§ 3179.7 - Gas capture requirement.

§ 3179.7 Gas capture requirement.

(a) Except as provided in § 3179.8, on a monthly basis, each operator must capture for sale or use on site a volume of gas sufficient to meet the “capture percentage” requirement specified in paragraph (b) of this section.

(b) Beginning January 17, 2019, the operator's capture percentage must equal:

(1) For each month during the period from January 17, 2019, to December 31, 2020: 85 percent;

(2) For each month during the period from January 1, 2021, to December 31, 2023: 90 percent;

(3) For each month during the period from January 1, 2024, to December 31, 2026: 95 percent; and

(4) For each month beginning January 1, 2027: 98 percent.

(c) The term “capture percentage” in this section means the “total volume of gas captured” over the “relevant area” divided by the “adjusted total volume of gas produced” over the “relevant area.”

(1) The term “total volume of gas captured” in this section means: For each month, the volume of gas sold from all of the operator's development oil wells in the relevant area plus the volume of gas from such wells used on lease, unit, or communitized area in the relevant area.

(2) The term “adjusted total volume of gas produced” in this section means: The total volume of gas captured over the month plus the total volume of gas flared over the month from high pressure flares from all of the operator's development oil wells that are in production in the relevant area, minus:

(i) For each month from January 17, 2019, to December 31, 2019: 5,400 Mcf times the total number of development oil wells “in production” in the relevant area;

(ii) For each month from January 1, 2020, to December 31, 2020: 3,600 Mcf times the total number of development oil wells in production in the relevant area;

(iii) For each month from January 1, 2021, to December 31, 2021: 1,800 Mcf times the total number of development oil wells in production in the relevant area; and

(iv) For each month from January 1, 2022, to December 31, 2022: 1,500 Mcf times the total number of development oil wells in production in the relevant area;

(v) For each month from January 1, 2023, to December 31, 2024: 1,200 Mcf times the total number of development oil wells in production in the relevant area;

(vi) For each month from January 1, 2025, to December 31, 2025: 900 Mcf times the total number of development oil wells in production in the relevant area; and

(vii) For each month after January 1, 2026: 750 Mcf times the total number of development.

(d) In any month in which the operator fails to meet the required capture percentage, the “excess flared gas” is royalty-bearing under § 3179.4. The term “excess flared gas” means:

Excess flared gas = (required capture percentage * adjusted total volume of gas produced over the relevant area) − total volume of gas captured.

(e) For purposes of calculating royalties on an operator's excess flared gas in a given month, the operator must prorate the excess flared gas across the relevant area to each lease, unit or communitized area that reported high-pressure flaring during the month.

[81 FR 83078, Nov. 18, 2016, as amended at 82 FR 58072, Dec. 8, 2017]