SECTION 165:10-27-8. Operator's option to confirm zero volume of gas sales because of noncompliance

(a)   If a producing owner fails to timely provide the operator of the well with any of the information required by 165:10-27-4 and 165:10-27-7, or if the owner of a gas meter, first purchaser or shipper of gas fails to timely provide the operator of the well with any of the information required of it by 165:10-27-7 for the transfer, transportation, delivery or sale of gas by a producing owner, the operator of the well shall have the right, but not the obligation, to confirm zero volume of gas sales for such producing owner, and to make available for nomination and sale to other producing owners in the well, then in compliance with said Sections, all of such producing owner's share of production for the next subsequent calendar month and for each and every month thereafter of noncompliance. If the operator elects to make such producing owner's share of production available for nomination and sale, the operator shall immediately notify such producing owner by certified mail and inform such producing owner that such producing owner shall no longer have the right to nominate any volume of gas, until the next production month following the date of compliance, unless the operator of the well agrees to an earlier date. Such notice shall contain the lease or well identification, legal description, production months of noncompliance, a brief description of the noncompliance, and a provision stating that the operator is confirming zero volume of gas sales for such producing owner. The operator shall than immediately notify each producing owner then in compliance with the aforesaid Sections and inform said producing owner about additional gas volumes available for nomination and sale. In regard to the producing owner for which the operator has confirmed zero gas sales, the operator shall also immediately notify in writing such producing owner's first purchaser or shipper, and the owner of the gas meter, and such notice shall report that such producing owner does not have the right to nominate and sell or transport any volume of gas, until the next production month following compliance, unless the operator of the well agrees to an earlier date. Such notice shall also contain the lease or well identification, legal description, a brief description of the noncompliance, and the production months of noncompliance.

(b)   As soon as a noncomplying party is in compliance, but no sooner than the next production month unless otherwise agreed to, the operator of the well shall give the affected producing owner the opportunity to nominate and sell gas subject to existing agreements or by common practice within the oil and gas industry.

(c)   The first purchaser or shipper and the owner of the gas meter shall be entitled to rely on and shall incorporate on a prospective basis any nomination or allocation changes pursuant to such notification from the operator under this Section. Changes pursuant to such notification may be made on a retroactive basis if so agreed to by the operator, owner of the meter, the first purchaser or shipper.

(d)   The remedies provided for in this Section shall not preclude any party from pursuing the remedies available to it through the district courts, as provided by existing law, including the right of offset.

(e)   All elections and notices given pursuant to the provisions of this Subchapter shall become effective as of the first day of the month following the end of any time period specified in the Production Revenue Standards Act as last amended, 52 O.S. Section 570.1, et seq.

[Source: Added at 10 Ok Reg 2601, eff 6-25-93; Amended at 11 Ok Reg 3699, eff 7-11-94]