NOTICE OF SUBSTANTIVE CHANGE
TYPE OF FILING: Amendment
1. Agency Information
Natural Resources; Oil, Gas and Mining; Oil and Gas
Department of Natural Resources
1594 W North Temple, Suite 1210
2. Contact Persons
Please address questions regarding information on this notice to the persons listed above.
3. General Information
A. Rule or section catchline:
R649-2-4. Designation of Operator
B. Purpose of the new rule or reason for the change:
The Division of Oil, Gas and Mining (division) is updating their bond requirements for Oil and Gas wells and has added a new form, Form 0 Registration Form.
C. Summary of the new rule or change:
This rule filing introduces a new form, Form 0 Registration Form, so there will be an agent responsible for operations who will also receive and accept all communications, notices, and orders from the division and board.
5. Fiscal Information
Provide an estimate and written explanation of the aggregate anticipated cost or savings to:
There is a total of one state agency, the Division of Oil, Gas and Mining, that will be associated with this proposed rule change. There will be no fiscal impact to the agency as these changes are purely administrative.
No local government fiscal impact is anticipated since this rule only impacts oil and gas operators, the Division, and the Board.
C. Small businesses ("small business" means a business employing 1-49 persons):
There are 303 small business oil and gas operators (for a complete listing of NAICS codes used in this analysis, please contact the agency) in the state of Utah. There is no fiscal impact to small businesses as these changes are purely administrative.
D. Non-small businesses ("non-small business" means a business employing 50 or more persons):
There are a total of 4 non-small business oil and gas operators (for a complete listing of NAICS codes used in this analysis, please contact the agency) in the state of Utah. There is no fiscal impact to non-small businesses as these changes are purely administrative.
E. Persons other than small businesses, non-small businesses, state, or local government entities ("person" means any individual, partnership, corporation, association, governmental entity, or public or private organization of any character other than an agency):
This rule change will not affect persons other than small businesses, businesses, or local governments as this rule only applies to small and non-small business operators and the Division of Oil, Gas and Mining.
F. Compliance costs for affected persons:
There will be no compliance costs as this rule change is purely administrative.
6. Regulatory Impact Summary Table
Enter the cost or savings in the relevant cell. If there is no cost or savings, enter, "$0." If a cost or savings is inestimable, enter, "inestimable."
7. Regulatory Impact Analysis Approval
The Commissioner of the Department of Natural Resources, Joel Ferry, has reviewed and approved this regulatory impact analysis.
8. Family Impact Information
A. The agency has considered this rule's impact on family health, stability, and formation:
9. Citation Information
Provide citations to the statutory authority for the rule. If there is also a federal requirement for the rule, provide a citation to that requirement:
11. Public Notice Information
The public may submit written or oral comments to the agency identified in box 1.
A. Comments will be accepted until:
12. Effective Date Information
This rule change MAY become effective on:
(NOTE: This is the date the agency anticipates making the filing effective. It is NOT the effective date)
13. Agency Authorization Information
Agency head or
designee and title:
R649. Natural Resources; Oil, Gas and Mining; Oil and Gas.
R649-2. General Rules.
R649-2-4. Designation of Operator.
(1)[.] Subject to[ the provision of] Subsections R649-2-4(3) and (4), the designated operator of a drilling unit for oil and gas operations shall be the owner which, in the applicable drilling unit: (a)[1.1.] owns more than an undivided 50% of the working interest; (b)[1.2.] owns 50% or less of the working interest, and has the written authorization and designation by additional owners to operate on their behalf which, combined with the designated operator's interest, totals more than an undivided 50% of the working interest; or (c)[1.3.] is the designated owner selected by the consenting parties to a JOA if: (i[a]) a JOA has been entered by owners owning more than an undivided 50% of the working interest; (ii[b]) the operator designated under the JOA has elected to go non-consent to the proposed operation;[,] and (iii[c]) the terms of the JOA allow the designation. (2)[.] Subject to [the provision of ]Subsections R649-2-4(3) and (4)[ below], in the absence of a board order establishing a drilling unit for oil and gas operations, the designated operator of a well shall be the owner that: (a)[2.1.] owns more than the aggregate of the undivided 50% of: (i[a]) the working interest in the lease covering the lands which the well will physically penetrate and in the targeted formations from which the well will produce; and (ii[b]) the working interest derived from oil and gas owned in fee in the lands which the well will physically penetrate and in the targeted formations from which the well will produce; or (b)[2.2.] owns the aggregate of the undivided 50% or less of: (i[a]) the working interest in the lease covering the lands which the well will physically penetrate and in the targeted formations from which the well will produce; and (ii[b]) the working interest derived from oil and gas owned in fee in the lands which the well will physically penetrate and in the targeted formations from which the well will produce; and (iii[c]) has the written authorization and designation by additional owners to operate on their behalf which, combined with the designated operator's interest totals more than the aggregate of an undivided 50%: (A)[2.2.1.] the working interest attributable to the lease covering the lands which the well will physically penetrate and in the targeted formations from which it will produce; and (B)[2.2.2.] the working interest derived from oil and gas owned in fee in the lands which the well will physically penetrate and in the targeted formations from which it will produce; or (c)[2.3.] the designated owner selected by consenting parties to a JOA if: (i[a]) a JOA has been entered by owners owning more than the aggregate of an undivided 50% of: (A[i]) the working interest in the lease covering the lands which the well will physically penetrate and in the targeted formations from which the well will produce; and (B[ii]) the working interest derived from oil and gas owned in fee in the lands which the well will physically penetrate and in the targeted formations from which the well will produce; (ii[b]) the operator designated under the JOA has elected to go non-consent to an operation; and (iii[c]) the terms of the JOA allow the designation. (3)[.] If the criteria set forth in Subsection R649-2-4(1) or (2) cannot be met, or if any owner desires to challenge whether any of the required criteria have been satisfied, or if any owner desires to challenge the designation of the operator on any other good faith basis, including those specified in Subsection R649-3-4(4), the owner may file a request for agency action seeking board review and designation of a different operator provided that no challenge may be asserted after the protest period specified in Subsection R649-3-4(4) has elapsed and, if the division has determined that good cause exists for shortening the ten day period under Subsection R649-3-4(4), preparation for drilling has commenced. (a)[3.1.] The board may elect to consider the provisions of the applicable JOA regarding change of operatorship in determining which owner shall be the operator rather than designating an operator under this rule. (b)[3.2.] The board may elect to take the designation of an operator under advisement or continue the request until additional information is provided to the board. (4)[.] If a request for agency action is filed as provided in Subsection R649-2-4(3), and after opportunity for a hearing, the board may consider any of the following factors in its deliberations and ruling: (a)[4.1.] experience, prudence and competence as an operator in other similarly situated wells; (b)[4.2.] multi-well expenditures already made for infrastructure that involve the applicable well or drilling unit; (c)[4.3.] good faith negotiations before[prior to] the board's consideration of the operator designation; (d)[4.4.] whether drainage of the spacing or drilling unit has occurred or is likely to occur in the immediate future and whether an owner has committed to drill a well in a timely fashion; (e)[4.5.] project complexity and geology; (f)[4.6.] contractual obligations including those arising under a drilling contract, surface use agreement, or an expiring lease; and (g)[4.7.] any other factors the board may consider[deem] material to its decision. (5)[.] Subject to Subsection R649-2-4(5[.3])(c) the designated operator has the right to request the division revoke any other approved APDs for any wells where preparation for drilling has not yet commenced relating to: (a)[5.1.] the applicable drilling unit; or (b)[5.2.] in the absence of a board order establishing a drilling unit, any approved APDs for any wells approved under the criteria specified in Subsection R649-2-4(2)[ above]. (c)[5.3.] The division may not revoke APDs approved pursuant to Subsection R649-3-4(5). (6) The operator of a drilling unit shall designate, on Form 0 Registration Form, an agent responsible for operations in the state who will receive and accept service of all communications, notices, and orders of the division and board. (a) An operator shall provide the division written notice within five business days of any change to the designated agent or its contact information. (b) Services of any notice or order under Title R649 shall be sufficient if sent to the designated agent at the last address or email address furnished to the division by the operator. (7) The designated operator of a well shall notify the division in writing when a party, other than the designated operator, is on site operating a well. (a) Written notice to the division should include the on site party's name, address, telephone number, and email address. (b) Providing the division with notice of the on site party's contact information does not relieve the designated operator of responsibility for the well or the resolution of any compliance issues. KEY: consenting, nonconsenting, oil, pooling
Date of Last Change: 2026[July 27, 2020] Notice of Continuation: June 30, 2025
Authorizing, and Implemented or Interpreted Law: 40-6-1 et seq.
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