2011 New Mexico Statutes
Chapter 19: Public Lands
Article 10: Lease of Oil and Gas Lands, 19-10-1 through 19-10-70
Section 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.