DEPARTMENT OF CONSUMER AND INDUSTRY SERVICES

                         PUBLIC SERVICE COMMISSION

                PRODUCTION AND TRANSMISSION OF NATURAL GAS


R  460.851   Scope and application.
  Rule 1. These rules apply to the conduct of the business  of  all   natural 
gas producers, gathering companies  and  transmitters  which   are   or   may 
hereafter be subject to the jurisdiction of the   Michigan   public   service 
commission under the laws of the state of Michigan:   provided,   that   when 
the production of  natural  gas  is  incidental  to,   and   unavoidable   to 
connection with, the production of oil or  mineral  water,   R   460.860,   R 
460.861, R 460.862, R 460.864, R 460.865, R 460.866, R 460.867, R 460.869, R  
460.870,  and  R  460.871  shall   not   apply,   but   special   rules   and 
regulations pertaining in each such case will be issued   by   the   Michigan 
public service commission whenever necessary. The grouping  of  rules   under 
the headings of production and transmission is for   convenience   only   and 
the application of any rule is not restricted because of this fact.

  History: 1979 AC.


R  460.852   Definitions.
  Rule 2. For the purposes of these rules the following definitions apply:
  (a) The word "commission" shall be defined to mean  the   Michigan   public 
service commission.
  (b) The words "producer" or "operator" shall  be  defined   to   mean   any 
corporation, association or person now or hereafter  controlling   or   being 
responsible for the control of any well,  or  of  the   production   of   gas 
therefrom.
  (c) The term "well owner"  shall  mean  any  owner  of   a   full   working 
interest in any well, and the term "fractional well owner"  shall  mean   any 
owner of a fractional working interest in any well.
  (d) The word "transmitter" shall be defined  to   mean   any   corporation, 
association or person, now  or  hereafter  engaging  in   the   carrying   or 
transporting of natural gas by pipe line or lines.
  (e) The term "common purchaser" shall be defined to  mean  any  transmitter 
engaging in the business of purchasing and transporting   natural   gas   for 
hire, compensation or otherwise: provided, that factories  or  industries  in 
this state may transport or transmit natural gas through   pipe   lines   for 
their  own  use  in  plants  located  wholly  within   this   state   without 
constituting themselves common purchasers. (See sections 3 and   4   of   Act 
No. 9 of the Public Acts of 1929.)
  (f) The term "common carrier" shall be defined to  mean  any   corporation, 
association or person purchasing or collecting natural gas  and  conveying or 
transmitting the same for hire, compensation or otherwise by  pipe   line  or 
lines as a common carrier. (See section 6 of Act No. 9.)
  (g) The words "gas" or "natural gas"  as  used  in   these   rules   shall, 
unless  otherwise  specifically  provided,  be  defined    to    mean    dry, 
merchantable, natural gas, either dry gas as produced from a dry gas  well or 
so-called casinghead gas after removal of gasoline  vapors,  or  either  such 
gas after dilution  with  other  gas  or   gases,   as   distinguished   from 
so-called casinghead gas before treatment for removal of gasoline  vapors.
  (h) The term "cubic foot" of gas as used in these rules  shall   have   the 
following meanings:
  (i) In cases where gas is supplied and metered to the ultimate  consumer at 
the standard delivery pressure which may   vary   from   3   inches   to   10 
inches water column, a cubic foot of gas  shall  be  defined   to   be   that 
volume of gas which, at the  temperature  and  pressure   existing   in   the 
meter, occupies 1 cubic foot.
  (ii) In cases where gas is supplied to  purchasers   through   orifice   or 
positive meters at other than standard delivery pressure as defined above,  a 
cubic foot of gas shall be defined to be that volume  of  gas  which,  at  60 
degrees Fahrenheit and at absolute pressure of  14.65   pounds   per   square 
inch, occupies 1 cubic foot;  except  that  in  cases   where   a   different 
pressure base that  is  considered  by  the  commission  to   be   fair   and 
reasonable is provided for in gas sales contracts or in rules or practices of 
 a  distributor  such  different  pressure  base  shall  be  effective.
(Corrections for temperature and pressure shall be made  in  accordance  with 
Charles' law and Boyle's law respectively, except  that,   when   the   meter 
pressure is 125 pounds per square inch gauge or greater, correction  shall be 
made for deviation from such laws (supercompressibility) in  accordance  with 
American  gas  association   gas   measurement   committee   report   no.  3, 
"Orifice Metering of Natural Gas" dated April, 1955,  or   other   procedures 
which may be approved by the commission.)
  (iii) The cubic foot of gas for the purposes of  measuring   gas   produced 
and purchased at wells shall be defined to be that volume of gas which, at an 
assumed temperature of 60 degrees Fahrenheit and an   absolute   pressure  of 
15.025 pounds per square inch,  occupies  1  cubic   foot:   provided,   that 
contracting parties may agree  to  any  special  method   or   procedure   in 
measuring or determining temperatures that is considered by the commission to 
be reasonable. (Corrections for temperature and pressure shall  be   made  in 
accordance with Charles' law and Boyle's law respectively, except that,  when 
the meter pressure is  125  pounds  per  square  inch   gauge   or   greater, 
correction   shall   be   made    for    deviation     from     such     laws 
(supercompressibility) in accordance with  American   gas   association   gas 
measurement committee report no. 3,  "Orifice  Metering   of   Natural   Gas" 
dated April, 1955, or other  procedures  which  may  be   approved   by   the 
commission.)
  (iv) The standard cubic foot of gas  for  testing  the   gas   itself   for 
heating value, etc., shall be that volume of  gas   which,   when   saturated 
with water vapor and at a temperature of 60 degrees Fahrenheit  and  under  a 
pressure equivalent to that of 30 inches of mercury (mercury  at  32  degrees 
Fahrenheit and under standard gravity) occupies 1  cubic  foot.  (Corrections 
for temperature and pressure shall be made in accordance  with  Charles'  law 
and Boyle's law respectively, except that, when the meter  pressure  is   125 
pounds per square inch gauge or greater,  correction  shall   be   made   for 
deviation  from  such  laws  (supercompressibility)   in   accordance    with 
American gas association gas measurement committee report  no.  3,   "Orifice 
Metering of Natural Gas" dated April, 1955, or other procedures which  may be 
approved by the commission.)
  (i) "Absolute open flow" is defined as the number of cubic  feet   of   gas 
per 24 hours that would be produced by a well if the  only  pressure  against 
the face of the producing sand in the well bore were atmospheric pressure.
  (j) "Modified open flow" is defined as the absolute open flow  of  a   well 
multiplied by the acreage factor applied to such well. (See R 460.865(2).)

  History: 1979 AC.


R  460.853   Qualifying clause.
  Rule 3. The adoption  of  these  rules  shall  in  no   way   prevent   the 
commission from altering or amending the same in due legal form, in  whole or 
in part, or from requiring any other or additional  services,  appliances  or 
standards, either upon its own motion  or  upon  the   application   of   any 
consumer, producer, transmitter or distributor.

  History: 1979 AC.


R  460.854   Reference to commission.
  Rule 4. In any case where the parties concerned shall fail  to  agree  upon 
the application or the interpretation of any of these rules, or  in  case  of 
disagreement regarding regulations promulgated  by   any   producer,   common 
carrier, common purchaser or distributor concerning   service,   the   matter 
may be referred by either party to the commission for settlement.

  History: 1979 AC.


R  460.855   Jurisdiction.
  Rule 5. (1) The jurisdiction of this commission, according to Act  No. 9 of 
the Public Acts of 1929, over all gas wells and over the production   of  gas 
from such wells shall begin at the time the production or  preparation  for   
production  is   started   and   shall   continue   and   remain   with   the 
commission until production is  abandoned.  The   operations   of   drilling, 
deepening, plugging and abandoning, and in fact all   underground   work   on 
gas wells, is under the jurisdiction of the supervisors of   wells   of   the 
department of conservation. (Refer to  the  rules  of   the   department   of 
conservation covering the drilling, deepening and plugging   of   wells   for 
natural dry gas.)
  (2) Any gas well shall be  considered  as  producing   or   preparing   for 
production at such time as an application for a well  connection  permit  has 
been filed with the commission, but in case connection with a  line  to  take 
gas from any well for any purpose is made before an application  for  a  well 
connection permit is filed, the commission's jurisdiction  over   such   well 
shall begin when work of installing connections is started.
  (3) During the period that gas wells are under the   supervision   of   the 
commission it shall be the duty of the chief engineer,  directly  or  through 
his authorized representatives:
  (a) To enforce such rules as the commission may adopt to  carry   out   the 
requirements of said act.
  (b) To inspect the maintenance and operations of all gas   wells   with   a 
view to preventing waste  of  gas,  damage  to  gas   producing   strata   or 
formation, or injury to life or property, and to issue  in  accordance   with 
the natural gas acts, necessary instructions to guard  against  and   prevent 
such waste, damage or injury.
  (c) To determine the percentage of the open flow  capacity   of   any   gas 
well which may be utilized when in his opinion such action  is  necessary  to 
protect the gas producing formation; and to specify the   time   and   method 
for determining the open flow capacities of wells.
  (d) To regularly gather data and compile statistics  showing  production of 
gas from all wells, fields or pools, and the value of the gas produced.

  History: 1979 AC.


R  460.856   Availability of records.
  Rule 6. All records required by these  rules  shall  be   kept   in   files 
within the boundaries of the state, at the  offices  of   the   producer   or 
transmitter responsible for such records, and shall be   available   at   all 
reasonable times for examination  by  authorized   representatives   of   the 
commission: provided, that temporary absence of  records   from   the   state 
that are necessary or convenient in the record system  of   a   producer   or 
transmitter are approved, and that in specific cases the  commission  may  at 
its own discretion or upon proper showing, authorize  other  modifications of 
this provision. All such records shall be  preserved  for  at  least  3 years 
after they are made, except as otherwise provided.

  History: 1979 AC.


R  460.857   Waste prohibited and defined.
  Rule  7.  (1)  Natural  gas  shall  not  be   produced,   transmitted    or 
distributed in the state  of  Michigan  in  such  manner   and   under   such 
conditions as to constitute waste.
  (2) The term "waste" as used in these rules in addition  to  its   ordinary 
meaning shall include (a) the permitting of any gas   to   wastefully   burn, 
(b) the wasteful use of gas including the use of gas in its natural  state in 
engines or pumps where its pressure  is  the   main   or   direct   operating 
force, unless such gas can be consumed after discharge from  such  engines or 
pumps for normal use for fuel  purposes,  (c)  surface  waste,  which   shall 
include the unnecessary blowing, release or escape of natural  gas  into  the 
open air,  and  any  unnecessary  or  excessive   surface   loss,   including 
leakage, fire loss and loss or  destruction  incident  to   the   manner   of 
equipping, operating or producing of such well or wells,  or  by  inefficient 
handling thereof, (d) underground waste, which  shall  include   inefficient, 
excessive, or  improper  use  or  dissipation  of   the   reservoir   energy, 
including gas energy and water drive, of  any  pool;   and   the   equipping, 
operating, or producing of any well or wells in such a manner as to reduce or 
tend to reduce the total quantity of gas  ultimately  recoverable  from  such 
pool, and  the  unreasonable  damage  to  underground   deposits   from   the 
operation, maintenance or production  of  gas;  and   (e)   the   intentional 
drowning with water of a gas stratum capable of producing  gas  (except  that 
temporary drowning may become necessary as  an  exigency   of   drilling   or 
repairing wells).

  History: 1979 AC.


R  460.858   Fire prevention and control.
  Rule 8. The commission recognizes that practically all   gas   well   fires 
occurring after wells have been placed on production are  due   to   improper 
wellhead design or carelessness and  the  attention  of   well   owners   and 
operators is particularly directed  to  the  following  R   460.859   and   R 
460.860 in order to eliminate this hazard.

  History: 1979 AC.

                                PRODUCTION

R  460.859   Wellhead heaters.
  Rule 9. Heaters for preventing freezing in wellhead  connections  shall  be 
installed or reinstalled for service at the beginning of  each  winter,  only 
after wellhead connections are checked for leakage, and  after  any  leakages 
have been repaired and stopped. The products of combustion,  or  the   burned 
fumes from gas or any other fuel, shall not be used in such  heaters  or   in 
any other way  to  apply  heat  directly  to  wellheads  or   to   thaw   out 
connections. The points of air mixture  for  any  flame   at   any   wellhead 
heater shall be located at least 10 feet from the wellhead,  and  any  burned 
exhaust gases shall be discharged from flue or chimney  at   least   8   feet 
from wellhead or wellhead connections and at least 4 feet  higher  than   the 
top of wellhead connections. All heaters installed at   or   near   wellheads 
shall be inspected at least once daily while in operation.

  History: 1979 AC.


R  460.860   Wellhead fittings.
  Rule 10. (1) Wellhead connections shall be  designed   and   installed   in 
accordance with principles of design and installation  illustrated  on  plate 
1A, appendix A, unless specific approval is secured in   writing   from   the 
chief engineer.
  (2) Master or control valve shall be installed with valve  stem  not   less 
than 2, nor more than  4  feet  above  the  ground   level,   provided   that 
whenever tubing or siphon is installed in any well, the  valve  and  wellhead 
fitting construction and spacing will necessarily be  governed   by   special 
conditions in each separate case.
  (3) Wheels on valves shall be left and secured in   place   to   facilitate 
emergency opening or closing of valves  with  an   emergency   long   stemmed 
wrench or key.
  (4) A space free from surface obstructions shall be kept   clear   on   the 
stem or wheel side of each control gate or  valve,  so   that   workmen   can 
approach wells and use long stemmed wrenches or keys in  opening  or  closing 
valves in case of fire.

  History: 1979 AC.


R  460.861   Determination of well capacity.
  Rule 11. (1) The producing or open flow capacities of wells to  be  used as 
a basis for proration shall be  determined   by   the   commission   at   its 
discretion, when necessary for the  practical,   equitable   and   economical 
operation of wells, pools  or  fields.  The  method   of   determining   said 
capacity where practicable shall avoid the waste of gas  encountered  in  the 
"open flow" test method, and shall make use of the United  States  bureau  of 
mines production capacity test method that is  based   on   observations   of 
shut-in well pressure and the measurement of volumes of  gas  production   at 
varying wellhead pressures, or of any improvements that may  be  approved  by 
the commission.
  (2) Capacity  tests  may  also  be  made  by   producers,   purchasers   or 
transmitters with the approval  of  the  commission.   The   commission   may 
require that any applicant for such test shall make a  sufficient  showing of 
necessity for a test. All information  obtained  from  such  tests  shall  be 
promptly compiled and filed with the commission.
  (3) When a producer is dissatisfied with a capacity test  he  may   require 
the commission to redetermine the  open  flow  capacity  of   the   well   by 
notifying it to that effect and depositing the sum of $10.00  with   it.   If 
the retest shows the original test to be materially in  error,  the   deposit 
will be refunded, otherwise it will be retained   as   nominal   compensation 
for the costs incurred in making the test.
  (4) Records of tests of meters, well capacity tests or  tests  of  specific 
gravity, chemical composition or heating value of gas made by   or   on   the 
order of any producer, transmitter, purchaser,   distributor,   or   consumer 
shall be available for information of the commission, and  reports  shall  be 
filed with the commission when requested.

  History: 1979 AC.


R  460.862   Well meters.
  Rule 12. (1) No gas shall be withdrawn from wells  for  transportation   or 
sale, nor for any other regular and extended uses,  except   for   fuel   for 
drilling on the same lease, or for use for domestic   purposes   by   lessors 
(as usually specified in oil  and  gas  leases),   without   being   metered, 
provided, however, that the commission may approve in advance an  estimate of 
the amount that will be required for a specific drilling operation   off  the 
lease. The commission's representatives shall have access to all meter houses 
and meters at all times.
  (2) Each gas well completed after the effective date of this order shall be 
equipped with its own separate meter, except that:
  (a) The commission may, in cases of small wells, permit the  measurement of 
the gas from more than 1 well through a single meter.
  (b) The commission, the interested well operator and  the   gas   purchaser 
jointly may, in cases of large wells of identical operator control,  agree to 
the measurement of the gas from more   than   1   well   through   a   single 
meter; provided that:
  (c) In either case (a) or (b) of this subrule, the gas from only 1  well at 
a time shall be measured by a single meter,  and  that  through  the  use  of 
check-valves, "blind" discs or other device or means, lines  from  all  wells 
except the one from which gas is being measured shall be completely closed so 
that the gas from any  2  or  more  wells   shall   not   be   in   any   way 
intermixed prior to measurement.
  (3) Meters  shall  be  located  as  close  to  wells   as   is   reasonably 
practicable, considering accessibility and the   possible   desirability   in 
some cases of grouping not more than 4 well meters in 1  meter  house.   Flow 
lines from wells to meters shall be constructed, maintained  and  operated in 
such manner that leakage losses and waste may  be  avoided,  and  these lines 
shall be patrolled regularly to check for leaks or breakage that may  develop 
through unforeseeable and unavoidable accidents.
  (4) In view of the latitude allowed in the location of   meters   and   the 
probability that the "point of delivery" of gas at the   wellhead   will   be 
some distance from the point of  measurement,  the   gathering   company   or 
purchaser is charged with a high degree of care in preventing  all  gas  loss 
between these 2 points and shall therefore arrange its operating procedure to 
that end.
  (5) The commission shall have authority, upon notice to  any  purchaser  or 
transmitter, to cause to be made such tests as it may   deem   necessary   to 
determine the accuracy  or  other  conditions  of  any  meter   or   if   its 
appurtenances, (see R 460.907 and R 460.909 in "standards  of  gas  service") 
and any such purchaser or transmitter shall be entitled to  be   present   at 
any such test if he so elects.
  (6) Upon written request by an interested well operator,  well   owner   or 
fractional well owner, the commission shall cause to be made special tests of 
meter through which gas from a well is being measured for any   purpose,  and 
the applicant, the  gas  purchaser  or  transmitter,  and  other   interested 
parties shall be entitled to be present when any such test   is   made.   One 
such special test of a meter shall be made during any calendar  year  for   a 
fee of $5.00; further special tests of the same meter   during   a   calendar 
year may be  made  at  the  discretion  of  the   commission   upon   written 
application of an interested well owner or operator  presenting  evidence  of 
the necessity for such special test, for a fee of $15.00; but  for  any  test 
after the first one during any calendar year, the commission   may   at   its 
discretion add to the fixed fee of $15.00 a charge for  all   traveling   and 
subsistence expenses incurred by its representatives in making such tests.
  (7) Any application by an  interested  well  owner  or   operator   for   a 
special meter test shall be accompanied by a deposit of the  fixed  fee   for 
such test. If the test shows that the calculated measurements of  gas  are or 
have been in error more than 2% in  favor   of   the   gas   purchaser,   the 
deposit made by the well owner or operator shall be refunded  to   him,   and 
the amount of such refund shall be paid  to  the  commission   by   the   gas 
purchaser.
  (8) In cases where gas measurements are shown by  meter   tests   to   have 
been in error more than 2%, adjustments of accounts shall be made in favor of 
the party in interest who has been injured by reason  of  such   errors,  the 
measurement error indicated by  the  meter  test   being   applied   to   all 
recorded gas measurements during the time such error has  existed   if   such 
time is ascertainable, and if not ascertainable then said correction shall be 
made for 1/2 of the period since the meter was last tested and adjusted in  a 
manner satisfactory to  the  commission;  except  that  in  cases   where   a 
different basis of adjustment considered by the commission to  be  fair   and 
reasonable is provided for in gas purchase contract  such   different   basis 
shall be effective.
  (9) No adjustments in accounts need be made if such  adjustments  amount to 
less than $2.00 per month.

  History: 1979 AC.


R  460.863   Unmetered gas.
  Rule 13. Lessors of lands who are using unmetered gas from wells located on 
their lands for domestic fuel in their principal houses  or   dwellings,  and 
well operators or owners who are using unmetered gas from  their   wells  for 
fuel for drilling on the same lease, shall so construct  and  maintain  their 
lines and the fittings  thereon  that  there  shall  be  no  leakage losses.  
No   wasteful   gas   burners   or    other    wasteful     gas     consuming 
appurtenances shall be used by  these  consumers  of   unmetered   gas.   The 
representatives of the commission shall require the  immediate  correction of 
any wasteful use of gas by these classes of consumers, and may  prohibit  the 
continued use of gas if such corrections are not made immediately.

  History: 1979 AC.


R  460.864   Permit for well connection.
  Rule 14. (1) The operator of each well shall,  before   gas   is   produced 
from such well, make  application  to  the  commission   on   form   provided 
therefor, (form 15A, appendix A) for permission  to  sell   gas   from   such 
well: provided, that application and permit  shall  not   be   required   for 
making connection to pipe  lines  used  exclusively   for   transporting   or 
transmitting gas for fuel for drilling wells, or  gas  used   in   homes   of 
lessors of lands on which wells are located.
  (2) Any application for a standard  well  connection   permit   should   be 
submitted to the commission not less than 15 days before the  first  day   of 
the month during which it is  expected  that   receiving,   transmitting   or 
purchasing of gas shall commence. Upon receipt from a well  operator   of   a 
properly executed application for a well connection  permit,  the  commission 
will issue well connection permit order (form 16A, appendix   A)   and   will 
furnish a copy thereof to the purchaser or transmitter  designated   by   the 
applicant operator,  such  copy  to  be  furnished  to   the   purchaser   or 
transmitter at least 10 days before the first day of   the   monthly   period 
used in accounting for gas. The commission will cause a well capacity test to 
be made, and following such test will  issue  an  allowable  withdrawal order 
(form 17A, appendix A) to the well operator, and will furnish a copy  thereof 
to the purchaser or transmitter on or before the first day  of   the  monthly 
period used in accounting for gas.
  (3) The  purchaser  or  transmitter  shall  connect  such   well   to   its 
gathering system and prepare to receive, transmit or  purchase   gas   during 
the next succeeding monthly period used in accounting   for   gas,   provided 
that it has received the copy of  the  well  connection   permit   from   the 
commission at least 10 days  before  such  date;  that   the   operator   has 
prepared and  placed  the  well  in  condition  to   make   such   connection 
conveniently  possible,  and  that  obstacles  or   conditions   beyond   its 
reasonable control do not prevent such connection.
  (4) In case of emergency a  temporary  well  connection   permit   may   be 
issued by wire upon receipt of  an  application  by   telegraph   from   well 
operator, giving the full name of the applicant,  the  full   name   of   the 
well,  the  conservation  department  permit  number,  the   date   of   well 
completion, and the open flow capacity of the well; and  also  a  telegraphic 
statement from the prospective transmitter or common purchaser of gas that it 
will accept said well for connection. Such telegraphic  application  must  be 
followed within 10 days by the regular application required in   subrule  (1) 
of this rule.
  (5) The commission and a transmitter or purchaser may   at   their   option 
and discretion cooperate,  if  it  is  reasonably   practicable,   to   issue 
orders, make well capacity tests, connect to wells and  make  provisions  for 
receiving, transmitting or purchasing gas from a well  if   the   application 
for temporary or standard well connection permit has not  been   filed   with 
the commission as much as 15 days before  the  beginning   of   the   monthly 
period used by the transmitter or purchaser in  accounting   for   gas,   but 
there shall be no obligation in such cases  on  the  part   of   either   the 
commission or the transmitter or purchaser to either  commence  or   complete 
such orders, tests, connections or preparations to   receive,   transmit   or 
purchase gas during the next succeeding monthly period.
  (6) With each standard well connection permit there  will   be   issued   a 
metal plate bearing the permit number. This plate must be  affixed   to   the 
wellhead substantially as shown on plate 1A, appendix A, and   in   case   of 
loss or destruction must be immediately replaced. The original plate  will be 
furnished without charge, but a nominal charge of 50 cents will be  made  for 
each replacement plate.
  (7) When processed casinghead gas is to be transmitted  for   public   use, 
application shall be made to  the  commission  for   a   special   connection 
permit before transmission by pipe line is begun. (See R 460.851.)

  History: 1979 AC.


R  460.865   Taking of gas.
  Rule 15. (1) Maximum withdrawal:
  (a) General. The maximum withdrawal during any 12   months'   period   from 
any gas well shall average on a daily basis not more than 17  1/2%   of   the 
current approved absolute daily open flow  capacity  of   such   well,   such 
withdrawal being the allowable maximum annual withdrawal.  Whenever   a   new 
open flow capacity test is made and approved by the  commission,   such   new 
test will, upon notice to the producer and  transmitter,  become  immediately 
effective in determining the maximum withdrawal. In order to  provide  for  a 
variable  seasonable  demand,  the  following  percentages   of   the    last 
determined allowable maximum annual  withdrawal  may  be   taken,   but   not 
exceeded: In any 6 consecutive months, 66%; in any 1 month, 12  1/2%;  and in 
any 1 day, .6 of 1%.
  (b) Special. The maximum withdrawal from Monroe gas wells  located  in  the 
Walker-Talmadge oil field shall not exceed  50%  of   the   last   officially 
measured open flow of each such well.
  (c) Special. The maximum withdrawal during any 12   months'   period   from 
any gas well in the Howell field shall average on a daily  basis   not   more 
than 25% of the current approved absolute daily open flow  capacity  of  such 
well, such withdrawal being the allowable maximum  annual   withdrawal.   The 
allowance for seasonable variation in the rate of take  as   set   forth   in 
subrule (1)(a) shall continue to be based on the  annual  maximum   allowable 
withdrawal determined as 17 1/2% of the open flow, unless  the  allowance  so 
determined shall be less than 25% in which case the   25%   allowance   shall 
prevail.
  (d) Special. When a dry natural gas field has been depleted  to   such   an 
extent that  production  has  become  merely  a   stripper   operation,   the 
commission may approve different  maximum  withdrawals   than   required   by 
subrule (1)(a) if it finds that such different  withdrawals   will   conserve 
gas and, in its opinion, support commercial production for  a  longer  period 
than would otherwise be the case.
  (2) Acreage  factor.  The  acreage  or  area  from  which   any   well   is 
considered to produce or draw gas shall enter into   the   determination   of 
the take of gas from such well, a well in the center of  a   square   40-acre 
tract of land being considered as unity, with an acreage factor  of  1.   The 
factor for a well producing from a square or rectangular tract  of  any  area 
other than 40 acres shall be the area  in  acres  allotted   to   such   well 
divided by 40, and the factor for a well in the center of a base  drilling or 
producing unit of 160 acres of land shall be 4; provided that:
  (a) No side of the area allotted a well shall be farther  from   the   well 
than the distance from the center point of the production area  to  the  most 
distant side thereof, excepting that:
  (i) In the case of a discovery well, this distance may be  increased  by as 
much as 330 feet for a well located on a 40-acre tract of land, and 990  feet 
for a well located on a 160-acre tract of land.
  (ii) In the case of a well drilled  off  center  of   a   production   area 
because of topographical or other physical conditions, this  distance  may be 
increased by not to exceed 25%  upon  presentation  to  the   commission   of 
satisfactory proof, supported by a map and  a   written   statement   showing 
that a center location was prohibited. Every reasonable   effort   shall   be 
made to drill wells at center locations.
  (iii) The 16 gas wells drilled, or in the process of   drilling,   in   the 
Cannon Creek gas field in the counties of Missaukee and  Kalkaska  prior   to 
September 15, 1950, shall each be entitled to an acreage factor  of   4,   as 
long as the producing unit assigned to each is  160  acres,   notwithstanding 
any other provisions of this rule.
  (b) In addition to  the  above  provisions,  acreage   factors   shall   be 
subject to the following limitations:
  (i) The length of a production area shall not be greater  than  twice   its 
width.
  (ii) Production areas shall not overlap.
  (iii) Any production area shall be entirely  within   the   leasehold   (or 
leaseholds in case 2 or more are pooled) on which the  well   to   which   it 
refers is drilled.
  (iv) No acreage factor shall exceed 4 except in  the  Kawkawlin-Salina  gas 
field, as it is now or may be  hereafter  defined  by   the   supervisor   of 
wells, wherein it may be increased to 16.
  (v) The acreage factors for wells located on  tracts   that   are   neither 
square nor rectangular shall be  determined  by  the   commission   in   each 
individual case, following, insofar as they are   applicable,   the   general 
principles applied herein.
  (vi) In the following fields which  have  been   developed   with   40-acre 
drilling units, there shall be no acreage factor greater   than   1,   unless 
the operator or leaseholder shall secure  and  file   with   the   commission 
written consent from all direct and diagonal  offset   40-acre   leaseholders 
upon whose holdings there are producing or productive gas wells.

  Austin   Crystal   Six Lakes  Broomfield   New Haven-Sumner Clare (McKay)   
West Vernon  Vernon

  (vii) No well drilled on a 40-acre location in any of  the   above   fields 
shall each be entitled to an acreage factor greater than 1 if  such  well  is 
directly offset by more than 2 producing or productive  wells  with   acreage 
factors of 1 or less.
  (c) Traverse oil wells drilled in the  Walker-Talmadge   field   prior   to 
February 25, 1942, shall, when either deepened to  produce   gas   from   the 
Monroe formation or plugged back to produce gas from  the  Berea   formation, 
receive acreage factors as provided by the attached map  entitled  plate  2a, 
but any Monroe or Berea gas wells drilled from the surface of  the  ground in 
the Walker-Talmadge oil field  subsequent  to  February   25,   1942,   shall 
receive acreage factors based on the usual provisions as  stated  in  subrule 
(2)(a) and (b) of this rule.
  (3) Minimum take:
  (a) The minimum allowable take of gas from any  well   shall   be   500,000 
cubic feet per month, except under the following conditions:
  (i) In no case shall the total gas taken from  a  well   be   larger   than 
provided for in subrule (1).
  (ii) The average minimum volume of gas production monthly per well shall be 
in conformity with the market demand when such  market  demand  is  not  high 
enough to permit the taking of the full minimum  allowable  from  all  wells. 
Each operating month as used by the  gas  purchasers  in  a  field  shall  be 
considered separately  in   administering   the   minimum   take   provisions 
herein, and, if the total sale or take of  gas  from  any   field   or   pool 
during any such monthly period is not sufficient to permit  the   taking   of 
the full minimum allowable from each well, there shall be  no  carryover   or 
balance of gas to be taken from such well,  field,  or   pool   under   these 
minimum take provisions because of such deficiency in total market demand.
  (iii) The minimum take of gas from any well  having   an   acreage   factor 
other than 1, as provided  for  in  subrule  (2),  shall   be   modified   or 
adjusted by multiplying the minimum allowable take of 500,000  cubic  feet by 
such acreage factor, the resulting minimum  take  to  be   subject   to   the 
restrictions in subrule (3)(a)(i) and (ii) of this rule.
  (b) The allowable take from any well that is not capable  of  producing  as 
much gas as its allowable minimum under the operating   conditions   of   the 
field in which it is located shall be the total amount of   gas   that   such 
well is capable of producing under such conditions.
  (c) For fields or pools wherein reservoir conditions  and  gas   withdrawal 
operations do not permit the  practical  application   of   subrule   (3)(a), 
special procedures applicable to such special conditions may be authorized by 
 the  commission,  provided   that   any   such   special   procedure   shall 
accomplish the  intents  and  purposes  of  the  rule  as   closely   as   is 
practicably possible.
  (4) Ratable taking or gas proration: All gas produced from   a   field   or 
pool in excess of the minimum allowable provided for in subrule (3)  shall be 
taken ratably from all wells that are capable of  producing  more  than their 
minimum allowable take. Such excess  shall  be  divided  among  such wells in 
proportion to their modified open flow  capacities   or   any   other  method 
determined by the commission to  be  equitable  or   less   wasteful,  except 
that in no case shall the total gas taken from   a   well   be   larger  than 
provided for in subrule (1).
  (5) Proration schedules:
  (a) Proration schedules and orders shall be prepared and  issued   by   the 
commission. Such orders shall be revised not to exceed   once   each   month, 
the effective date of any revision being the  first  day   of   the   monthly 
period used  by  the  gathering  company,  transmitter,   or   purchaser   in 
accounting for gas.
  (b) No proration schedule or production order affecting any  well  shall be 
made until after well connection permit has been issued.
  (6) Well conditioning requirements:
  (a) A well to go on proration or production shall have  complied  with  the 
following  requirements:  The  well  and  wellhead   connections   shall   be 
installed in accordance with standards prescribed  in  R  460.860   of   this 
order. The wellhead connections shall be tight and free  from   leakage.   If 
there is evidence of underground leakage of gas or of  water  intrusion,  the 
well shall be repaired to the satisfaction of the commission.
  (b) In cases of wells where leaks, other defective  well   conditions,   or 
water intrusion develop after a well has been  placed   on   proration,   the 
operator shall make repairs  promptly  and  to  the   satisfaction   of   the 
commission, and, if repairs have not been made within a  reasonable  time  as 
determined by the  commission,  then  such  a  well  shall   be   taken   off 
proration and shall not be returned to proration until  the  commission   has 
been notified that repairs have been made and has  approved   a   return   to 
proration.
  (c) After any gas well has been placed on  proration,   no   deepening   or 
plugging back work shall be started until the operator   has   notified   the 
commission and the gas transmitter or purchaser,  in   writing,   and   until 
that operator has secured the approval, in writing, of  the   supervisor   of 
wells of the department of conservation, of the deepening  or  plugging  back 
plan, in conformity with the rules and regulations of  such   supervisor   of 
wells.
  (d) A well that is being either deepened or plugged back  may  be   removed 
from proration:
  (i) If, in the judgment of the commission, the   showing   indicates   that 
the operation may affect the open flow capacity of the well.
  (ii) If the operation is to consume a period of 10 days or more.
  (iii) If the wellhead fittings remain altered  in  such   a   manner   that 
reconnection with a pipe line cannot be made within  10   days   after   such 
fittings are removed.
  (e) A well that has been removed from proration because  of  deepening   or 
plugging back operations shall not be returned to proration  until   it   has 
been placed in condition to resume production in a  manner  satisfactory   to 
the supervisor of wells of the  department  of  conservation   and   to   the 
commission, and the gas transmitter or purchaser have been  so   advised   in 
writing.

  History: 1979 AC.


R  460.866   Production reports.
  Rule 16. (1) Every operator of 1 or more gas wells shall  file   with   the 
commission, on or before the twenty-fifth day of   each   month,   producer's 
monthly report (form no. 18A or 18B, appendix A) giving  full  information as 
to production of gas from each well separately and such other   data   as  is 
requested. This report  shall  be  signed   by   the   producer   or   by   a 
responsible employee, whose capacity or title shall be indicated, and  who is 
in position to know that the data  or  information  given  is  correct.   The 
commission may  permit,  upon  application  and   satisfactory   showing,   a 
reporting  interval  of  more  than  1  month.  If   this   gas    production 
information is regularly furnished to the commission by  the   purchaser   or 
transmitter of  gas,  based  on  information  or  data   gathered   by   such 
purchaser or transmitter, the producer may be relieved   of   obligation   to 
furnish data.
  (2) Any gas used, whether metered or unmetered, for   drilling   or   lease 
operating or other field fuel purposes on a lease other than  the  one   from 
which it is produced shall be reported to the commission   monthly   by   the 
gas producer on form 18B appendix A. Either the price per M.  cubic  feet  of 
gas or the flat rate charge that is made shall be stated, and in the  case of 
gas that is not metered the estimated approximate volume  of  gas  used shall 
be stated.

  History: 1979 AC.


R  460.867   Pumps or compressors.
  Rule 17. No gas well, pool or field shall be placed under  vacuum  by   the 
use of compressors, pumps or other devices except with the  approval  of  the 
commission. If and when the placing of a vacuum in any well, pool or field is 
planned, application for approval shall be made to the commission,   and  the 
adjoining lease owners and operators of  a  pool  or   field   who   may   be 
affected shall be given notice. The commission may call a  hearing   on   the 
subject, or may take such action as it deems advisable.

  History: 1979 AC.

                               TRANSMISSION

R  460.868   Approval for pipe line project.
  Rule 18. (1)  Every  transmitter  shall  file  with   the   commission   an 
application (see form 19A, appendix A), setting forth   the   necessity   and 
practicability of such  proposed  transmission  line  or   lines;   and   the 
commission shall, if its study of the proposed  project   shows   that   such 
line  or  lines  will,  when  constructed  and  in   operation,   serve   the 
convenience and necessities of the public, grant said  application;  and   no 
construction shall begin prior to the granting of the  application  and   the 
approval  of  the  map,  route  and  type  of  construction   by   the   said 
commission; provided that this rule shall not apply to the  laying  of   pipe 
lines used exclusively for transporting or transmitting  gas   for   drilling 
purposes.
  (2) The transmitter shall, as a part of the application,  submit   to   the 
commission a map or plat of  the  proposed  line  or   lines,   showing   the 
dimensions and character of such line or lines,  its   compressor   stations, 
control valves and connections; an estimate of the cost of  the  project;  an 
estimate of the  proven  reserves  of  gas   available   for   transportation 
through the proposed line; and an estimate  of   the   anticipated   revenue, 
operating expenses and earnings of the project for a 5-year period.
  (3) The transmitter's application shall, among other  things,   state   (a) 
when said transmitter is a common purchaser the price to  be  paid  producers 
for the gas and the price at which gas will be sold  to   distributors;   (b) 
when said transmitter is a common carrier, the rates and fee  which  it  will 
charge for the service to be performed by  it.  Certified   copies   of   all 
executed or proposed contracts with producers  or   distributors   shall   be 
filed with the application, together with such  additional   information   as 
the commission may require.

  History: 1979 AC.


R  460.869   Requirements before transmitter may connect to gas wells.
  Rule 19. Transmitters shall not  connect  with  any  gas   well   until   a 
temporary or standard well  connection  permit  has  been   issued   by   the 
commission. (This permit is not required for  connecting  lines   exclusively 
for carrying gas for drilling purposes.)

  History: 1979 AC.


R  460.870   Maximum taking of gas.
  Rule 20. The transmitters in any field shall not at any   time   take   gas 
from such field in greater total amounts than the sum   of   the   withdrawal 
allowances  of  all  connected  individual  wells  as   determined    by    R 
460.865(1).

  History: 1979 AC.


R  460.871   Proration among pipe lines and fields.
  Rule 21. The allowable rates  of  withdrawal  of  gas   for   purposes   of 
proration among producers and among several   purchasers,   transmitters   or 
pipe lines from the same field, and the  prorating   of   withdrawals   among 
several fields shall be subject to approval by the commission.  It  shall  be 
the duty of the commission to determine that production from  any   pool   or 
field is not abandoned or unreasonably curtailed  until   recovery   of   all 
economically recoverable gas has been assured.

  History: 1979 AC.


R  460.872   Discrimination.
  Rule 22.  (1)  Common  purchasers  and  common   carriers   are   expressly 
prohibited from discrimination in amount of gas taken, price  paid   for   or 
rates charged for like grades of natural  gas  or   facilities   as   between 
producers or persons; and if a  common  purchaser  or   common   carrier   is 
likewise a producer, it  shall  not  discriminate  in  favor   of   its   own 
production or of production in which it  may  be   interested   directly   or 
indirectly. The commission shall have authority to relieve  any  such  common 
purchaser or common carrier, after due application,   notice   and   hearing, 
from the obligation of purchasing or receiving gas from wells  which  due  to 
variation in quality and pressure, or for economic reasons, are  not  at  the 
time a practicable source of supply.
  (2) Except  in  cases  where  exigency  of   service   requires   emergency 
measures, common purchasers or  common  carriers  shall   not   abandon   nor 
curtail withdrawals or purchases of gas from any pool or section  of  pool in 
favor of another pool or   section   thereof,   because   of   temporary   or 
permanent decline in reservoir or producing pressure  without  having   first 
received the approval of the commission.

  History: 1979 AC.


R  460.873   Patrolling and supervision.
  Rule 23. It shall be the duty of all transmitters  to   closely   supervise 
the operation of all their lines to the end that leakage may   be   kept   at 
the lowest practical minimum. This shall  include   regular   patrolling   by 
competent employees and prompt attention to leaks discovered  or   to   other 
conditions affecting  the  safe  and  efficient  operation   of   pipe   line 
systems.

  History: 1979 AC.


R  460.874   Transmitter's or purchaser's reports and records.
  Rule 24. (1) Every common purchaser, common carrier   or   transmitter   of 
natural gas shall file with the commission on or  before   the   twenty-fifth 
day of each month, for the last preceding month,  gas  transmitters   monthly 
report (form 20A, appendix A), giving full information as  to  gas  purchased 
from each producer and as to sales or deliveries.  Said   report   shall   be 
signed by the transmitter or by a responsible employee,  whose  capacity   or 
title shall be indicated, and who is in a position to know that  the  data or 
information is correct.
  (2) Meter charts shall be kept on file at the office  of  the  transmitter, 
and the commission shall have access to all such records  at  any  reasonable 
time. Also refer to R 460.902 in "standards of gas service."

  History: 1979 AC.


R  460.875   Filing of rates, contracts, and regulations.
  Rule  25.  (1)  Complete  rate  schedules,  and   rules   and   regulations 
governing each common purchaser's or common carrier's  relations   with   its 
producers and distributors, shall be filed in  compliance   with   commission 
order D-3096, or in pertinent superseding or modifying orders.  In  case  all 
purchase contracts in a single field are identical,  the   filing   of   such 
contracts as provided in section 25(2)  hereof,  shall   be   considered   as 
fulfillment by the common purchaser of this requirement.
  (2) Every common  purchaser  or  common  carrier  shall   file   with   the 
commission a true and verified  copy  of  any   contracts   for   purchasing, 
receiving or supplying of gas within 30 days after the making thereof.
  (3) No change shall be made  in  any  filed  rates,   charges,   rules   or 
regulations without approval of the commission.

                               Distributors
  Utilities distributing natural gas should also refer to and be  governed by 
"standards of gas service," commission order no. 1982.





  3. That attached hereto and made a part hereof  is  a  map   or   plat   of 
proposed line or lines, showing the dimensions and characters of such line or 
lines, compression stations, control valves and connections.
  4. That attached hereto and made a part here of is   an   exhibit   showing 
the gas reserves served by the proposed main or mains.
  5. That attached hereto and made a part hereof  is  a   schedule   of   the 
rates and prices at  which  the  applicant  herein  will   receive   gas   at 
delivery stations and a schedule of rates or  charges  at   which   it   will 
deliver gas to connecting carriers or  distributing   lines   or   customers, 
and, in case it is proposed to operate as a carrier for hire,  a  schedule of 
the rates and charges to be made for the services to  be  performed   by  the 
applicant.
  6. That attached hereto and made a part hereof are  certified   copies   of 
all contracts now signed for the purchase or sale of natural gas.
  7. That attached hereto and made a part hereof is  a   carefully   compiled 
estimate by expert engineers setting forth the total cost  of  the  completed 
project.
  8. That attached hereto and made a part hereof is  a   carefully   prepared 
estimate by competent engineers showing the  anticipated  revenue,  operating 
expenses and earnings for a five-year period.
  And said petitioner, therefore, prays that the  Michigan   Public   Service 
Commission, under the authority of  Act  No. 9,  of  the   Public   Acts   of 
Michigan for the year 1929, may grant to said petitioner  its   approval   of 
the said map or plat and of the construction of said line or lines and may

determine that such line or lines, when constructed and  in  operation,  will 
serve the convenience and necessity of the public.



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Figure for 460.875 (Part 8 of 8)




  Above  well  locations  are  on  the  normal  10-acre   pattern   used   in 
Walker-Talmadge oil field.


  Those well locations shown in solid black represent  Traverse   oil   wells 
that may be deepened or plugged back to obtain gas  production  with  acreage 
factors as stated. On tracts of 20 acres or more, operator  may   deepen   or 
plug back only 1 of the wells shown in black in order   to   secure   maximum 
allowable for the tract. The deepening or plugging back of a  second  well on 
the same tract, regardless of size  of  tract,   shall   not   increase   the 
allowable. If, at the option of the producer, any of   the   above   Traverse 
wells, other than those in solid black, are deepened or  plugged  back,  they 
shall receive the usual acreage factor prescribed   by   commission's   order 
D-2883, effective May 1, 1940.

  History: 1979 AC.