§ 27-508.01 — Common purchaser of gas; duties; ratable taking; discrimination prohibited

Arizona § 27-508.01

• Jurisdiction: Arizona
• Title 27: Arizona Revised Statutes
• Ch. 4: OIL AND GAS
• Art. 1: Production and Conservation

Text

A. Every person as defined in this article now or hereafter engaged in purchasing from one or more producers, gas produced from gas wells shall be a common purchaser thereof within each pool from which it purchases, and as such it shall purchase gas lawfully produced from gas wells with which its gas transportation facilities are connected in the pool and other gas lawfully produced within the pool and tendered to a point on its gas transportation facilities. Such purchases shall be made without unjust or unreasonable discrimination in favor of one producer against another in the price paid, the quantities purchased, the bases of measurement, or the gas transportation facilities afforded for gas of like quantity, quality, and pressure available from such wells. The question of justice or reasonableness shall be determined by the commission. In the event any such common purchaser is likewise a producer, he is prohibited to the same extent from discriminating in favor of himself on production from gas wells in which he has an interest, direct or indirect, either in whole or in part, as against other production from gas wells in the same pool. For the purposes of this section, reasonable differences in prices paid or facilities afforded, or both, shall not constitute unreasonable discrimination if such differences bear a fair relationship to differences in quality, quantity or pressure of the gas available, the depth of the producing formation, or to the relative lengths of time during which such gas will be available to the purchaser. The provisions of this section shall not apply to:

1. Any well or pools used for storage and withdrawal from storage of natural gas originally produced not in violation of this section or of the rules, regulations or orders of the commission.

2. Purchases of casinghead gas from oil wells.

3. Persons purchasing gas principally for use in operations for secondary recovery of oil or gas, or for pressure maintenance, or cycling, or gas lift operations.

B. If a person is unable to purchase all the gas offered, or whenever the requirement for natural gas produced in Arizona from any pool can be fulfilled only by the production of natural gas therefrom under conditions constituting waste, or whenever the commission finds and determines that the orderly development of, and production of natural gas from, any pool requires the exercise of its jurisdiction, then said person shall purchase gas ratably so as to take the gas in proportion to the allowables or allocations established by the commission from all the wells to which it is connected, but this shall not apply when a difference in their production results from the inability of a well to produce proportionately with other wells connected to the purchaser, and in the event allowables or allocations have not been established by the commission, then said person shall purchase gas ratably from all wells to which it is connected in a manner so as to prevent waste and protect correlative rights as defined in this article. Any common purchaser taking gas produced from gas wells from a pool shall take ratably in accordance with the allocation formula, as may be established by special field rules or statewide regulations of the commission.

C. Nothing in this section shall be construed or applied to require any person to purchase gas of a quality, pressure, or any other condition, by reason of which such gas cannot be economically and satisfactorily used by such purchaser by means of his gas transportation facilities then in service.