the center of a square 40-acre tract of land being considered as unity, with an acreage factor of 1. The factor for a well producing from a square or rectangular tract of any area other than 40 acres shall be the area in acres  allotted  to such well divided by 40, and the factor for a well in the center of a base drilling or producing unit of 160 acres of land shall be 4; provided that:

(a)   No side of the area allotted a well shall be farther from the well than the distance from the center point of the production area to the most distant side thereof, excepting that:

(i)   In the case of a discovery well, this distance may be increased by as much as 330 feet for a well located on a 40-acre tract of land, and 990 feet for a well located on a 160-acre tract of land.

(ii)    In the case of a well drilled off center of a production area because of topographical or other physical conditions, this distance may be increased by not to exceed 25%  upon  presentation  to  the    commission   of satisfactory proof, supported by a map and a written statement showing that a center location was prohibited. Every reasonable  effort  shall   be made to drill wells at center locations.

(iii)    The 16 gas wells drilled, or in the process of drilling,   in  the Cannon Creek gas field in the counties of Missaukee and Kalkaska prior to September 15, 1950, shall each be entitled to an acreage factor of 4,  as long as the producing unit assigned to each is 160 acres,  notwithstanding any other provisions of this rule.

(b)   In addition to the above provisions, acreage factors shall be subject to the following limitations:

(i)   The length of a production area shall not be greater than twice  its width.

(ii)   Production areas shall not overlap.

(iii)   Any production area shall be entirely within the leasehold  (or leaseholds in case 2 or more are pooled) on which the  well   to   which   it refers is drilled.

(iv)   No acreage factor shall exceed 4 except in the  Kawkawlin-Salina  gas field, as it is now or may be hereafter defined by the supervisor of wells, wherein it may be increased to 16.

(v)   The acreage factors for wells located on tracts that are neither square nor rectangular shall be determined by the  commission  in   each individual case, following, insofar as they are  applicable,   the   general principles applied herein.

(vi)   In the following fields which have been developed   with  40-acre drilling units, there shall be no acreage factor greater than 1, unless the operator or leaseholder shall secure and  file   with  the  commission written consent from all direct and diagonal offset 40-acre leaseholders upon whose holdings there are producing or productive gas wells.

Austin     Crystal     Six Lakes   Broomfield     New Haven-Sumner Clare (McKay)

West Vernon Vernon

(vii)   No well drilled on a 40-acre location in any of the above fields shall each be entitled to an acreage factor greater than 1 if such well is directly offset by more than 2 producing or productive wells  with   acreage factors of 1 or less.

(c)  Traverse oil wells drilled in the Walker-Talmadge field prior to February 25, 1942, shall, when either deepened to produce gas from the Monroe formation or plugged back to produce gas from the Berea formation, receive acreage factors as provided by the attached map entitled plate 2a, but any Monroe or Berea gas wells drilled from the surface of the ground in the Walker-Talmadge oil field subsequent to February 25, 1942,  shall receive acreage factors based on the usual provisions as stated  in  subrule (2)(a) and (b) of this rule.

(3)   Minimum take:

(a)   The minimum allowable take of gas from any well shall  be  500,000 cubic feet per month, except under the following conditions:

(i)   In no case shall the total gas taken from a well be larger than provided for in subrule (1).

(ii)    The average minimum volume of gas production monthly per well shall be in conformity with the market demand when such market demand is not high enough to permit the taking of the full minimum allowable from  all  wells. Each operating month as used by the gas purchasers in a field shall be considered separately in administering   the  minimum  take  provisions herein, and, if the total sale or take of gas from  any  field  or  pool during any such monthly period is not sufficient to permit the  taking   of the full minimum allowable from each well, there shall be  no   carryover or balance of gas to be taken from such well, field, or pool  under  these minimum take provisions because of such deficiency in total market demand.

(iii)   The minimum take of gas from any well  having  an  acreage  factor other than 1, as provided for in subrule (2), shall be modified or adjusted by multiplying the minimum allowable take of 500,000 cubic feet by such acreage factor, the resulting minimum take to be  subject  to  the restrictions in subrule (3)(a)(i) and (ii) of this rule.

(b)   The allowable take from any well that is not capable of producing  as much gas as its allowable minimum under the operating conditions of the field in which it is located shall be the total amount of gas that such well is capable of producing under such conditions.

(c)   For fields or pools wherein reservoir conditions and gas  withdrawal operations do not permit the practical application of subrule  (3)(a), special procedures applicable to such special conditions may be authorized by the commission, provided that  any  such  special   procedure  shall accomplish the  intents  and  purposes  of  the rule as   closely  as   is practicably possible.

(4)   Ratable taking or gas proration: All gas produced from a field or pool in excess of the minimum allowable provided for in subrule (3) shall be taken ratably from all wells that are capable of producing more than their minimum allowable take. Such excess shall be divided among such wells in proportion to their modified open flow capacities or any  other   method determined by the commission to  be  equitable   or less wasteful,  except that in no case shall the total gas taken from  a  well  be  larger than provided for in subrule (1).

(5)   Proration schedules:

(a)     Proration schedules and orders shall be prepared and issued by  the commission. Such orders shall be revised not to exceed once each month, the effective date of any revision being the first day of the monthly period used by the gathering company,  transmitter,   or  purchaser    in accounting for gas.

(b)    No proration schedule or production order affecting any well shall be made until after well connection permit has been issued.

(6)   Well conditioning requirements:

(a)  A well to go on proration or production shall have complied with the following requirements: The well and  wellhead  connections   shall  be installed in accordance with standards prescribed  in  R  460.860   of  this order. The wellhead connections shall be tight and free from leakage. If there is evidence of underground leakage of gas or of water intrusion,  the well shall be repaired to the satisfaction of the commission.

(b)    In cases of wells where leaks, other defective well conditions, or water intrusion develop after a well has been  placed   on   proration,   the

operator shall make repairs promptly and   to  the  satisfaction  of   the commission, and, if repairs have not been made within a reasonable time as determined by the commission,   then  such  a  well  shall  be   taken   off proration and shall not be returned to proration until the commission  has been notified that repairs have been made and has  approved   a  return   to proration.

(c)   After any gas well has been placed on proration, no deepening  or plugging back work shall be started until the operator has notified the commission and the gas transmitter or purchaser,   in  writing,  and    until that operator has secured the approval, in writing, of the supervisor of wells of the department of conservation, of the deepening or plugging back plan, in conformity with the rules and regulations of such supervisor  of wells.

(d)   A well that is being either deepened or plugged back may be removed from proration:

(i)    If, in the judgment of the commission, the showing indicates that the operation may affect the open flow capacity of the well.

(ii)   If the operation is to consume a period of 10 days or more.

(iii)    If the wellhead fittings remain altered in such a  manner  that reconnection with a pipe line cannot be made within  10   days    after   such fittings are removed.

(e)    A well that has been removed from proration because of deepening or plugging back operations shall not be returned to proration until it has been placed in condition to resume production in a manner satisfactory to the supervisor of wells of the department of conservation and to the commission, and the gas transmitter or purchaser have been  so   advised  in writing.

History: 1979 AC.