40-6-2 - Definitions.
40-6-2. Definitions.
For the purpose of this chapter:
(1) "Board" means the Board of Oil, Gas, and Mining.
(2) "Correlative rights" means the opportunity of each owner in a pool to produce his justand equitable share of the oil and gas in the pool without waste.
(3) "Condensate" means hydrocarbons, regardless of gravity, that:
(a) occur naturally in the gaseous phase in the reservoir; and
(b) are separated from the natural gas as liquids through the process of condensationeither in the reservoir, in the wellbore, or at the surface in field separators.
(4) "Consenting owner" means an owner who consents in advance to the drilling andoperation of a well and agrees to bear his proportionate share of the costs of the drilling andoperation of the well.
(5) "Crude oil" means hydrocarbons, regardless of gravity, that:
(a) occur naturally in the liquid phase in the reservoir; and
(b) are produced and recovered at the wellhead in liquid form.
(6) (a) "Gas" means natural gas, as defined in Subsection (9), natural gas liquids, asdefined in Subsection (10), other gas, as defined in Subsection (14), or any mixture of them.
(b) "Gas" does not include any gaseous or liquid substance processed from coal, oilshale, or tar sands.
(7) "Illegal oil" or "illegal gas" means oil or gas that has been produced from any wellwithin the state in violation of this chapter or any rule or order of the board.
(8) "Illegal product" means any product derived in whole or in part from illegal oil orillegal gas.
(9) (a) "Natural gas" means hydrocarbons that occur naturally in the gaseous phase in thereservoir and are produced and recovered at the wellhead in gaseous form, except natural gasliquids as defined in Subsection (10) and condensate as defined in Subsection (3).
(b) "Natural gas" includes coalbed methane gas.
(10) "Natural gas liquids" means hydrocarbons, regardless of gravity, that are separatedfrom natural gas as liquids in gas processing plants through the process of condensation,absorption, adsorption, or other methods.
(11) "Nonconsenting owner" means an owner who after written notice does not consentin advance to the drilling and operation of a well or agree to bear his proportionate share of thecosts.
(12) (a) "Oil" means crude oil, as defined in Subsection (5), condensate, as defined inSubsection (3), or any mixture of them.
(b) "Oil" does not include any gaseous or liquid substance processed from coal, oil shale,or tar sands.
(13) (a) "Oil and gas proceeds" means any payment that:
(i) derives from oil and gas production from any well located in the state;
(ii) is expressed as a right to a specified interest in the:
(A) cash proceeds received from the sale of the oil and gas; or
(B) the cash value of the oil and gas; and
(iii) is subject to any tax withheld from the payment pursuant to law.
(b) "Oil and gas proceeds" includes a royalty interest, overriding royalty interest,production payment interest, or working interest.
(c) "Oil and gas proceeds" does not include a net profits interest or other interest theextent of which cannot be determined with reference to a specified share of:
(i) the cash proceeds received from the sale of the oil and gas; or
(ii) the cash value of the oil and gas.
(14) (a) "Other gas" means nonhydrocarbon gases that:
(i) occur naturally in the gaseous phase in the reservoir; or
(ii) are injected into the reservoir in connection with pressure maintenance, gas cycling,or other secondary or enhanced recovery projects.
(b) "Other gas" includes hydrogen sulfide, carbon dioxide, helium, and nitrogen.
(15) "Owner" means the person who has the right:
(a) to drill into and produce from a reservoir; and
(b) appropriate the oil and gas produced for himself or for himself and others.
(16) "Operator" means the person who has been designated by the owners or the board tooperate a well or unit.
(17) "Payor" means the person who undertakes to distribute oil and gas proceeds to thepersons entitled to them, whether as the first purchaser of that production, as operator of the wellfrom which the production was obtained, or as lessee under the lease on which royalty is due.
(18) "Pool" means an underground reservoir containing a common accumulation of oil orgas or both. Each zone of a general structure that is completely separated from any other zone inthe structure is a separate pool. "Common source of supply" and "reservoir" are synonymouswith "pool."
(19) "Pooling" means the bringing together of separately owned interests for the commondevelopment and operation of a drilling unit.
(20) "Producer" means the owner or operator of a well capable of producing oil and gas.
(21) "Product" means any commodity made from oil and gas.
(22) "Waste" means:
(a) the inefficient, excessive, or improper use or the unnecessary dissipation of oil or gasor reservoir energy;
(b) the inefficient storing of oil or gas;
(c) the locating, drilling, equipping, operating, or producing of any oil or gas well in amanner that causes:
(i) a reduction in the quantity of oil or gas ultimately recoverable from a reservoir underprudent and economical operations;
(ii) unnecessary wells to be drilled; or
(iii) the loss or destruction of oil or gas either at the surface or subsurface; or
(d) the production of oil or gas in excess of:
(i) transportation or storage facilities; or
(ii) the amount reasonably required to be produced as a result of the proper drilling,completing, testing, or operating of a well or otherwise utilized on the lease from which it isproduced.
Amended by Chapter 344, 2009 General Session