Section 7-29B-3 - Approval of production restoration projects, well workover projects and stripper well properties. - New Mexico Statutes

7-29B-3. Approval of production restoration projects, well workover projects and stripper well properties.

A.     A natural gas or oil well shall be approved by the division as a production restoration project if:   

(1)     the operator of the well makes application to the division in accordance with the provisions of the Natural Gas and Crude Oil Production Incentive Act [7-29B-1 NMSA 1978] and rules adopted pursuant to that act for approval of a production restoration project and the application is made within twelve months of the completion of the production restoration project; and   

(2)     the division records show that the well had thirty days or less of production in any period of twenty-four consecutive months beginning on or after January 1, 1993.   

B.     A natural gas or oil well shall be approved by the division as a well workover project if:   

(1)     the operator of the well makes application to the division in accordance with the provisions of the Natural Gas and Crude Oil Production Incentive Act and rules adopted pursuant to that act for approval of a well workover project;   

(2)     the division determines that the procedure performed by the operator of the well is a procedure to increase the production from the well, but is not routine maintenance performed by a prudent operator to maintain the well in operation. Such procedures may include, but are not limited to:   

(a)     re-entry into the well to drill deeper, to sidetrack to a different location or to recomplete for production;   

(b)     recompletion by reperforation of a zone from which natural gas or oil has been produced or by perforation of a different zone;   

(c)     repair or replacement of faulty or damaged casing or related downhole equipment;   

(d)     fracturing, acidizing or installing compression equipment; or   

(e)     squeezing, cementing or installing equipment necessary for removal of excessive water, brine or condensate from the well bore in order to establish, continue or increase production from the well; and   

(3)     the operator of the well submits to the division evidence of a positive production increase over the production rate of the well prior to the workover. The operator must submit a production curve or tabulation made up of at least twelve months' production prior to the workover and at least three months' production following the workover that reflects a positive production increase from the workover. The production curve or tabulation must be certified by the operator as that of the well on which a workover was performed.   

C.     A natural gas or crude oil producing property shall be approved and certified by the division as a stripper well property if the division records show that the property is assigned a single production unit number by the department and:   

(1)     if a crude oil producing property, produced an average daily production of less than ten barrels of oil per eligible well per day for the preceding calendar year;   

(2)     if a natural gas producing property, produced an average daily production of less than sixty thousand cubic feet of natural gas per eligible well per day during the preceding calendar year; or   

(3)     if a property with wells that produce both crude oil and natural gas, produced an average daily production of less than ten barrels of oil per eligible well per day for the preceding calendar year, as determined by converting the volume of natural gas produced by the well to barrels of oil by using a ratio of six thousand cubic feet to one barrel of oil.