As the newest trend in North Louisiana horizontal wells continues to be cross unit laterals, it is important to note, and be prepared for, the issues that arise with these wells in relation to production reporting. Since cross unit wells, by their very definition, are producing from more than one unit, they do require commingling applications. Production with differing interest is being combined into the same tank or pipeline before sales, since a cross unit well is commingling production from multiple units in its wellbore. While typically we would see such commingling when multiple wells from different units are sharing the same tanks or pipeline prior to going to sales, with these cross unit wells we are achieving the same outcome with a single wellbore.  Commingling applications for cross unit wells should be filed in the same manner, and with the same information, as would be required for two separate wells: an interested party list for each unit represented in the application/wellbore, a diagram, and the corresponding narrative. These applications do take some time to be processed in Baton Rouge, and as such it is important to plan ahead prior to completing and producing cross unit wells. If you have additional questions regarding commingling applications for horizontal cross unit wells, please contact us by emailing information@brammer.com.

Effective August 1, 2015, the Louisiana Department of Natural Resources will be imposing new fees for traditionally fee-exempt processes. While the fees themselves are not exorbitant, it is important to note that they will be expected to accompany the following items/applications going forward: work permits, change of operator submittals for stripper or incapable wells, and annual organization report renewals.

Effective September 1, 2015, there are also new requirements that will likely be implemented regarding financial security. The per-foot amounts for individual well security are slated to increase substantially. Likewise, the blanket security amounts, which is the option most operators choose, are doubling. For example, in the past operators with 11-99 wells were required to have a bond or letter of credit for $125,000. The required bond amount for the same number of wells will now be $250,000. It is important to note that operators who are in good standing with the state will not be required to immediately present a revised bond or letter of credit. They will be allowed to continue under their current financial security amount until such time as they acquire an additional well or apply to drill a new well. There are discussions underway between the state and various operators which may potentially push back the effective date of September 1, 2015, or may revise the new financial security rules to some degree.

In addition, there will be new rules for wells that have been inactive for a considerable amount of time. As stated in the revised LAC 43:XIX.137, all wells which have been inactive for four or more years as of May 20, 2015 shall have one year, until May 20, 2016, to either be plugged or added to a schedule to be plugged. If an operator chooses not to plug their inactive wells, an annual fee of $250 per well will be assessed until such time as the well is plugged.

Links to new fee listing and revised financial security rules may be found here:
http://dnr.louisiana.gov/index.cfm?md=pagebuilder&tmp=home&pid=1291