(a) Definitions. The following words and terms, when used in this section, shall have the following meanings unless the context clearly indicates otherwise:
  (1) Identifiable liquid hydrocarbons--Volume of scrubber oil/skim hydrocarbons that is received at a gas plant/produced water disposal facility where the origin of such liquid hydrocarbons can be clearly identified.
  (2) Producing property--A location from which hydrocarbons are being produced that has been assigned a lease identification number by the Commission and which is used in reporting production.
  (3) Scrubber oil--Liquid hydrocarbons which accumulate in lines that are transporting casinghead gas and which are captured at the inlet to a gas processing plant.
  (4) Skim hydrocarbons--Oil and condensate which accumulate during produced water disposal operations.
  (5) Tolerance--The amount of skim hydrocarbons that may be recovered before the produced water disposal system operator must allocate to the producing property.
  (6) Unidentifiable liquid hydrocarbons--Scrubber oil/skim hydrocarbons received at a gas plant/produced water disposal facility where the origin of such liquid hydrocarbons cannot be identified.
(b) Disposition of scrubber oil, skim hydrocarbons, and identifiable liquid hydrocarbon volumes.
  (1) Scrubber oil. Any scrubber oil that has not been returned to a producing property by the end of a monthly report period shall be reported by the operator of the gas plant on the monthly plant report, Form R-3 (Monthly Report for Gas Processing Plants). The unidentifiable liquid hydrocarbons recovered and reported on Form R-3 may be disposed of at the point of accumulation. The accepted Form R-3 shall be the authority for the movement of the hydrocarbons to beneficial disposition.
  (2) Skim hydrocarbons.
    (A) All unidentifiable liquid hydrocarbons recovered by a single operator or multiple operator produced water disposal system shall be reported on the Form P-18 (Skim Oil/Condensate Report) for each reporting period.
    (B) The unidentifiable liquid hydrocarbons recovered and reported on Form P-18 may be disposed of at the point of accumulation. The accepted Form P-18 shall be the authority for the movement of the hydrocarbons to beneficial disposition.
    (C) Unidentifiable liquid hydrocarbons recovered by a single operator produced water disposal system shall be allocated to each producing property in the proportion that the volume of water received from the producing property bears to the total volume of water received by the system during a reporting period.
    (D) Unidentifiable liquid hydrocarbons recovered by a multiple operator produced water disposal system in excess of a tolerance ratio of one barrel of liquid hydrocarbons for each 2,000 barrels of produced water received shall be allocated to each producing property in the proportion that the volume of water received from the producing property bears to the total volume of water received by the system during a reporting period. The produced water disposal system operator shall notify the operator of each producing property of any allocations to that property by furnishing a copy of the allocations as shown on Form P-18 (Skim Oil/Condensate Report).
    (E) The operator of each producing property shall report the volume of liquid hydrocarbons allocated to the producing property as production from the property on Form PR, Monthly Production Report. The volume allocated back shall be shown as skim oil or skim condensate on the form.
  (3) Identifiable liquid hydrocarbon volumes.
    (A) Identifiable liquid hydrocarbon volumes returned to the producing property during the reporting period in which the volume is received at the gas plant/produced water disposal facility shall not be reported to the Commission by the gas plant/facility operator. The gas plant/produced water disposal facility operator shall notify the appropriate Commission district office by telephone prior to the return of such volumes. The movement of these volumes back to the producing property shall comply with §3.85 of this title (relating to Manifest to Accompany Each Transport of Liquid Hydrocarbons by Vehicle), commonly referred to as Statewide Rule 85.
    (B) Identifiable volumes not returned to the producing property shall be reported to the Commission and to the operator of the producing property on Form R-3 or Form P-18 as prescribed in paragraph (1) or (2) of this subsection. Volumes shall be specifically credited to the appropriate producing property. The operator of the producing property shall report the disposition of such identifiable volumes as either skim hydrocarbons or scrubber oil on the appropriate production report.

Source Note: The provisions of this §3.56 adopted to be effective January 10, 2000, 25 TexReg 80; amended to be effective November 24, 2004, 29 TexReg 10728; amended to be effective January 30, 2007, 32 TexReg 287