SECTION 165:10-17-12. New proposed well classification for the priority schedule

(a)   Any common purchaser as defined in 52 O.S. 1981, Section 240 shall purchase all the gas which may be offered for sale and which may reasonably be reached by its trunk lines or gathering lines, without discrimination in favor of one producer as against another or in favor of any one source of supply as against another, except as authorized by the Commission under (b) of this Section.

(b)   In the interest of the prevention of waste and protection of correlative rights, the following priority schedule shall be implemented by any first purchaser of gas whenever the permitted production from all wells in any common source of supply in its system in this State, including gas which is processed, is in excess of that purchaser's reasonable market demand; provided, however, if the first purchaser does not contractually control wellhead production, the first taker of gas shall be responsible for implementation of the following priority schedule.

(1)   Priority One - Hardship and distressed wells.

(2)   Priority Two - Enhanced recovery wells.

(3)   Priority Three - Wells producing casinghead gas and associated gas.

(c)   With respect to all gas not identified in (b)of this Section, the collective market demand of multiple common purchasers on each pipeline system for natural gas production from each well and each common source of supply in this state shall be deemed adequate to meet statutory purchasing requirements unless the Commission, upon its own motion or upon verified application by any interested party and after notice and hearing, as hereinafter provided, shall determine that differing obligations shall be imposed upon any common purchaser in order to protect correlative rights, the interest of the public or otherwise meet the requirements of applicable law.

(d)   When permitted production of gas from all Priority 1, 2, and 3 wells from which a purchaser or taker is required to take exceeds the market demand of said purchaser or taker, all reductions in gas purchases or takes from wells in each priority shall be ratable. All production from the lower priority wells shall be shut-in before production from any well in the next higher priority is curtailed.

(e)   Any well which meets the definition of more than one priority shall be assigned the higher priority.

(f)   When there is more than one purchaser or taker involved in the taking of gas from a well into any purchaser's system, all purchasers and takers within that system shall be responsible for compliance with this Section.

(g)   Upon a verified application of the Director of the Conservation Division or any other person, the Commission, after notice and hearing, may determine if gas has been ratably purchased or taken from a common source of supply on a system-wide basis in accordance with this Section without avoidable waste and with equitable participation in production and markets by all operators and other interested parties.

(h)   First purchasers or takers of gas produced from Priority 1, 2, or 3 wells, who anticipate curtailing production from such wells, shall file by the twentieth day of each month nominations of requirements for gas to be purchased and/or used by them during the following month (Form 1004B). Nominations shall be made according to priorities established in (b) of this Section. Curtailments of production and acceptance of deliveries of gas shall be performed in accordance with (a) and (b) of this Section.

(i)   Any interested party may file an application requesting that the Commission, for good cause shown, authorize limited deviation from the general priority schedule provided under (b) of this Section. The Commission, on its own motion, may initiate a review of the continued need for such a limited deviation. After notice and hearing, the Commission may authorize limited deviation upon finding that the same is necessary in order to prevent waste, protect correlative rights, and is otherwise required by the public interest or authorized by law.

[Source: Amended at 12 Ok Reg 2045, eff 7-1-95]