New Mexico § 19-10-6 - Shut-in oil wells; conditions

§ 19-10-6. Shut-in oil wells; conditions

A. If, after notice and public hearing, the commissioner finds that because of a severe

reduction in the price of oil the beneficiaries of state trust lands are ultimately

better served if oil wells are allowed to be temporarily shut in rather than produced

at a low price, he may promulgate a regulation which allows such wells to be shut

in. B. Any regulation promulgated under Subsection A of this section shall automatically

expire two years from its effective date unless it is either extended by the commissioner

after a subsequent notice and public hearing or terminated sooner by a subsequent

regulation of the commissioner after finding that the price of oil is no longer severely

reduced; provided, that any such termination shall not be effective until thirty

days after the commissioner has by certified mail sent notice of the prospective termination

to each lessee whose lease is being extended by the operation of this section. C. Any oil and gas lease issued by the commissioner of public lands and maintained

in good standing according to the terms and conditions thereof and all applicable

statutes and regulations shall not expire if: (1) there is, currently in effect, a regulation promulgated under Subsection A of

this section; (2) there is a well capable of producing oil located upon some part of the lands included

in the lease and such well is shut in because of the severe reduction in the price

of oil; (3) the lessee timely notifies the commissioner in writing within thirty days of the

date the well is first shut in; and (4) the lessee timely pays an annual shut-in royalty within ninety days from the date

the well was first shut in and thereafter before each anniversary of the date the

well was first shut in. The amount of the shut-in royalty shall be twice the annual rental due by the lessee

under the terms of the lease but not less than three hundred twenty dollars ($320)

per well per year. If the other requirements of this subsection are satisfied, the timely payment of

the shut-in royalty shall be considered for all purposes the same as if oil were being

produced in paying quantities until the next anniversary of the date the well was

first shut in.