DEPARTMENT OF CONSUMER AND INDUSTRY SERVICES

PUBLIC SERVICE COMMISSION

PRODUCTION AND TRANSMISSION OF NATURAL GAS

R 460.851 Scope and application.

Rule 1. These rules apply to the conduct of the business of all natural gas

producers, gathering companies and transmitters which are or may hereafter be

subject to the jurisdiction of the Michigan public service commission under the laws

of the state of Michigan: provided, that when the production of natural gas is

incidental to, and unavoidable to connection with, the production of oil or mineral

water,

R

460.860, R 460.861, R 460.862, R 460.864, R 460.865, R 460.866, R

460.867, R 460.869, R 460.870, and R 460.871 shall not apply, but special rules

and regulations pertaining in each such case will be issued by the Michigan public

service commission whenever necessary. The grouping of rules under the headings of

production and transmission is for convenience only and the application of any rule is

not restricted because of this fact.

History: 1979 AC.

R 460.852 Definitions.

Rule 2. For the purposes of these rules the following definitions apply:

(a) The word "commission" shall be defined to mean the Michigan public service

commission.

(b) The words "producer" or "operator" shall be defined to mean any

corporation, association or person now or hereafter controlling or being responsible

for the control of any well, or of the production of gas therefrom.

(c) The term "well owner" shall mean any owner of a full working interest in

any well, and the term "fractional well owner" shall mean any owner of a fractional

working interest in any well.

(d) The word "transmitter" shall be defined to mean any corporation, association

or person, now or hereafter engaging in the carrying or transporting of natural gas

by pipe line or lines.

(e) The term "common purchaser" shall be defined to mean any transmitter

engaging in the business of purchasing and transporting natural gas for hire,

compensation or otherwise: provided, that factories or industries in this state may

transport or transmit natural gas through pipe lines for their own use in plants

located wholly within this state without constituting themselves common purchasers.

(See sections 3 and 4 of Act No. 9 of the Public Acts of 1929.)

(f) The term "common carrier" shall be defined to mean any

corporation,

association or person purchasing or collecting natural gas and conveying or transmitting

the same for hire, compensation or otherwise by pipe line or lines as a common carrier.

(See section 6 of Act No. 9.)

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(g) The words "gas" or "natural gas" as used in these rules shall, unless

otherwise specifically provided, be defined to mean dry, merchantable, natural

gas, either dry gas as produced from a dry gas well or so-called casinghead gas after

removal of gasoline vapors, or either such gas after dilution with other gas or gases,

as distinguished from so-called casinghead gas before treatment for removal of

gasoline vapors.

(h) The term "cubic foot" of gas as used in these rules shall have the following

meanings:

(i) In cases where gas is supplied and metered to the ultimate consumer at the

standard delivery pressure which may vary from 3 inches to 10 inches water

column, a cubic foot of gas shall be defined to be that volume of gas which, at the

temperature and pressure existing in the meter, occupies 1 cubic foot.

(ii) In cases where gas is supplied to purchasers through orifice or positive

meters at other than standard delivery pressure as defined above, a cubic foot of gas shall

be defined to be that volume of gas which, at 60 degrees Fahrenheit and at absolute

pressure of 14.65 pounds per square inch, occupies 1 cubic foot; except that in

cases where a different pressure base that is considered by the commission to be

fair and reasonable is provided for in gas sales contracts or in rules or practices of a

distributor such different pressure base shall be effective. (Corrections for

temperature and pressure shall be made in accordance with

Charles' law and Boyle's law respectively, except that, when the meter pressure is

125 pounds per square inch gauge or greater, correction shall be made for deviation from

such laws (supercompressibility) in accordance with American gas association gas

measurement committee report no. 3, "Orifice Metering of Natural Gas" dated April,

1955, or other procedures which may be approved by the commission.)

(iii) The cubic foot of gas for the purposes of measuring gas produced and

purchased at wells shall be defined to be that volume of gas which, at an assumed

temperature of 60 degrees Fahrenheit and an absolute pressure of 15.025 pounds per

square inch, occupies 1 cubic foot: provided, that contracting parties may agree to

any special method or procedure in measuring or determining temperatures that is

considered by the commission to be reasonable. (Corrections for temperature and

pressure shall be made in accordance with Charles' law and Boyle's law respectively,

except that, when the meter pressure is 125 pounds per square inch gauge or

greater, correction shall be made

(supercompressibility) in accordance with American

for

deviation

from

gas

such

association

laws

gas

measurement committee report no. 3, "Orifice Metering of Natural Gas" dated April,

1955, or other procedures which may be approved by the commission.)

(iv) The standard cubic foot of gas for testing the gas itself for heating value,

etc., shall be that volume of gas which, when saturated with water vapor and at a

temperature of 60 degrees Fahrenheit and under a pressure equivalent to that of 30

inches of mercury (mercury at 32 degrees Fahrenheit and under standard gravity)

occupies 1 cubic foot. (Corrections for temperature and pressure shall be made in

accordance with Charles' law and Boyle's law respectively, except that, when the meter

pressure is 125 pounds per square inch gauge or greater, correction shall be made

for deviation from such laws (supercompressibility) in accordance with American

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gas association gas measurement committee report no. 3, "Orifice Metering of Natural

Gas" dated April, 1955, or other procedures which may be approved by the commission.)

(i) "Absolute open flow" is defined as the number of cubic feet of gas per 24

hours that would be produced by a well if the only pressure against the face of the

producing sand in the well bore were atmospheric pressure.

(j) "Modified open flow" is defined as the absolute open flow of a well multiplied

by the acreage factor applied to such well. (See R 460.865(2).)

History: 1979 AC.

R 460.853 Qualifying clause.

Rule 3. The adoption of these rules shall in no way prevent the commission

from altering or amending the same in due legal form, in whole or in part, or from

requiring any other or additional services, appliances or standards, either upon its own

motion or upon the application of any consumer, producer, transmitter or

distributor.

History: 1979 AC.

R 460.854 Reference to commission.

Rule 4. In any case where the parties concerned shall fail to agree upon the

application or the interpretation of any of these rules, or in case of disagreement

regarding regulations promulgated by any producer, common carrier, common

purchaser or distributor concerning service, the matter may be referred by either party

to the commission for settlement.

History: 1979 AC.

R 460.855 Jurisdiction.

Rule 5. (1) The jurisdiction of this commission, according to Act No. 9 of the

Public Acts of 1929, over all gas wells and over the production of gas from such wells

shall begin at the time the production or preparation for production is started and

shall continue and remain with the

commission until production is abandoned. The

operations

of

drilling,

deepening, plugging and abandoning, and in fact all underground work on gas wells,

is under the jurisdiction of the supervisors of wells of the department of conservation.

(Refer to the rules of the department of conservation covering the drilling,

deepening and plugging of wells for natural dry gas.)

(2) Any gas well shall be considered as producing or preparing for production

at such time as an application for a well connection permit has been filed with the

commission, but in case connection with a line to take gas from any well for any

purpose is made before an application for a well connection permit is filed, the

commission's jurisdiction over

connections is started.

such

well shall begin when work of installing

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(3) During the period that gas wells are under the supervision of the commission

it shall be the duty of the chief engineer, directly or through his authorized

representatives:

(a) To enforce such rules as the commission may adopt to carry out the

requirements of said act.

(b) To inspect the maintenance and operations of all gas wells with a view to

preventing waste of gas, damage to gas producing strata or formation, or injury to

life or property, and to issue in accordance with the natural gas acts, necessary

instructions to guard against and prevent such waste, damage or injury.

(c) To determine the percentage of the open flow capacity of any gas well which

may be utilized when in his opinion such action is necessary to protect the gas

producing formation; and to specify the time and method for determining the open

flow capacities of wells.

(d) To regularly gather data and compile statistics showing production of gas from

all wells, fields or pools, and the value of the gas produced.

History: 1979 AC.

R 460.856 Availability of records.

Rule 6. All records required by these rules shall be kept in files within the

boundaries of the state, at the offices of the producer or transmitter responsible for

such records, and shall be available at all

reasonable times for examination by authorized

commission: provided, that temporary absence of records from the state that are

necessary or convenient in the record system of producer or transmitter are

representatives

of

the

a

approved, and that in specific cases the commission may at its own discretion or upon

proper showing, authorize other modifications of this provision. All such records shall

be preserved for at least 3 years after they are made, except as otherwise provided.

History: 1979 AC.

R 460.857 Waste prohibited and defined.

Rule 7. (1) Natural gas shall not be produced, transmitted or distributed in

the state of Michigan in such manner and under such conditions as to constitute

waste.

(2) The term "waste" as used in these rules in addition to its ordinary meaning

shall include (a) the permitting of any gas to wastefully burn, (b) the wasteful use of

gas including the use of gas in its natural state in engines or pumps where its pressure is

the main or direct operating force, unless such gas can be consumed after discharge

from such engines or

pumps for normal use for fuel purposes, (c) surface waste, which shall include

the unnecessary blowing, release or escape of natural gas into the open air, and any

unnecessary or excessive surface loss, including leakage, fire loss and loss or

destruction incident to the manner of equipping, operating or producing of such well

or wells, or by inefficient handling thereof, (d) underground waste, which shall

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include inefficient, excessive, or improper use or dissipation of the reservoir

energy, including gas energy and water drive, of any pool; and the equipping,

operating, or producing of any well or wells in such a manner as to reduce or tend to

reduce the total quantity of gas ultimately recoverable from such pool, and the

unreasonable damage to underground deposits from the operation, maintenance or

production of gas; and (e) the intentional drowning with water of a gas stratum

capable of producing gas (except that temporary drowning may become necessary as

an exigency of drilling or repairing wells).

History: 1979 AC.

R 460.858 Fire prevention and control.

Rule 8. The commission recognizes that practically all gas well fires occurring

after wells have been placed on production are due to improper wellhead design or

carelessness and the attention of well owners and operators is particularly directed

to the following R 460.859 and R 460.860 in order to eliminate this hazard.

History: 1979 AC.

PRODUCTION

R 460.859 Wellhead heaters.

Rule 9. Heaters for preventing freezing in wellhead connections shall be installed

or reinstalled for service at the beginning of each winter, only after wellhead

connections are checked for leakage, and after any leakages have been repaired and

stopped. The products of combustion, or the burned fumes from gas or any other fuel,

shall not be used in such heaters or in any other way to apply heat directly to

wellheads or to thaw out connections. The points of air mixture for any flame at

any wellhead heater shall be located at least 10 feet from the wellhead, and any burned

exhaust gases shall be discharged from flue or chimney at least 8 feet from wellhead

or wellhead connections and at least 4 feet higher than the top of wellhead connections.

All heaters installed at or near wellheads shall be inspected at least once daily while

in operation.

History: 1979 AC.

R 460.860 Wellhead fittings.

Rule 10. (1) Wellhead connections shall be designed and installed in accordance

with principles of design and installation illustrated on plate 1A, appendix A, unless

specific approval is secured in writing from the chief engineer.

(2) Master or control valve shall be installed with valve stem not less than 2, nor

more than 4 feet above the ground level, provided that whenever tubing or siphon

is installed in any well, the valve and wellhead fitting construction and spacing will

necessarily be governed by special conditions in each separate case.

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(3) Wheels on valves shall be left and secured in place to facilitate emergency

opening or closing of valves with an emergency long stemmed wrench or key.

(4) A space free from surface obstructions shall be kept clear on the stem or

wheel side of each control gate or valve, so that workmen can approach wells and

use long stemmed wrenches or keys in opening or closing valves in case of fire.

History: 1979 AC.

R 460.861 Determination of well capacity.

Rule 11. (1) The producing or open flow capacities of wells to be used as a basis

for proration shall be determined by the commission at its discretion, when

necessary for the practical, equitable and economical operation of wells, pools or

fields. The method of determining said capacity where practicable shall avoid the

waste of gas encountered in the "open flow" test method, and shall make use of the

United States bureau of mines production capacity test method that is based on

observations

production

of shut-in well pressure and the measurement of volumes of gas

at varying wellhead pressures, or of any improvements that may be

approved by the commission.

(2) Capacity tests may also be made by producers, purchasers or transmitters

with the approval of the commission. The commission may require that any

applicant for such test shall make a sufficient showing of necessity for a test. All

information obtained from such tests shall be

promptly compiled and filed with the commission.

(3) When a producer is dissatisfied with a capacity test he may require the

commission to redetermine the open flow capacity of the well by notifying it to that

effect and depositing the sum of $10.00 with it. If the retest shows the original test to

be materially in error, the deposit will be refunded, otherwise it will be retained as

nominal compensation for the costs incurred in making the test.

(4) Records of tests of meters, well capacity tests or tests of specific gravity,

chemical composition or heating value of gas made by or on the order of any

producer, transmitter, purchaser, distributor, or consumer shall be available for

information of the commission, and reports shall be filed with the commission when

requested.

History: 1979 AC.

R 460.862 Well meters.

Rule 12. (1) No gas shall be withdrawn from wells for transportation or sale, nor

for any other regular and extended uses, except for fuel for drilling on the same lease,

or for use for domestic purposes by lessors (as usually specified in oil and gas

leases), without being metered, provided, however, that the commission may approve

in advance an estimate of the amount that will be required for a specific drilling

operation off the lease. The commission's representatives shall have access to all meter

houses and meters at all times.

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(2) Each gas well completed after the effective date of this order shall be equipped

with its own separate meter, except that:

(a) The commission may, in cases of small wells, permit the measurement of the

gas from more than 1 well through a single meter.

(b) The commission, the interested well operator and the gas purchaser jointly

may, in cases of large wells of identical operator control, agree to the measurement of

the gas from more than 1 well through a single meter; provided that:

(c) In either case (a) or (b) of this subrule, the gas from only 1 well at a time shall

be measured by a single meter, and that through the use of check-valves, "blind" discs

or other device or means, lines from all wells except the one from which gas is being

measured shall be completely closed so that the gas from any 2 or more wells shall

not be in any way intermixed prior to measurement.

(3) Meters shall be located as close to wells as is reasonably practicable,

considering accessibility and the possible desirability in some cases of grouping not

more than 4 well meters in 1 meter house. Flow lines from wells to meters shall be

constructed, maintained and operated in such manner that leakage losses and waste may

be avoided, and these lines shall be patrolled regularly to check for leaks or breakage

that may develop through unforeseeable and unavoidable accidents.

(4) In view of the latitude allowed in the location of meters and the probability

that the "point of delivery" of gas at the wellhead will be some distance from the

point of measurement, the gathering company or purchaser is charged with a high

degree of care in preventing all gas loss between these 2 points and shall therefore

arrange its operating procedure to that end.

(5) The commission shall have authority, upon notice to any purchaser or

transmitter, to cause to be made such tests as it may deem necessary to determine the

accuracy or other conditions of any meter or if its appurtenances, (see R 460.907

and R 460.909 in "standards of gas service") and any such purchaser or transmitter shall

be entitled to be present at any such test if he so elects.

(6) Upon written request by an interested well operator, well owner or fractional

well owner, the commission shall cause to be made special tests of meter through which

gas from a well is being measured for any purpose, and the applicant, the gas

purchaser or transmitter, and other interested parties shall be entitled to be present

when any such test is made. One such special test of a meter shall be made during any

calendar year for a fee of $5.00; further special tests of the same meter during a

calendar year may be made at the discretion of the commission upon written

application of an interested well owner or operator presenting evidence of the necessity

for such special test, for a fee of $15.00; but for any test after the first one during any

calendar year, the commission may at its discretion add to the fixed fee of $15.00 a

charge for all traveling and subsistence expenses incurred by its representatives in

making such tests.

(7) Any application by an interested well owner or operator for a special meter

test shall be accompanied by a deposit of the fixed fee for such test. If the test shows

that the calculated measurements of gas are or have been in error more than 2% in favor

of the gas purchaser, the deposit made by the well owner or operator shall be

refunded to him, and the amount of such refund shall be paid to the commission by

the gas purchaser.

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(8) In cases where gas measurements are shown by meter tests to have been in

error more than 2%, adjustments of accounts shall be made in favor of the party in

interest who has been injured by reason of such errors, the measurement error

indicated by the meter test being applied to all recorded gas measurements during

the time such error has existed if such time is ascertainable, and if not ascertainable

then said correction shall be made for 1/2 of the period since the meter was last tested and

adjusted in a manner satisfactory to the commission; except that in cases where a

different basis of adjustment considered by the commission to be fair and reasonable is

provided for in gas purchase contract such different basis shall be effective.

(9) No adjustments in accounts need be made if such adjustments amount to less

than $2.00 per month.

History: 1979 AC.

R 460.863 Unmetered gas.

Rule 13. Lessors of lands who are using unmetered gas from wells located on their

lands for domestic fuel in their principal houses or dwellings, and well operators or

owners who are using unmetered gas from their wells for fuel for drilling on the same

lease, shall so construct and maintain their lines and the fittings thereon that there

shall be no leakage losses. No wasteful gas burners or other wasteful gas

consuming appurtenances shall be used by these consumers of unmetered gas. The

representatives of the commission shall require the immediate correction of any

wasteful use of gas by these classes of consumers, and may prohibit the continued use of

gas if such corrections are not made immediately.

History: 1979 AC.

R 460.864 Permit for well connection.

Rule 14. (1) The operator of each well shall, before gas is produced from such

well, make application to the commission on form provided therefor, (form 15A,

appendix A) for permission to sell gas from such well: provided, that application and

permit shall not be required for making connection to pipe lines used exclusively

for transporting or transmitting gas for fuel for drilling wells, or gas used in homes

of lessors of lands on which wells are located.

(2) Any application for a standard well connection permit should be submitted

to the commission not less than 15 days before the first day of the month during which

it is expected that receiving, transmitting or purchasing of gas shall commence.

Upon receipt from a well operator of a properly executed application for a well

connection permit, the commission will issue well connection permit order (form 16A,

appendix

A)

and

will furnish a copy thereof to the purchaser or transmitter

designated by the applicant operator, such copy to be furnished to the purchaser

or transmitter at least 10 days before the first day of the monthly period used in

accounting for gas. The commission will cause a well capacity test to be made, and

following such test will issue an allowable withdrawal order (form 17A, appendix A)

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to the well operator, and will furnish a copy thereof to the purchaser or transmitter on or

before the first day of the monthly period used in accounting for gas.

(3) The purchaser or transmitter shall connect such well to its gathering

system and prepare to receive, transmit or purchase gas during the next succeeding

monthly period used in accounting for gas, provided that it has received the copy of

the well connection permit from the commission at least 10 days before such date;

that the operator has prepared and placed the well in condition to make such

connection conveniently possible, and that obstacles or conditions beyond its

reasonable control do not prevent such connection.

(4) In case of emergency a temporary well connection permit may be issued by

wire upon receipt of an application by telegraph from well operator, giving the full

name of the applicant, the full name of the well, the conservation department

permit number, the date of well completion, and the open flow capacity of the well;

and also a telegraphic statement from the prospective transmitter or common purchaser

of gas that it will accept said well for connection. Such telegraphic application must be

followed within 10 days by the regular application required in subrule (1) of this

rule.

(5) The commission and a transmitter or purchaser may at their option and

discretion cooperate, if it is reasonably practicable, to issue orders, make well

capacity tests, connect to wells and make provisions for receiving, transmitting or

purchasing gas from a well if

the

application for temporary or standard well

connection permit has not been filed with the commission as much as 15 days before

the beginning of the monthly period used by the transmitter or purchaser in

accounting for gas, but there shall be no obligation in such cases on the part of

either the commission or the transmitter or purchaser to either commence or complete

such orders, tests, connections or preparations to receive, transmit or purchase gas

during the next succeeding monthly period.

(6) With each standard well connection permit there will be issued a metal plate

bearing the permit number. This plate must be affixed to the wellhead substantially as

shown on plate 1A, appendix A, and in case of loss or destruction must be

immediately replaced. The original plate will be furnished without charge, but a nominal

charge of 50 cents will be made for each replacement plate.

(7) When processed casinghead gas is to be transmitted for

public

use,

application shall be made to the commission for a special connection permit before

transmission by pipe line is begun. (See R 460.851.)

History: 1979 AC.

R 460.865 Taking of gas.

Rule 15. (1) Maximum withdrawal:

(a) General. The maximum withdrawal during any 12 months' period from any

gas well shall average on a daily basis not more than 17 1/2% of the current approved

absolute daily open flow capacity of such well, such withdrawal being the allowable

maximum annual withdrawal. Whenever a new open flow capacity test is made and

approved by the commission, such new test will, upon notice to the producer and

transmitter, become immediately effective in determining the maximum withdrawal. In

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order to provide for a variable seasonable demand, the following percentages of the

last determined allowable maximum annual withdrawal may be taken, but not

exceeded: In any 6 consecutive months, 66%; in any 1 month, 12 1/2%; and in any 1

day, .6 of 1%.

(b) Special. The maximum withdrawal from Monroe gas wells located in the

Walker-Talmadge oil field shall not exceed 50% of the last officially measured open

flow of each such well.

(c) Special. The maximum withdrawal during any 12 months' period from any

gas well in the Howell field shall average on a daily basis not more than 25% of the

current approved absolute daily open flow capacity of such well, such withdrawal being

the allowable maximum annual withdrawal. The allowance for seasonable variation in

the rate of take as set forth in subrule (1)(a) shall continue to be based on the annual

maximum allowable withdrawal determined as 17 1/2% of the open flow, unless the

allowance so determined shall be less than 25% in which case the 25% allowance

shall prevail.

(d) Special. When a dry natural gas field has been depleted to such an extent that

production has become merely a stripper operation, the commission may approve

different maximum withdrawals than required by subrule (1)(a) if it finds that such

different withdrawals will conserve gas and, in its opinion, support commercial

production for a longer period than would otherwise be the case.

(2) Acreage factor. The acreage or area from which any well is considered

to produce or draw gas shall enter into the determination of the take of gas from such

well, a well in the center of a square 40-acre tract of land being considered as unity,

with an acreage factor of 1. The factor for a well producing from a square or

rectangular tract of any area other than 40 acres shall be the area in acres allotted to

such well divided by 40, and the factor for a well in the center of a base drilling or

producing unit of 160 acres of land shall be 4; provided that:

(a) No side of the area allotted a well shall be farther from the well than the

distance from the center point of the production area to the most distant side thereof,

excepting that:

(i) In the case of a discovery well, this distance may be increased by as much as

330 feet for a well located on a 40-acre tract of land, and 990 feet for a well located on a

160-acre tract of land.

(ii) In the case of a well drilled off center of

a

production area because of

topographical or other physical conditions, this distance may be increased by not to

exceed 25% upon presentation to the commission of satisfactory proof, supported by

a map and a written statement showing that a center location was prohibited. Every

reasonable effort shall be made to drill wells at center locations.

(iii) The 16 gas wells drilled, or in the process of drilling, in the Cannon Creek

gas field in the counties of Missaukee and Kalkaska prior to September 15, 1950, shall

each be entitled to an acreage factor of 4, as long as the producing unit assigned to

each is 160 acres, notwithstanding any other provisions of this rule.

(b) In addition to the above provisions, acreage factors shall be subject to the

following limitations:

(i) The length of a production area shall not be greater than twice its width.

(ii) Production areas shall not overlap.

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(iii) Any production area shall be entirely within the leasehold (or leaseholds in

case 2 or more are pooled) on which the well to which it refers is drilled.

(iv) No acreage factor shall exceed 4 except in the Kawkawlin-Salina gas field, as

it is now or may be hereafter defined by the supervisor of wells, wherein it may be

increased to 16.

(v) The acreage factors for wells located on tracts that are neither square nor

rectangular shall be determined by the commission in each individual case,

following, insofar as they are applicable, the general principles applied herein.

(vi) In the following fields which have been developed with 40-acre drilling

units, there shall be no acreage factor greater

than 1, unless the operator or

leaseholder shall secure and file with the commission written consent from all direct

and diagonal offset 40-acre leaseholders upon whose holdings there are producing or

productive gas wells.

Austin Crystal Six Lakes Broomfield New Haven-Sumner Clare (McKay)

West Vernon Vernon

(vii) No well drilled on a 40-acre location in any of the above fields shall each be

entitled to an acreage factor greater than 1 if such well is directly offset by more than 2

producing or productive wells with acreage factors of 1 or less.

(c) Traverse oil wells drilled in the Walker-Talmadge field prior to February 25,

1942, shall, when either deepened to produce gas from the Monroe formation or

plugged back to produce gas from the Berea formation, receive acreage factors as

provided by the attached map entitled plate 2a, but any Monroe or Berea gas wells

drilled from the surface of the ground in the Walker-Talmadge oil field subsequent to

February 25, 1942, shall receive acreage factors based on the usual provisions as

stated in subrule (2)(a) and (b) of this rule.

(3) Minimum take:

(a) The minimum allowable take of gas from any well shall be 500,000 cubic

feet per month, except under the following conditions:

(i) In no case shall the total gas taken from a well be larger than provided for in

subrule (1).

(ii) The average minimum volume of gas production monthly per well shall be in

conformity with the market demand when such market demand is not high enough to

permit the taking of the full minimum allowable from all wells. Each operating month

as used by the gas purchasers in a field shall be considered separately in

administering the minimum take provisions herein, and, if the total sale or take of

gas from any field or pool during any such monthly period is not sufficient to permit

the taking of the full minimum allowable from each well, there shall be no carryover

or balance of gas to be taken from such well, field, or pool under these minimum

take provisions because of such deficiency in total market demand.

(iii) The minimum take of gas from any well having an acreage factor other than

1, as provided for in subrule (2), shall be modified or adjusted by multiplying the

minimum allowable take of 500,000 cubic feet by such acreage factor, the resulting

minimum take to be subject to the restrictions in subrule (3)(a)(i) and (ii) of this

rule.

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(b) The allowable take from any well that is not capable of producing as much gas

as its allowable minimum under the operating conditions of the field in which it is

located shall be the total amount of gas that such well is capable of producing under

such conditions.

(c) For fields or pools wherein reservoir conditions and gas withdrawal operations

do not permit the practical application of subrule (3)(a), special procedures

applicable to such special conditions may be authorized by the commission, provided

that any such special procedure shall accomplish the intents and purposes of the

rule as closely as is practicably possible.

(4) Ratable taking or gas proration: All gas produced from

a

field or pool in

excess of the minimum allowable provided for in subrule (3) shall be taken ratably from

all wells that are capable of producing more than their minimum allowable take. Such

excess shall be divided among such wells in proportion to their modified open flow

capacities or any other method determined by the commission to be equitable or

less wasteful, except that in no case shall the total gas taken from a well be larger

than provided for in subrule (1).

(5) Proration schedules:

(a) Proration schedules and orders shall be prepared and issued

by

the

commission. Such orders shall be revised not to exceed once each month, the

effective date of any revision being the first day of the monthly period used by the

gathering company, transmitter, or purchaser in accounting for gas.

(b) No proration schedule or production order affecting any well shall be made

until after well connection permit has been issued.

(6) Well conditioning requirements:

(a) A well to go on proration or production shall have complied with the following

requirements: The well and wellhead connections shall be installed in accordance

with standards prescribed in R 460.860 of this order. The wellhead connections shall

be tight and free from leakage. If there is evidence of underground leakage of gas or of

water intrusion, the well shall be repaired to the satisfaction of the commission.

(b) In cases of wells where leaks, other defective well conditions, or water

intrusion develop after a well has been placed on proration, the

operator shall make repairs promptly and to the satisfaction of the commission,

and, if repairs have not been made within a reasonable time as determined by the

commission, then such a well shall be taken off proration and shall not be returned

to proration until the commission has been notified that repairs have been made and

has approved a return to proration.

(c) After any gas well has been placed on proration, no deepening or plugging

back work shall be started until the operator has notified the commission and the gas

transmitter or purchaser, in writing, and until that operator has secured the approval,

in writing, of the supervisor of wells of the department of conservation, of the

deepening or plugging back plan, in conformity with the rules and regulations of such

supervisor of wells.

(d) A well that is being either deepened or plugged back may be removed from

proration:

(i) If, in the judgment of the commission, the showing indicates that the

operation may affect the open flow capacity of the well.

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(ii) If the operation is to consume a period of 10 days or more.

(iii) If the wellhead fittings remain altered in such a manner that reconnection

with a pipe line cannot be made within 10 days after such fittings are removed.

(e) A well that has been removed from proration because of deepening or

plugging back operations shall not be returned to proration until it has been placed in

condition to resume production in a manner satisfactory to the supervisor of wells of

the department of conservation and to the commission, and the gas transmitter or

purchaser have been so advised in writing.

History: 1979 AC.

R 460.866 Production reports.

Rule 16. (1) Every operator of 1 or more gas wells shall file with the commission,

on or before the twenty-fifth day of each month, producer's monthly report (form no.

18A or 18B, appendix A) giving full information as to production of gas from each well

separately and such other data as is requested. This report shall be signed by the

producer or by a responsible employee, whose capacity or title shall be indicated, and

who is in position to know that the data or information given is correct. The

commission may permit, upon application and satisfactory showing, a reporting

interval of more than 1 month. If this gas production information is regularly

furnished to the commission by the purchaser or transmitter of gas, based on

information or data gathered by such purchaser or transmitter, the producer may be

relieved of obligation to furnish data.

(2) Any gas used, whether metered or unmetered, for drilling or lease operating

or other field fuel purposes on a lease other than the one from which it is produced

shall be reported to the commission monthly by the gas producer on form 18B

appendix A. Either the price per M. cubic feet of gas or the flat rate charge that is made

shall be stated, and in the case of gas that is not metered the estimated approximate

volume of gas used shall be stated.

History: 1979 AC.

R 460.867 Pumps or compressors.

Rule 17. No gas well, pool or field shall be placed under vacuum by the use of

compressors, pumps or other devices except with the approval of the commission. If

and when the placing of a vacuum in any well, pool or field is planned, application for

approval shall be made to the commission,

and the adjoining lease owners and

operators of a pool or field who may be affected shall be given notice. The

commission may call a hearing on the subject, or may take such action as it deems

advisable.

History: 1979 AC.

TRANSMISSION

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R 460.868 Approval for pipe line project.

Rule 18. (1) Every transmitter shall file with the commission an application

(see form 19A, appendix A), setting forth the necessity and practicability of such

proposed transmission line or lines; and the commission shall, if its study of the

proposed project shows that such line or lines will, when constructed and in

operation, serve the convenience and necessities of the public, grant said application;

and no construction shall begin prior to the granting of the application and the

approval of the map, route and type of construction by the said commission;

provided that this rule shall not apply to the laying of pipe lines used exclusively for

transporting or transmitting gas for drilling purposes.

(2) The transmitter shall, as a part of the application, submit to the commission a

map or plat of the proposed line or lines, showing the dimensions and character of

such line or lines, its compressor stations, control valves and connections; an estimate

of the cost of the project; an estimate of the proven reserves of gas available for

transportation through the proposed line; and an estimate of the anticipated revenue,

operating expenses and earnings of the project for a 5-year period.

(3) The transmitter's application shall, among other things, state (a) when said

transmitter is a common purchaser the price to be paid producers for the gas and the

price at which gas will be sold to distributors; (b) when said transmitter is a common

carrier, the rates and fee which it will charge for the service to be performed by it.

Certified copies of all executed or proposed contracts with producers or distributors

shall be filed with the application, together with such additional information as the

commission may require.

History: 1979 AC.

R 460.869 Requirements before transmitter may connect to gas wells.

Rule 19. Transmitters shall not connect with any gas well until a temporary or

standard well connection permit has been issued by the commission. (This permit

is not required for connecting lines exclusively for carrying gas for drilling purposes.)

History: 1979 AC.

R 460.870 Maximum taking of gas.

Rule 20. The transmitters in any field shall not at any time take gas from such

field in greater total amounts than the sum of the withdrawal allowances of all

connected individual wells as determined by R 460.865(1).

History: 1979 AC.

R 460.871 Proration among pipe lines and fields.

Rule 21. The allowable rates of withdrawal of gas for purposes of proration

among producers and among several purchasers, transmitters or pipe lines from the

same field, and the prorating of withdrawals among several fields shall be subject to

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approval by the commission. It shall be the duty of the commission to determine that

production from any pool or field is not abandoned or unreasonably curtailed until

recovery of all economically recoverable gas has been assured.

History: 1979 AC.

R 460.872 Discrimination.

Rule 22. (1) Common purchasers and common carriers are expressly

prohibited from discrimination in amount of gas taken, price paid for or rates charged

for like grades of natural gas or facilities as between producers or persons; and if a

common purchaser or common carrier is likewise a producer, it shall not

discriminate in favor of its own production or of production in which it may be

interested directly or indirectly. The commission shall have authority to relieve any

such common purchaser or common carrier, after due application,

notice

and

hearing, from the obligation of purchasing or receiving gas from wells which due to

variation in quality and pressure, or for economic reasons, are not at the time a

practicable source of supply.

(2) Except in cases where exigency of service requires emergency measures,

common purchasers or common carriers shall not abandon nor curtail withdrawals

or purchases of gas from any pool or section of pool in favor of another pool or section

thereof, because of temporary or permanent decline in reservoir or producing

pressure without having first received the approval of the commission.

History: 1979 AC.

R 460.873 Patrolling and supervision.

Rule 23. It shall be the duty of all transmitters to closely supervise the operation

of all their lines to the end that leakage may be kept at the lowest practical minimum.

This shall include regular patrolling by competent employees and prompt attention to

leaks discovered or to other conditions affecting the safe and efficient operation of

pipe line systems.

History: 1979 AC.

R 460.874 Transmitter's or purchaser's reports and records.

Rule 24. (1) Every common purchaser, common carrier or transmitter of natural

gas shall file with the commission on or before the twenty-fifth day of each month, for

the last preceding month, gas transmitters monthly report (form 20A, appendix A),

giving full information as to gas purchased from each producer and as to sales or

deliveries. Said report shall be signed by the transmitter or by a responsible

employee, whose capacity or title shall be indicated, and who is in a position to know

that the data or information is correct.

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(2) Meter charts shall be kept on file at the office of the transmitter, and the

commission shall have access to all such records at any reasonable time. Also refer to R

460.902 in "standards of gas service."

History: 1979 AC.

R 460.875 Filing of rates, contracts, and regulations.

Rule 25. (1) Complete rate schedules, and rules and regulations governing

each common purchaser's or common carrier's relations with its producers and

distributors, shall be filed in compliance with commission order D-3096, or in

pertinent superseding or modifying orders. In case all purchase contracts in a single

field are identical, the filing of such contracts as provided in section 25(2) hereof,

shall be considered as fulfillment by the common purchaser of this requirement.

(2) Every common purchaser or common carrier shall file with the

commission a true and verified copy of any contracts for purchasing, receiving or

supplying of gas within 30 days after the making thereof.

(3) No change shall be made in any filed rates, charges, rules or regulations

without approval of the commission.

Distributors

Utilities distributing natural gas should also refer to and be governed by "standards

of gas service," commission order no. 1982.

3. That attached hereto and made a part hereof is a map or plat of proposed line

or lines, showing the dimensions and characters of such line or lines, compression

stations, control valves and connections.

4. That attached hereto and made a part here of is an exhibit showing the gas

reserves served by the proposed main or mains.

5. That attached hereto and made a part hereof is a schedule of the rates and

prices at which the applicant herein will receive gas at delivery stations and a

schedule of rates or charges at which it will deliver gas to connecting carriers or

distributing lines or customers, and, in case it is proposed to operate as a carrier for

hire, a schedule of the rates and charges to be made for the services to be performed

by the applicant.

6. That attached hereto and made a part hereof are certified copies of all contracts

now signed for the purchase or sale of natural gas.

7. That attached hereto and made a part hereof is a carefully compiled estimate

by expert engineers setting forth the total cost of the completed project.

8. That attached hereto and made a part hereof is a carefully prepared estimate by

competent engineers showing the anticipated revenue, operating expenses and earnings

for a five-year period. And said petitioner, therefore, prays that the Michigan Public

Service Commission, under the authority of Act No. 9, of the Public Acts of

Michigan for the year 1929, may grant to said petitioner its approval of the said map

or plat and of the construction of said line or lines and may determine that such line or

lines, when constructed and in operation, will serve the convenience and necessity of

the public.

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Figure for 460.875 (Part 1 of 8)

Figure for 460.875 (Part 2 of 8)

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Figure for 460.875 (Part 3 of 8)

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Figure for 460.875 (Part 4 of 8)

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Figure for 460.875 (Part 5 of 8)

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Figure for 460.875 (Part 6 of 8)

Figure for 460.875 (Part 7 of 8)

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Figure for 460.875 (Part 8 of 8)

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Above well locations are on the normal 10-acre pattern used in Walker-

Talmadge oil field.

Those well locations shown in solid black represent Traverse oil wells that may

be deepened or plugged back to obtain gas production with acreage factors as stated.

On tracts of 20 acres or more, operator may deepen or plug back only 1 of the wells

shown in black in order to secure maximum allowable for the tract. The deepening or

plugging back of a second well on the same tract, regardless of size of tract, shall not

increase the allowable. If, at the option of the producer, any of the above Traverse

wells, other than those in solid black, are deepened or plugged back, they shall receive

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the usual acreage factor prescribed by commission's order D-2883, effective May 1,

1940.

History: 1979 AC.

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