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(continued)

Stat. Auth.: ORS 520
Stats. Implemented: ORS 520.095
Hist.: GMI 1, f. 1-27-54; GMI 4-1985, f. & ef. 11-20-85; GMI 2-1995, f. & cert. ef. 3-10-95

632-010-0157

Exceptions to Special Rules

(1) The board may grant exception to Special Rules after holding a hearing when necessary on the basis of geology, productivity, topography, or environmental protection.

(2) Before granting an exception for a well proposed within the set-back distance set forth in a Special Rule, the department shall notify mineral owners in the spacing unit where the well is proposed to be drilled and in the adjacent spacing unit(s) within the set-back distance. Any such mineral owner may request a hearing by the board to consider the application. If no request for a hearing is made in writing within twenty (20) days of sending of notice, the department may issue a permit for the proposed well. If the applicant is the only mineral owner in the adjacent spacing units or has leased the right to drill from the mineral owner(s) in the adjacent spacing units and has obtained a waiver in writing from these mineral owners to allow the drilling, the department may approve the application immediately.

(3) If any such mineral rights owner requests a hearing, it shall be held within 30 days of receipt of request, provided the request is made within 20 day period specified in section (2) of this rule. Any order by the State Geologist or board granting an exception to Special Rules under this rule shall include provisions to prevent the production from the proposed well in excess of its just and equitable share of oil and/or gas in the the pool.

(4) If a permittee proposes to change the proposed location of a well such that it will not comply with the set-back distances in a Special Rule, an exception necessary for the permit to remain valid may be granted according to the process above.

(5) Whenever a uniform spacing plan has been prescribed for any pool, exceptions may be permitted if the board finds, after notice and hearing, that conditions within the pool are such that the Special Rules would be impracticable.

Stat. Auth.: ORS 516.090, ORS 520.095, ORS 522.019, ORS 522.305, ORS 522.405, ORS 522.434 & ORS 522.545
Stats. Implemented: ORS 520.095
Hist.: GMI 2-1995, f. & cert. ef. 3-10-95

632-010-0159

Underground Reservoirs for Natural Gas Storage

Rules providing for well spacing and proration of gas shall not apply to gas storage wells, injection wells or monitor wells.

Stat. Auth.: ORS 520
Stats. Implemented: ORS 520.095
Hist.: GMI 3-1980, f. 2-29-80, ef. 3-1-80

632-010-0161

Compulsory Integration Orders

(1) Definitions. For purposes of this rule:

(a) "Costs" include:

(A) "Drilling costs" means all reasonable costs and expenses of drilling, redrilling, reworking, deepening, plugging back, testing and completing the well; and

(B) "Production costs" means all reasonable on-site costs and expenses of production and production equipment for the well including wellhead, but not pipeline costs and not overhead.

(b) "Constructive agreement". See definition of participating owner below;

(c) "Participating owner" means each owner in the spacing unit who prior to commencement of drilling operations entered into a written agreement with the operator to share costs, production and entitlements as provided in subsection (6)(c) of this rule. However, where no such agreement has been reached, an owner who, prior to drilling tendered the operator a written agreement to pay not less than the owners pro rata share of costs attributable to his interest, as computed in section (2) of this rule, in the spacing unit in exchange for a share of production and entitlements as provided in subsection (6)(c) of this rule, shall be considered to be a participating owner and to have entered into a constructive agreement to that effect.

(2) Timing. In the absence of a voluntary integration agreement for the entire spacing unit, the board shall enter an order integrating all mineral rights ownership interests in a spacing unit pursuant to ORS 520.220(2), at any time following the entry of an order establishing the spacing unit for a pool pursuant to ORS 520.210.

(3) Determination of Interests. A compulsory integration order shall determine the interest of each mineral rights owner in the spacing unit by dividing:

(a) The number of surface acres subject to such owner's mineral rights located in the spacing unit by;

(b) The total number of surface acres in the spacing unit.

(4) Content. The compulsory integration order shall provide for the drilling, if necessary, and operation of the well on the spacing unit, for the sharing of production, and for the payment of costs.

(5) Effective Date. The compulsory integration order shall be effective as of the date of initial production unless the Board establishes another date.

(6) Allocation of Costs and Earnings:

(a) The compulsory integration order shall provide that the operator and participating owners shall be treated as an entity. The operator-participating owners' entity shall be entitled to share production and pay costs, both in proportion to the total interest, as computed under section (2) of this rule, of the operator-participating owners' entity in the spacing unit. The express and constructive agreements between the operator and participating owner(s) shall control the allocations of production and costs attributable to the operator-participating owners' entity;

(b) The compulsory integration order shall provide that each non-participating owner shall be entitled to a full share in production in proportion to his interest in the spacing unit subject to his royalty obligations, if any, and subsection (c) of this section;

(c) In addition to the above, the compulsory integration order shall provide that the operator-participating owners' entity first shall receive from each non-participating owner's share of production an entitlement in the amount of:

(A) Three hundred percent as a maximum of the amount of drilling costs attributable (pro rata on the basis of interests, as computed under section (2) of this rule) to the non-participating owner's interest; and

(B) Three hundred percent as a maximum of production costs attributable to the non-participating owner's interest on the same basis. Each such entitlement shall be allocated between the members of the operator-participating owners' entity according to their actual and constructive agreements.

Stat. Auth.: ORS 520
Stats. Implemented: ORS 520.095
Hist.: GMI 3-1982, f. & ef. 8-16-82; GMI 4-1985, f. & ef. 11-20-85; GMI 6-1990, f. & cert. ef. 12-5-90; GMI 2-1995, f. & cert. ef. 3-10-95

632-010-0162

Illegal Production

No purchaser, producer, operator, or any other person shall produce any crude oil, natural gas, or waste oil from any spacing unit or pool in this state except in accordance with the rules, regulations, and orders of the board.

Stat. Auth.: ORS 520
Stats. Implemented: ORS 520.095
Hist.: GMI 1, f. 1-27-54; GMI 2-1995, f. & cert. ef. 3-10-95

632-010-0163

Limitation of Production

In the absence of unitization, whenever the board, after notice and hearing, finds that waste as defined in ORS 520.015, is occurring or is imminent in any oil or gas field or pool and that the production of oil or gas from such field or pool should be limited to prevent waste, then the board shall issue an order limiting production from such field or pool and specify rules applicable thereto for the allocation or distribution of allowable production therefrom as provided for in ORS 520.005(11) and 520.015.

Stat. Auth.: ORS 520
Stats. Implemented: ORS 520.095
Hist.: GMI 3-1980, f. 2-29-80, ef. 3-1-80; GMI 6-1990, f. & cert. ef. 12-5-90; GMI 2-1995, f. & cert. ef. 3-10-95

632-010-0164

Commingling of Production Prohibited

The production from one pool shall not be commingled with that from another pool in the same well before delivery to a purchaser, unless otherwise approved by the board.

Stat. Auth.: ORS 520
Stats. Implemented: ORS 520.095
Hist.: GMI 1, f. 1-27-54; GMI 6-1990, f. & cert. ef. 12-5-90; GMI 2-1995, f. & cert. ef. 3-10-95

632-010-0165

Allocation of Gas Pursuant to Special Pool Rules

Whenever the full production from any pool producing natural gas is in excess of the market demand for gas from that pool, any operator or interest owner pursuant to ORS 520.115 may petition the board for a hearing and an order establishing a method of determining the market demand from the pool and of distributing that demand among the wells producing therefrom.

Stat. Auth.: ORS 520
Stats. Implemented: ORS 520.095
Hist.: GMI 3-1980, f. 2-29-80, ef. 3-1-80; GMI 6-1990, f. & cert. ef. 12-5-90; GMI 2-1995, f. & cert. ef. 3-10-95

632-010-0166

Reports by Purchasers and Producers

(1) Purchasers: Each purchaser or taker of any oil or gas from any well, lease, or pool shall on or before the last day of each month succeeding the month in which the purchasing or taking occurs, file with the department on a form furnished by the department or other form acceptable to the department, a signed statement of all oil or gas purchased, or taken from any such well, lease, or pool during the preceding month.

(2) Producers: The producer or operator of each and every well or spacing unit shall on or before the last day of each month succeeding the month in which the production occurs file with the department on a form furnished by the department, or other form acceptable to the department a signed statement by an officer of the producer-corporation or operator, showing the amount of production made by each well.

(3) If the purchaser and the producer are the same, only one statement need be submitted.

(4) Information submitted in accordance with sections (1), (2), and (3) of this rule shall not be confidential.

Stat. Auth.: ORS 520
Stats. Implemented: ORS 520.095
Hist.: GMI 1, f. 1-27-54; GMI 4-1985, f. & ef. 11-20-85; GMI 6-1990, f. & cert. ef. 12-5-90; GMI 2-1995, f. & cert. ef. 3-10-95; DGMI 2-1999, f. & cert. ef. 8-30-99

632-010-0167

Maximum Efficient Rate Hearings

The board on its own motion may, or at the request of any interested party shall, hold a hearing to determine the maximum efficient rate at which any pool in the state can produce oil and gas without waste.

Stat. Auth.: ORS 520
Stats. Implemented: ORS 520.095
Hist.: GMI 3-1980, f. 2-29-80, ef. 3-1-80; GMI 6-1990, f. & cert. ef. 12-5-90; GMI 2-1995, f. & cert. ef. 3-10-95

632-010-0168

Use of Earthen Reservoirs

Oil shall not be stored or retained in earthen reservoirs or in open receptacles.

Stat. Auth.: ORS 520
Stats. Implemented: ORS 520.095
Hist.: GMI 1, f. 1-27-54

632-010-0169

Natural Gas Policy Act Determination Procedures

(1) The operator shall initiate all category determinations under the Natural Gas Policy Act of 1978 by filing with the State Geologist single legible copies of the documentation described below. A co-lessee may initiate such a determination if the operator refuses to take action upon written request of the operator or State Geologist:

(a) For new onshore reservoirs, an application under Section 102(c)(1)(C) of the Natural Gas Policy Act of 1978 shall be accompanied by:

(A) A completed Federal Energy Regulatory Commission Form 121;

(B) A completed application for permit to drill;

(C) Geological information sufficient to support a determination that the reservoir is a new onshore reservoir including all well logs, results of well potential tests, geologic maps and cross-sections showing the extent of the reservoir as known at the time of application, gas analyses, well completion reports, and directional drilling surveys if performed;

(D) If a board order or rule designates a new reservoir or grants new field status to a reservoir in which a well is completed, the applicant may reference such order or rule in lieu of paragraph (C) of this subsection;

(E) Well summary report (completion report);

(F) Monthly production reports, if there has been production;

(G) A statement by the operator under oath:

(i) That he has made, or has caused to be made pursuant to his instructions, a diligent search of all records (including but not limited to production, state severance tax, and royalty payment records) which are reasonably available and contain information relevant to the determination of eligibility describing the search made, the records reviewed, the location of such records, and any records which he believes may contain information relevant to the determination but which he has determined are not reasonably available to him;

(ii) That on the basis of the results of this search and examination, he has concluded that to the best of his information, knowledge, and belief, the natural gas to be produced and for which he seeks determination is from a new onshore reservoir;

(iii) That he has no knowledge of any other information not described in the application which is inconsistent with his conclusion; and

(iv) The applicant, in his statement under oath, shall also answer, to the best of his information, knowledge and belief, and on the basis of the results of his search and examination, the following questions:

(I) Was natural gas produced in commercial quantities from the reservoir prior to April 20, 1977?

(II) Was the reservoir penetrated before April 20, 1977, by an old well from which natural gas or crude oil was produced in commercial quantities from any reservoir?

(III) If the question in sub-subparagraph (II) of this subparagraph is answered in the affirmative, could natural gas have been produced in commercial quantities from the reservoir before April 20, 1977?

(IV) If the natural gas is to be produced through an old well, were suitable facilities for the production and delivery to a pipeline of such natural gas in existence on April 20, 1977?

(b) For new natural gas, an application under section 102(c)(1)(B) of the Natural Gas Policy Act of 1978 shall be accompanied by:

(A) A completed Federal Energy Regulatory Commission Form 121;

(B) A completed application for permit to drill;

(C) Well summary reports (completion reports) and logs on the subject well;

(D) Monthly production reports, if there has been production;

(E) A statement by the applicant, under oath:

(i) That he has made or has caused to be made pursuant to his instructions, a diligent search of all records (including but not limited to production, state severance tax, and royalty payment records) which are reasonably available and contain information relevant to the determination of eligibility; describing the search made, the records reviewed, the location of such records, and a description of any records which he believes may contain information relevant to the determination but which he has determined are not reasonably available to him;

(ii) That on the basis of the results of this search and examination, he has concluded that to the best of his information, knowledge and belief, there is no marker well within a two and one-half (2.5) mile radius of the well for which he seeks a determination which has a completion location less than 1,000 feet above the completion location of the new well; and

(iii) That he has no knowledge of any information not described in the application which is inconsistent with his conclusion.

(c) For new onshore production wells an application under Section 103 of the Natural Gas Policy Act of 1978 shall be accompanied by:

(A) A completed Federal Energy Regulatory Commission Form 121;

(B) A completed application for permit to drill;

(C) A plat map showing the location of the subject well. If the subject well is within a spacing unit, the map shall also show the boundaries of the unit and any existing wells in the unit;

(D) Well summary report (completion report) and logs on the subject well and directional surveys, if performed;

(E) A statement by the applicant, under oath:

(i) That the surface drilling of the well for which he seeks a determination was begun on or after February 19, 1977;

(ii) That the well satisfies any applicable federal and state well spacing requirements;

(iii) That, except as provided in paragraph (F) of this subsection, the well is not within a spacing unit:

(I) That was in existence at the time the surface drilling of the well began;

(II) That was applicable to the reservoir from which such natural gas is produced; and

(III) That was applied to any other well that either produced natural gas in commercial quantities or the surface drilling of which was begun before February 19, 1977, and was thereafter capable of producing natural gas in commercial quantities.

(iv) That on the basis of the documents submitted in the application, the applicant has concluded that to the best of his information, knowledge, and belief, the natural gas for which he seeks a determination is produced from a new onshore production well; and

(v) That the applicant has no knowledge of any information not described in the application which is inconsistent with his conclusion.

(F) If the applicant is seeking a determination with respect to a new well to be drilled into an existing spacing unit, the applicant must file all items required in paragraphs (A) through (E) of this subsection, except for the portion of the oath statement described in subparagraph (E)(iii) of this subsection and demonstrate by appropriate geological evidence that the new well is necessary to effectively and efficiently drain a portion of the reservoir covered by the spacing unit which cannot be effectively and efficiently drained by any existing well within the spacing unit.

(d) For stripper wells an application under section 108 of the Natural Gas Policy Act of 1978 shall be accompanied by:

(A) A completed Federal Energy Regulatory Commission Form 121;

(B) A completed application for permit to drill;

(C) A plat map showing the location of the subject well;

(D) Well summary report (completion report);

(E) Monthly production reports;

(F) Copies of all lithologic, electric, gamma, and other logs, drill test results and directional surveys, if performed;

(G) Name and address of operator and parties to purchase contracts;

(H) For cases of increased production resulting from enhanced recovery techniques, a description of the processes and equipment used for such recovery and the dates such processes or equipment were installed and used;

(I) For cases of seasonally affected production, a description of the nature of the fluctuations and the data used to determine the seasonal variation;

(J) A statement by the applicant, under oath, that to the best of his information, knowledge and belief, the information supplied and conclusions drawn are true and that the operator has no knowledge of any information not contained or described in the application which is inconsistent with any of his conclusions.

(2) The applicant shall, at the time of filing for a category determination, notify, by certified mail the purchasers and all working interest owners of such filing, and mail a list of the parties notified to the State Geologist. If more than one category determination is being requested for a single well, separate applications for each determination must be filed. The application, upon filing, shall be given a date.

(3) Applications containing logs which are confidential under the provisions of ORS 520.095(2) shall be kept confidential by the State Geologist.

(4) The State Geologist will review uncontested applications.

(5) Any person desiring to protest the granting of a determination shall send, within 15 days after receiving notification from the applicant, a written protest to the State Geologist and applicant by certified mail. The protest shall be supported by documentation in the same manner as the documentation submitted by the applicant. Contested applications will be referred to public hearings. The board will review the record of the hearing and issue a category determination at its regularly scheduled meeting.

(6) The State Geologist shall give written notice of the category determination to the Federal Energy Regulatory Commission and any protestant within 15 days after the Board determination.

Stat. Auth.: ORS 520
Stats. Implemented: ORS 520.095
Hist.: GMI 3-1980, f. 2-29-80, ef. 3-1-80; GMI 4-1985, f. & ef. 11-20-85; GMI 6-1990, f. & cert. ef. 12-5-90; GMI 2-1995, f. & cert. ef. 3-10-95

632-010-0170

Reservoir Surveys

By order of the board, periodic surveys may be made of the reservoirs in the state containing oil and/or gas. These surveys will be thorough and complete and shall be made under the supervision of the department. The condition of the reservoirs containing oil and/or gas and the practices and methods employed by the operators shall be investigated. Such investigation shall include but not be limited to: the volume and source of crude oil and natural gas; the reservoir pressure of the reservoir as an average; the areas of regional or differential pressure; stabilized gas-oil ratios; and the producing characteristics of the field as a whole and the individual wells within the field.

Stat. Auth.: ORS 520
Stats. Implemented: ORS 520.095
Hist.: GMI 1, f. 1-27-54; GMI 6-1990, f. & cert. ef. 12-5-90; GMI 2-1995, f. & cert. ef. 3-10-95

632-010-0172

Operators to Assist in Reservoir Surveys

All operators of oil and/or gas wells are required to authorize surveys and to assist the representatives of the board and the State Geologist in making any and all tests including bottom hole pressure and gas-oil ratio determinations, required by the Board or State Geologist on any or all of such operators' wells.

Stat. Auth.: ORS 520
Stats. Implemented: ORS 520.095
Hist.: GMI 1, f. 1-27-54; GMI 4-1985, f. & ef. 11-20-85; GMI 6-1990, f. & cert. ef. 12-5-90; GMI 2-1995, f. & cert. ef. 3-10-95

632-010-0174

Measurement of Potential Open-Flow of Gas Wells

The operator shall determine the potential open-flow of a gas well by U.S. Bureau of Mines back pressure method, or by other approved methods.

Stat. Auth.: ORS 520
Stats. Implemented: ORS 520.095
Hist.: GMI 1, f. 1-27-54; GMI 6-1990, f. & cert. ef. 12-5-90

632-010-0176

Supervision of Open-Flow and Pressure Tests

All tests made in determining the potential flow and shut-in well-head or bottom hole pressure of a gas well shall be monitored by the department to assure that:

(1) Initial flow to the surface shall be accomplished during daylight hours.

(2) Gas shall be flared during tests when feasible.

(3) Proper safety precautions shall be taken to prevent fire or explosion during tests.

Stat. Auth.: ORS 520
Stats. Implemented: ORS 520.095
Hist.: GMI 1, f. 1-27-54; GMI 4-1985, f. & ef. 11-20-85; GMI 6-1990, f. & cert. ef. 12-5-90; GMI 2-1995, f. & cert. ef. 3-10-95

632-010-0178

Duration of Tests

The operator shall test for open-flow and pressure of completed gas wells shall be made at such intervals and shall continue for such time as may be necessary to effect accurate determination.

Stat. Auth.: ORS 520
Stats. Implemented: ORS 520.095
Hist.: GMI 1, f. 1-27-54; GMI 1-1979, f. & ef. 1-25-79; GMI 6-1990, f. & cert. ef. 12-5-90

632-010-0182

Gas to be Metered

(1) Meters: All gas sold by a producer or sold shall be metered with an approved meter of sufficient capacity, provided that gas may be metered from a lease or unitized property as a whole, if it is shown that ratable taking can be maintained. Meters shall not be required for gas produced and used on the lease for development purposes and lease operations.

(2) Meter Charts and Records: Purchasers shall keep meter charts and gas purchased records in a permanent file, for a period of at least two years, and such information shall be made available to the department.

(3) Bypasses: Bypasses shall not be connected around meters or points where custody of the fluid is transferred in such manner as to permit the improper taking of gas.

Stat. Auth.: ORS 520
Stats. Implemented: ORS 520.095
Hist.: GMI 1, f. 1-27-54; GMI 1-1982, f. & ef. 6-25-82; GMI 4-1985, f. & ef. 11-20-85; GMI 6-1990, f. & cert. ef. 12-5-90; GMI 2-1995, f. & cert. ef. 3-10-95

632-010-0184

Direct Well Pressure

Where gas release to the atmosphere is involved the use of direct well pressure to operate any machinery is prohibited.

Stat. Auth.: ORS 520
Stats. Implemented: ORS 520.095
Hist.: GMI 1, f. 1-27-54; GMI 6-1990, f. & cert. ef. 12-5-90; GMI 2-1995, f. & cert. ef. 3-10-95

632-010-0186

Gas-Oil Ratio

No well shall be permitted to produce gas in excess of the maximum ratio determined for a pool unless all gas produced in excess thereof is returned to the pool from which it was produced.

Stat. Auth.: ORS 520
Stats. Implemented: ORS 520.095
Hist.: GMI 1, f. 1-27-54

632-010-0188

Gas-Oil Ratio Surveys and Reports

Gas-oil ratios and surveys shall be taken in the manner prescribed by the Board for individual fields where gas-oil ratio limits have been fixed and in accordance with the rules prescribed for each individual pool:

(1) Flowing Wells Intermittently (Stop-Cocked) Produced: In computing the operating gas-oil ratio, the total volume of gas and the total barrels of oil that are produced in order to obtain the daily oil allowable must be used regardless of the flowing time in the 24-hour period.

(2) Gas Lift or Jet Wells: The total volume of gas to be used in computing the operating gas-oil ratio, is the total output volume minus the total input volume.

(3) Pumping Wells: Gas withdrawn from the casing in an attempt to maintain a fluid seal, or for any other reason, must be added to the gas produced through tubing in computing the gas-oil ratio.

Stat. Auth.: ORS 520
Stats. Implemented: ORS 520.095
Hist.: GMI 1, f. 1-27-54; GMI 1-1982, f. & ef. 6-25-82; GMI 4-1985, f. & ef. 11-20-85; GMI 6-1990, f. & cert. ef. 12-5-90

632-010-0190

Gas Utilization

(1) No hydrocarbon gas shall be permitted to escape to the atmosphere except for short periods during testing or flowing wells during workovers or repairs when such escape has been authorized by the department.

(2) Flaring of produced gas shall not be permitted except by order of the board.

Stat. Auth.: ORS 520
Stats. Implemented: ORS 520.095
Hist.: GMI 1, f. 1-27-54; GMI 1-1979, f. & ef. 1-25-79; GMI 6-1990, f. & cert. ef. 12-5-90; GMI 2-1995, f. & cert. ef. 3-10-95

632-010-0192

Disposal of Brine or Salt Water

In addition to the requirements of ORS 520.095(1) and in addition to applicable rules of the Department of Environmental Quality and the Water Resources Department, the following conditions shall control the disposal of brine or salt water liquids, and any other means or methods of disposal which may be permitted:

(1) Disposal in Pits:

(a) Brine or salt water may be disposed of by evaporation when impounded in excavated earthen pits, only when such pits are lined with impervious material and a Water Pollution Control Facilities permit has been obtained from the Department of Environmental Quality;

(b) Impounding of brine or salt water in earthen pits that are porous is prohibited. Earthen pits used for impounding brine or salt water shall be so constructed and maintained as to prevent the escape of fluid;

(c) The department shall have authority to condemn any pit which does not properly impound such water and order the disposal of such water into an underground formation, or by other authorized method;

(d) The level of brine or salt water in earthen pits shall at no time be permitted to rise above the lowest point of the ground surface level. All pits shall have a continuous embankment surrounding them sufficiently above the level of the surface to prevent surface water from running into the pit. Such embankment shall not be used to impound brine or salt water;

(e) At no time shall brine or salt water impounded in earthen pits be allowed to escape onto adjacent land or into waters of the state.

(2) Disposal by Injection: Salt water may also be disposed of by injection into the strata from which produced or into other proved salt water bearing strata.

(3) Ocean discharge of salt water may be permitted if water quality is acceptable and if such discharge is approved by the State Department of Environmental Quality through issuance of a National Pollutant Discharge Elimination System waste discharge permit.

Stat. Auth.: ORS 520
Stats. Implemented: ORS 520.095
Hist.: GMI 1, f. 1-27-54; GMI 1-1979, f. & ef. 1-25-79; GMI 1-1982, f. & ef. 6-25-82; GMI 4-1985, f. & ef. 11-20-85; GMI 6-1990, f. & cert. ef. 12-5-90; GMI 2-1995, f. & cert. ef. 3-10-95

632-010-0194

Water Injection and Water Flooding of Oil and Gas Properties

(1) Application and Approval: The operator of any well may inject water under pressure into the formation containing oil or gas for the purpose of obtaining oil or gas from the reservoir, upon application to and approval by the State Geologist. No water injection or water flooding program shall be instituted until it has been authorized by the State Geologist.

(2) Casing and Cement: Wells used for the injection of water into the producing formation or repressuring wells shall be cased with sound casing so as not to permit leakage and the casing cemented in such manner that damage will not be caused to oil, gas, or freshwater resources.

(3) Application, Contents, Notice, Objection, Hearing, and Approval:

(a) An application for use of water injection shall be verified and filed with the State Geologist and shall include:

(A) The location of the injection well;

(B) The location of all oil and gas wells, including abandoned and drilling wells and dry holes, and the names of mineral rights owners within one-half mile of the injection well;

(C) The formations from which wells are producing or have produced;

(D) The name, description, and depth of the formations to be injected;

(E) The elevations of the top of the oil- or gas-bearing formation in the injection well and the wells producing from the same formation within one-half mile radius of the injection well;

(F) The log of the injection well or similar available information;

(G) Description of the injection well casing;

(H) Description of the liquid, stating the kind, where obtained, and the estimated amounts to be injected daily;

(I) The names and addresses of the operators;

(J) Such other information as the State Geologist may require to ascertain whether the injection or flooding may be safely and legally made.

(b) Applications may be made to include the use of more than one injection well on the same spacing unit, or on more than one spacing unit;

(c) Applications shall be executed by all operators who are to participate in the proposed water injection or water flooding plan.

(4) Notice of Commencement and Discontinuance of Water Injection or Water Flooding Operations:

(a) Immediately upon the commencement of water injection or water flooding operations, the applicant shall notify the State Geologist stating the date of commencement;

(b) Within ten days after the discontinuance of water injection or water flooding operations, the applicant or the one in charge thereof shall notify the State Geologist of the date of such discontinuance and the reasons therefor;

(c) Before any injection well shall be abandoned, application shall be made to the State Geologist, and the same procedure shall be followed in the plugging of such well as provided for the plugging of oil and gas wells. See OAR 632-010-0198.

(5) Records. The operator of a water injection project shall keep an accurate record of:

(a) The amount of water injected into the injection wells;

(b) The total amount of water produced; and

(c) The total amount of oil or gas produced from the area flooded. The information in subsections (a) - (c) of this section shall be made available to the State Geologist.

Stat. Auth.: ORS 520
Stats. Implemented: ORS 520.095
Hist.: GMI 1, f. 1-27-54; GMI 1-1982, f. & ef. 6-25-82; GMI 4-1985, f. & ef. 11-20-85; GMI 6-1990, f. & cert. ef. 12-5-90

632-010-0196

Gas Injection of Oil and Gas Properties

In addition to the requirements of ORS 520.095(1), OAR 632-010-0002 through 632-010-0240 and any other applicable statutes, orders or rules, wells drilled for the purpose of storing natural gas in an underground reservoir shall be drilled in such manner as shall protect the underground reservoir against pollution and against waste of natural gas.

(1) Application and Approval: Upon application to and approval by the State Geologist, the operator of any well or proposed well may inject gas under pressure into the formation containing water, oil or gas for the purpose of increasing production of oil or gas from the reservoir or for storing natural gas.

(2) Casing and Cement: Wells used for the injection of gas into the producing formation shall be cased with sound casing so as not to permit leakage and the casing shall be cemented in a manner that damage will not be caused to oil, gas, or freshwater resources. All injection of gas shall be through tubing with a casing packer set at the lower end above the zone of injection and the annular space between tubing and casing shall be monitored to be sure the packer is holding. The requirement for a casing packer may be waived by the Department for temporary test injection into a depleted or partially depleted gas pool when an existing well is utilized as the temporary injection well. Prior to temporary injection, the casing shall be tested for mechanical integrity to determine there is no leak in the casing. The Department shall be notified to witness mechanical integrity tests.

(3) Application, Contents, Notice, Objection, Hearing, and Approval:

(a) No gas shall be injected into a well until approved by the State Geologist pursuant to application and notice as herein required;

(b) An application for gas injection of oil and gas properties shall be filed with the State Geologist in the form of a letter with supporting data including:

(A) The location of the injection well;

(B) The location and depth of all oil and gas wells, including abandoned and drilling wells and dry holes, and the names of mineral rights owners within a one-half .5 mile radius of the injection well;

(C) The formations from which wells are producing or have produced;

(D) The name, description, and depth of the formations to be injected;

(E) The depths of each formation into which gas is to be injected;

(F) The elevations of the top of the oil- or gas-bearing formation in the injection well and the wells producing from the same formation within one-half mile of the injection well;

(G) The log of the injection well, or similar available information;

(H) Description of the injection well casing;

(I) The estimated amounts to be injected daily and the proposed injection pressure;

(J) An engineering and geological study of the proposed injection site including:

(i) Characteristics of reservoir and caprock, including areal extent, thickness, and lithology;

(ii) Remaining gas or oil reserves of storage zones, including calculations, if applicable;

(iii) If an aquifier is to be injected, known water wells, aquifier extent, thickness, and water quality; and

(iv) Proposed use of monitor wells for the project.

(K) The names and addresses of the operators;

(L) Such other information as the State Geologist may require to ascertain whether the gas injection plan meets the requirements of law and safety.

(c) Applications may be made to include the use of more than one injection well on the same spacing unit or on more than one spacing unit;

(d) Applications shall be executed by all operators who are to participate in the proposed gas injection plan.

(4) Notice of Commencement and Discontinuance of Gas Injection:

(a) At least ten (10) days prior to commencement of gas injection operations, the applicant shall notify the State Geologist stating the date of commencement;

(b) Within ten (10) days after the discontinuance of gas injection operations, the applicant or the one in charge of the operations shall notify the State Geologist of the date of discontinuance and the reasons therefor;

(c) Before any injection well shall be abandoned, application shall be made to the State Geologist and the same procedure shall be followed in the plugging of such well as provided for the plugging of oil and gas wells. See OAR 632-010-0198;

(d) The above notification requirements shall not apply to a gas storage facility except for the initial injection and filling of the reservoir and for the abandonment of the storage reservoir.

(5) Records: The operator of the gas injection project shall keep an accurate record of:

(a) The amount of gas injected into the injection wells;

(b) The amount of gas produced;

(c) The amount of oil produced from leases affected by the gas injection; and

(d) The well-head injection pressures. The information in subsections (a) - (d) of this section shall be made available to the State Geologist or representative.

Stat. Auth.: ORS 520
Stats. Implemented: ORS 520.095
Hist.: GMI 1, f. 1-27-54; GMI 1-1979, f. & ef. 1-25-79; GMI 1-1982, f. & ef. 6-25-82; GMI 4-1985, f. & ef. 11-20-85; GMI 6-1990, f. & cert. ef. 12-5-90; GMI 2-1995, f. & cert. ef. 3-10-95; GMI 2-1996, f. & cert. ef. 7-10-96

632-010-0198

Abandonment, Unlawful Abandonment, Suspension, Well Plugging

(1) Oil, Gas, and Water to be Protected: Before any oil and/or gas well shall be suspended or abandoned, the operator shall use such means, methods, and procedure necessary to prevent water from entering any oil- or gas-bearing formation, and to protect any underground or surface water that is suitable for domestic or irrigation purposes from waste, downward drainage, harmful infiltration and addition of deleterious substances.

(2) Suspension: The department may authorize a permittee to suspend operations or remove equipment from a well for the period stated in the department written authorization, upon receipt of a written application from the permittee showing good cause. The period of suspension may be extended by the department, upon written application made before expiration of the previously authorized suspension, accompanied by a written statement of the permittee showing good cause for such extension.

(3) Abandonment: Before any work is commenced to abandon any well drilled for oil and/or gas, the permittee shall give written or verbal notice to the department of his intention to abandon such well. If verbal notice is given but plugging is not planned within ten days, written notice must also be given within ten days. The notice shall be upon forms supplied by the department and shall contain the present condition of the well, proposed work, and such other information as reasonably may be required by the department.

(4) Unlawful Abandonment:

(a) After operations on or at a well have been suspended with the approval of the department pursuant to section (2) of this rule, if operations are not resumed within thirty (30) days from the date specified in such approval of suspension, the well is unlawfully abandoned unless the permittee has obtained from the department in writing an extension of time of such suspension. Written application showing good cause is required for the extension to be considered;

(b) If a well is left idle for a period of thirty (30) consecutive days without a written request for suspended status and approved downhole plugs in place, the well is unlawfully abandoned;

(c) Upon any unlawful abandonment as defined in these rules, written notice thereof shall be sent by certified mail both to such permittee at his last known address in the records of the department and to the permittee's surety. The department may then proceed against the permittee and the permittee's surety;

(d) All wells unlawfully abandoned as provided in this section shall be plugged, suspended, or otherwise repaired by the department as required by law and by these rules, using the surety bond, if sufficient. The department may recover its expenses in suspending, repairing, plugging, and site reclamation from the proceeds of the bond.

(5) Plugging Methods and Procedure: The methods and procedure for plugging a well shall be as follows:

(a) Producing strata and strata having fluid at greater than hydrostatic pressure shall be plugged with cement from at least 50 feet below the top of the fluid-bearing zone to at least 50 feet above the top of the zone;

(b) A cement plug not less than 100 feet in length shall be placed across the base of the freshwater-bearing strata in an uncased hole;

(c) When there is open hole below the base of any casing, a cement plug not less than 100 feet in length shall be placed to extend at least 50 feet above and 50 feet below the base of the casing;

(d) The top of all casing strings shall be cut off at least four (4) feet below ground surface, and casing and all annuli shall be plugged with cement to a depth of at least ten (10) feet;

(e) The operator shall have the option as to the method of placing cement in the hole by:

(A) Dump bailer;

(B) Pump through tubing or drill pipe;

(C) Other method approved by the department.

(f) The interval between plugs shall be filled with an approved heavy mud-laden fluid.

(6) The operator shall remove all gravel and debris from the site, shall backfill sumps, and shall restore the site, including revegetation.

(7) Affidavit on completion: Within 60 days after the plugging of any well, the operator shall file a written statement with the department setting forth in detail the method used in plugging the well.

(8) Wells Used for Fresh Water:

(a) When the drilled well to be plugged may safely be used as a freshwater well and such use is desired by the landowner, the well need not be filled above the required sealing plug set below fresh water; provided, however, authorization for use of any such well shall be obtained from the Director of the Water Resources Department;

(b) Application for leaving the well partially unplugged as a freshwater well shall be made to the department by the landowner in writing, together with evidence of a permit and bond from the Director of the Water Resources Department or that officer's statement that neither a permit nor a bond is required;

(c) The operator shall leave the freshwater well in a condition approved by the department.

(9) The bond furnished by permittee shall not be released until all procedures required by these rules have been completed and the department in writing has authorized such release.

Stat. Auth.: ORS 520
Stats. Implemented: ORS 520.095
Hist.: GMI 1, f. 1-27-54; GMI 3, f. 4-3-56; GMI 1-1982, f. & ef. 6-25-82; GMI 1-1985(Temp), f. & ef. 6-7-85; GMI 4-1985, f. & ef. 11-20-85; GMI 6-1990, f. & cert. ef. 12-5-90; GMI 2-1995, f. & cert. ef. 3-10-95

632-010-0205

Drilling Bond

(1)(a) Every person who engages in the drilling, redrilling, or reworking of any well, service well or disposal well shall file with the State Geologist on a form provided by the State Geologist a surety bond in the sum of $10,000 for each well drilled, redrilled, deepened, or reworked to a depth less than 2,000 feet, $15,000 for each well to a depth of 2,000 to 5,000 feet, or $25,000 for each well to a depth greater than 5,000 feet. The bond shall be filed with the State Geologist at the time of the filing of the notice of intention to drill, redrill, deepen, or rework as required in OAR 632-010-0010. Bonds may be submitted individually for each well or a blanket bond may be filed as described in (b) below.

(b) In multi-well operations, a blanket bond in the minimum amount of $100,000 may be filed in lieu of individual bonds. The blanket bond amount shall be computed as the sum of the applicable individual bond amounts required for each well, reduced by bond amounts on wells that are granted exclusion from the computation. The State Geologist may exclude the following wells from the blanket bond computation:

(A) Wells that have a gross annual wellhead production in dollars during the past twelve months that is greater than the amount of the required individual well bond; or

(B) Wells that have been used as disposal or service wells in the past twelve months. It is the responsibility of the well operator to file for exclusions annually prior to the permit anniversary date.

(c) The bond shall be executed by the operator, as principal, and by a company authorized to do business as a surety insurer in the State of Oregon, as surety, and shall be conditioned upon the faithful compliance by the principal with the statutes, rules, and orders of the Department of Geology and Mineral Industries and the board. The department, in its discretion, may accept an irrevocable letter of credit or other form of financial security in lieu of a bond.

(2) Any bond submitted as required by this section may, with the consent of the State Geologist, be terminated and cancelled and the surety relieved of all obligations thereunder. However, the State Geologist shall not consent to termination and cancellation of any bond until the well or wells covered by such bond have been properly abandoned including site reclamation, with the approval of the State Geologist, or another valid bond has been submitted and approved.

(3) For those applications concerning oil and gas wells on federal lands, the State Geologist may, in order to avoid unnecessary duplication, waive the requirements of sections (1) and (2) of this rule if the applicant submits suitable proof of compliance with federal bond requirements, and if State regulatory concerns are addressed to the satisfaction of the State Geologist in the use and release of the Federal Bond.

Stat. Auth.: ORS 520
Stats. Implemented: ORS 520.095
Hist.: GMI 1-1979, f. & ef. 1-25-79; GMI 4-1985, f. & ef. 11-20-85; GMI 6-1990, f. & cert. ef. 12-5-90; GMI 2-1995, f. & cert. ef. 3-10-95; GMI 3-1997, f. & cert. ef. 12-3-97; DGMI 2-1999, f. & cert. ef. 8-30-99

632-010-0210

Disposal of Solid and Liquid Wastes

(1)(a) Permit stipulations by the State Department of Environmental Quality regarding disposal of solid and liquid wastes generated by drilling, redrilling, deepening, or reworking operations shall be made a part of every permit issued under OAR 632-010-0010.

(b) All wells used for disposal of solid and liquid wastes shall be equipped with tubing and packers and shall be tested for mechanical integrity at least every five years to determine that there is no leak in the casing, tubing or packer, and that there is no fluid movement into an underground source of water, other than that from which the fluid was produced, unless otherwise approved by the department. Acceptable tests include pressuring tubing and casing annuli to demonstrate integrity of casing, tubing, and packer. Tracer surveys, noise logs, temperature logs, spinner surveys, or other methods approved by the department may be used to detect water movement adjacent to the wellbore. The department shall be notified to witness mechanical integrity tests, and result shall be submitted as required by OAR 632-010-0017.

(2) Once field development is initiated a separate permit is required from the State Department of Environmental Quality for disposal of liquid and solid wastes.

Stat. Auth.: ORS 520
Stats. Implemented: ORS 520.095
Hist.: GMI 1-1979, f. & ef. 1-25-79; GMI 4-1985, f. & ef. 11-20-85; GMI 2-1995, f. & cert. ef. 3-10-95

632-010-0220

Measurement of Oil

The volume of production of oil shall be computed in terms of barrels of clean oil on the basis of properly calibrated meter measurements or tank measurement of oil level differences made and recorded to the nearest quarter inch, using 100 percent tank capacity tables, subject to the following corrections:

(1) Correction for Impurities: The percentage of impurities (water, sand, and other foreign substances not constituting a natural component part of oil) shall be determined to the satisfaction of the department, and the observed gross volume of oil shall be corrected to exclude the entire volume of such impurities.

(2) Temperature Correction: The observed volume of oil corrected for impurities shall be further corrected to the standard volume at 60 degrees F. in accordance with A.S.T.M. Standards or any revisions thereof approved by the department.

(3) Gravity Determination: The gravity of oil at 60 degrees F. shall be determined in accordance with A.S.T.M. Standards or any revisions thereof and any supplements thereto or any close approximation thereof approved by the department.

Stat. Auth.: ORS 520
Stats. Implemented: ORS 520.095
Hist.: GMI 1-1979, f. & ef. 1-25-79; GMI 6-1990, f. & cert. ef. 12-5-90; GMI 2-1995, f. & cert. ef. 3-10-95

Special Rules, Mist Gas Field
632-010-0225

Spacing Plan

(1) For purposes of this section, the Mist Gas Field shall refer to the following area: sections 1 through 18, 20 through 29, 32 through 36 of T. 5 N., R. 4 W., sections 1, 2, 11, 12, of T. 5 N., R. 5 W., sections 3 through 10, 14 through 23, 25 through 36 of T. 6 N., R. 4 W., sections 1 through 36 of T. 6 N., R. 5 W., section 31 of T. 7 N., R. 4 W., and sections 13 through 36 of T. 7 N., R. 5 W., W.M.

(2) The minimum spacing for gas wells in the Mist Field shall be 160 acres when the top of the producing zone is less than 7,000 feet in vertical depth. (continued)