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$ 250.2 Definitions.

erable from a pool under prudent and

proper operations or which causes or The following terms as used in the

tends to cause unnecessary or excessive regulations in this part shall have the

surface loss or destruction of oil or gas; meanings here given:

(4) the ineficient storage of oil; and (5) (a) Secretary. The Secretary of the

the production of oil or gas in excess of Interior.

transportation or marketing facilities or (b) Director. The Director of the

in excess of reasonable market demand. Geological Survey, Washington, D. C.,

(1) Directional drilling. The deviahaving administrative direction of the tion of a bore hole from the vertical or enforcement of the regulations in this from its normal course in an intended part.

predetermined direction or course with (c) Supervisor. A representative of respect to the points of the compass. the Secretary, under administrative di- Directional drilling shall not include rection of the Director, authorized and deviations made for the purpose of empowered to regulate operations and to straightening a hole that has become perform other duties prescribed in the crooked in a normal course of drilling or regulations in this part, or any subor- deviating a hole at random without redinate of such representative acting gard to compass direction in an attempt under his direction.

to sidetrack a portion of the hole on ac(d) Outer Continental Shelf. All sub- count of mechanical difficulty in drilling. merged lands (1) which lie seaward and

JURISDICTION AND FUNCTIONS OF outside of the area of lands beneath

SUPERVISOR navigable waters as defined in the Submerged Lands Act (67 Stat. 29) and (2) $ 250.10 Jurisdiction. of which the subsoil and seabed apper

Drilling and production operations, tain to the United States and are subject

handling and measurement of producto its jurisdiction and control.

tion, determination and collection of (e) Lease. The contract or agree

rental and royalty, and, in general, all ment under which the leasehold rights

operations subject to the regulations in are held by the lessee, or the land cov

this part are under the jurisdiction of the ered by the contract or agreement,

supervisor for any district as delineated whichever is required by the context.

by the Director. (f) Lessee. The party authorized by a lease, or an approved assignment there- $ 250.11 General functions. of, to develop and produce the leased The supervisor is authorized to act deposits in accordance with the regula- upon the requests, applications, and notions in this part, including all parties tices made or given by an operator or holding such authority by or through lessee under the regulations in this part him.

and to require compliance with lease (g) Operator. The individual, part- terms, with the regulations in this part nership, firm, or corporation having con- and all other applicable regulations, and trol or management of operations on the with applicable law to the end that all leased land or a portion thereof. The operations shall conform to sound conoperator may be a lessee, designated servation practice and shall be conducted agent of the lessee, or holder of rights in such manner as to protect the natural under an approved operating agreement. resources of the outer Continental Shelf

(h) Waste of oil and gas. Waste and result in their maximum economic means and includes (1) physical waste as recovery. After appropriate hearings, that term is generally understood in the the supervisor may establish field rules oil and gas industry; (2) the inefficient, to govern the development and method excessive, or improper use of, or the un- of production of a pool, field, or area. necessary dissipation of reservoir energy;

The supervisor may require satisfactory (3) the locating, spacing, drilling, equip- evidence that a lease is in good standing, ping, operating, or producing of any oil that the lessee or operator is authorized or gas well or wells in a manner which to conduct operations, and that an accauses or tends to cause reduction in the ceptable bond has been filed before perquantity of oil or gas ultimately recov- mitting operations on the leased land.

submit such report as may be needed to furnish a basis for appropriate action to obtain reimbursement.

$ 250.12 Regulation of operations.

(a) Duties of supervisor. The supervisor shall inspect and regulate operations under the regulations in this part and shall issue orders and rules necessary, in his judgment, to prevent damage, or waste of any natural resource, or injury to life or property.

(b) Emergency suspensions. The supervisor is authorized to require a lessee by written notice to suspend any operation or method of operation which endangers life or threatens immediate, serious, or irreparable damage to the leased deposits or other valuable mineral deposits. § 250.13 Temporary approvals.

Whenever the regulations in this part require a lessee to obtain approval of the supervisor, the lessee may make an oral or telegraphic request for such approval, and the supervisor may give such oral or telegraphic approval as may be warranted: Provided, That the transaction shall forthwith be confirmed in the manner otherwise required by the regulations in this part. $ 250.14 Samples, tests, and surveys.

(a) When deemed necessary or advisable, the supervisor authorized to require that adequate tests or surveys be made in an acceptable manner without cost to the lessor to determine the reservoir energy; the presence, quantity, and q'iality of oil, gas, sulphur, other mineral deposits, or water; the amount and direction of deviation of any well from the vertical; or the formation, casing, tubing, or other pressures.

(b) The supervisor may, at the time of approval of any notice to drill or redrill any well, stipulate reasonable requirements for the taking of formation samples or cores to determine the iden. tity and character of any formation. § 250.15 Drilling and abandonment of

wells. The supervisor shall demand drilling in accordance with the terms of the lease and of the iegulations in this part; and shall require plugging and abandonment, in accordance with such plan as may be approved or prescribed by him, of any well no longer used or useful, and upon failure to secure compliance with such requirement, perform the work at the expense of the lessee, expending available public funds, and

§ 250.16 Well potentials and permissi

ble flow. The supervisor is authorized to specify the time and method for determining the potential capacity of any well and to fix, after appropriate notice, the permissible production of any such well that may be produced when such action is necessary to prevent waste or to conform with such proration rules, schedules, or procedures as may be established by the Secretary. $ 250.17 Well-spacing and well-casing.

(a) The supervisor shall approve well locations and well-spacing and -casing programs determined to be necessary for the proper development of the lease, giving due consideration to the location of drilling platforms, the geological and reservoir characteristics of the field, and the number of wells that can be economically drilled.

(b) The supervisor may approve irregular spacing of wells and development plans providing for a predetermined number of wells to be drilled and abandoned when required for the proper exploration and development of sulphur deposits. § 250.18 Rights of use and easement.

(a) In addition to the rights and privileges granted to a lessee under any lease issued or maintained under the act, the supervisor may grant such lessee, subject to such reasonable conditions as said supervisor may prescribe, the right of use or an easement to construct and maintain platforms, fixed structures, and artificial islands, and to use the same for carrying on operations, including drilling, directional drilling, producing, treating, handling, and storing production, and housing personnel engaged in operations, not only in connection with the lease on which the platform, structure, or island, is situated, but for the conduct of operations on any other lease, State or Federal.

(b) The supervisor may grant to a holder of a Federal or State lease the right of use or an easement to construct and maintain platforms, fixed structures, and artificial islands on areas of the outer continental Shelf, near or adjacent to the leased area, and to use same

for drilling directional well or wells to be bottomed under the leased area, and for producing and reworking such well or wells, and for handling, treating, and storing the production therefrom. Such rights of use or easement if on an area subject to any mineral lease issued or maintained under the act shall be granted only after the lessee under such lease has been notified and afforded an opportunity to voice objections thereto, and any such right shall be exercised only in such manner so as not to interfere unreasonably with operations of the lessee under such lease.

(C) Once a right of use or easement has been exercised by the erection of fixed platforms, structures, or islands, the right shall continue so long as such platforms, structures, or islands are maintained, even beyond the termination of any lease on which they may be situated, and the rights of all subsequent lessees shall be subject to such rights of use and easement by prior lessees. The foregoing right of use and easement shall include the right to lay gathering lines, flow lines, and other pipelines used in connection with any lease operations, for moving production to a central point for purposes of gathering, treating, or storing.

The right of use and easement shall not apply to pipelines used for transporting oil, gas, or other production after the same has been treated and measured, such rights-of-way being provided for in regulations under section 5 (c) of the Outer Continental Shelf Lands Act. § 250.19 Rentals, royalties, and other

payments. The supervisor shall determine pursuant to the lease and regulations the rental' and the amount or value of production accruing to the lessor as royalty, the loss through waste or failure to drill and produce protection wells on the lease, and the compensation due to the lessor as reimbursement for such loss. $ 250.20 Suspension of operations and

production. On receipt of an application for suspension of operations or production or for relief from any drilling or producing requirements under a lease, the supervisor shall grant such approval as he may deem warranted in the premises or reject such application, subject to the right of appeal as provided in $ 250.81.

REQUIREMENTS FOR LESSEES $ 250.30 Lease terms, regulations, waste,

damage, and safety. The lessee shall comply with the terms of the lease, with the written orders of the supervisor, and, subject to the provisions of section 5(a) of the act, with the regulations in this part and any amendments thereof. The lessee shall take all reasonable precautions to prevent damage or waste of any natural resource or injury to life or property or the aquatic life of the seas. $ 250.31 Designation of operator.

In all cases where operations are not conducted by the record owner but are to be conducted under authority of an unapproved operating agreement, assignment, or other arrangement, a "designation of operator" shall be submitted to the supervisor, in a manner and form approved by him, prior to commencement of operations. Such designation will be accepted as authority of operator or his local representative to fulfill the obligations of the lessee and to sign any papers or reports required under the regulations in this part. All changes of address and any termination of the authority of the operator shall be immediately reported, in writing to the supervisor or his representative. In case of such termination or of controversy between the lessee and the designated operator, the operator, if in possession of the lease, will be required to protect the interests of the lessor. 8 250.32 Local agent.

When required by the supervisor, the lessee shall designate a representative empowered to receive notices and comply with orders of the supervisor issued pursuant to the regulations in this part.

8 250.33 Drilling and producing obliga

tions. (a) The lessee shall diligently drill and produce such wells as are necessary to protect the lessor from loss by reason of production on other properties, or in lieu thereof, with the consent of the supervisor, shall pay a sum deter. mined by the supervisor as adequate to compensate the lessor for failure to drill and produce any such well. In the event that the lease is not being maintained in force by other production of oil or gas in paying quantities or by other approved drilling or reworking op

erations, such payments shall be consid.

$ 250.34a Extension of leases by drilling ered as the equivalent of production in or well reworking. paying quantities for all purposes of the

(a) The Secretary shall be deemed to lease.

have approved, within the meaning of (b) The lessee shall promptly drill and produce such other wells as the su

section 8(b) (2) of the Outer Continental

Shelf Lands Act, drilling or well repervisor may reasonably require in order that the lease may be properly and

working operations, conducted on the

leased area in the following instances: timely developed and produced in accordance with good operating practices.

(1) If, after discovery of oil or gas in

paying quantities has been made on the $ 250.34 Drilling and development pro

leasehold, and within 90 days prior to grams.

expiration of the five-year term or any

extension thereof, or thereafter, the (a) Prior to the beginning of any

production thereof shall cease at any operations on the lease, including the

time, or from time to time, from any construction of drilling or production

cause and production is restored or platforms or other structures, the les

drilling or well reworking operations see shall submit to the supervisor for

are commenced within 90 days thereapproval an acceptable plan for the per

after, and such drilling or well reworkformance of such work. Such plan shall

ing operations (whether on the same or include (1) a plan of the drilling or pro

different wells) are prosecuted diligently duction platform or structures, showing

until production is restored in paying the location and major features thereof, (2) the proposed well-casing program

quantities.

(2) If, within 90 days prior to expifor the initial well, (3) the location of the initial well (including surface and

ration of the five-year term or any

extension thereof, or thereafter, at any projected bottom-hole location if the well is to be directionally drilled), (4) struc

time, or from time to time, lessee is tural interpretations based on available

engaged in drilling or well reworking geological and geophysical data, and (5)

operations on the leasehold and there such other pertinent data as the super

is no well on the leasehold capable of visor may prescribe.

producing in paying quantities and the (b) After a discovery has been made

lessee diligently prosecutes such operon the lease, the lessee shall submit to

ations (whether on the same or different the supervisor a plan of development for

wells) with no cessation of more than the lease or field including (1) the num

90 days. ber and location of the proposed wells (b) The Secretary may approve such (including the projected bottom-hole lo- other operations for drilling or reworkcation for directionally drilled wells) ing upon application of lessee. and the approximate time for drilling (c) Nothing in this section obviates each, (2) amendments or additions to the necessity of obtaining the Superthe structural interpretations, (3) plans visor's approval of a plan or notice of for additional drilling or producing plat- intention to drill or of complying with forms or other structures, (4) the well- the other provisions of this part. casing program for the field or area, and

(24 F.R. 9527, Nov. 28, 1959) (5) such other data as the supervisor may prescribe. Such program must be

§ 250.35 Subsequent well operations. approved by the supervisor and may be After completion of all operations conmodified from time to time as conditions templated under any previously apmay warrant.

proved notice or plan, the lessee shall (c) In order to protect the interests not begin to redrill, repair, deepen, plug of the lessee, geological and geophysical back, shoot, or plug and abandon any interpretations required by this section well, make water shutoff, alter the casing shall, upon request of the lessee, be clas- or liner, stimulate production by acid, sified as not available for public inspec- gas, air, water injection, or any other tion until such time as the supervisor method, change the method of recoverdetermines the release of such informa- ing production, or use any formation or tion is required and necessary for the well for gas storage or water disposal proper development of the field or area. without first notifying the supervisor of his plan and intention and receiving location, designation, and status of all written approval prior to commencing wells on the leased lands, together with the contemplated work. This require- such other pertinent information as the ment shall not deter the lessee from tak- supervisor may require. ing any action in an emergency to (f) When deemed advisable by the prevent damage.

supervisor, the lessee shall require each $ 250.36 Well designations.

service company to furnish promptly to

the supervisor legible, exact copies of The lessee shall mark promptly each reports on cementing, perforating, aciddrilling platform or structure in a con- izing, or other similar services. spicuous place, showing his name or the name of the operator, the serial number

$ 250.38 Samples, tests, and surveys. of the lease, the identification of the (a) The lessee, when required by the wells, and shall take all necessary means supervisor, shall make adequate tests or and precautions to preserve these mark- surveys in an acceptable manner, withings.

out cost to the lessor, to determine the $ 250.37 Well records.

reservoir energy; the presence, quantity,

and quality of oil, gas, sulphur, other (a) The lessee shall keep on the lease, mineral deposits, or water; the amount or at his headquarters for the field, or and direction of deviation of any well otherwise conveniently available to the from the vertical; or the formation, cassupervisor, accurate and complete rec- ing, tubing, or other pressures. ords of the production, drilling, redrill- (b) The lessee shall take such formaing, deepening, repairing, cementing, al- tion samples or cores to determine the terations to casing, plugging, abandon- identity and character of any formation ing, and all other well operations, includ- in accordance with reasonable requireing electrical or radioactive well logs and ments of the supervisor prescribed at directional well surveys. The records the time of approval of the notice to drill shall show all the formations penetrated, or redrill any well. the content and character of oil, gas, other mineral deposits, or water in each

$ 250.39

Directional survey. formation; the kind, weight, size, and (a) An angular deviation and direclanded depth of casing used in drilling tional survey shall be made of the fineach well on the leased lands; and any ished hole of each well directionally other information obtained in the course drilled. of well operations.

(b) The supervisor, at the request of (b) The lessee shall, within 30 days an offset lessee made prior to completion after the completion of any well and of a well, may require a lessee of an within 30 days after the completion of adjoining lease to make or furnish a diany further operations on it, transmit to rectional survey of any hole, at the risk the supervisor copies of the records of and expense of the offset lessee making such work on forms furnished by or ac- such request. A copy of such directional ceptable to him.

survey shall be furnished to the super(c) The lessee shall, within 30 days visor and the offset lessee. If it is deafter the completion of electrical or ra- termined that such well is closer to the dioactive well-logging operations or di- line of the offset lease than one-half (42) rectional well surveys, transmit to the the required distance from such line supervisor copies of such logs or charts. fixed by an approved spacing program Such logs or charts may be either field or by special field rules, the risk and copies of individual runs or composite expense of making such directional surlogs of more than one run.

vey shall be borne by the offending (d) The lessee shall also submit such lessee; and, unless and until the hole is other reports and records of operations promptly straightened to correct the as may be required and in the manner offense, the supervisor may reduce the and form prescribed by the supervisor. allowable production from the well to

(e) Upon request and in the manner prevent its draining unduly the offset and form prescribed by the supervisor, leased area. Neither the imposition of the lessee shall furnish a copy of the any penalty or of the costs of such surdaily drilling report, a plat showing the vey upon the offending lessee nor the re.

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