Rule 37 Spacing Exception Agent

The Rule 37 agent is your specialist for preparing spacing exception filings with the Texas Railroad Commission (RRC). It handles the entire filing workflow, from calculating distances to assembling the complete Form W-1 package.

What Is Rule 37?

Rule 37 (formally 16 TAC 3.37) is the RRC’s well spacing regulation. It sets minimum distances between oil and gas wells and between wells and property (lease) lines. The standard spacing requirements are:

• 467 feet minimum distance between wells
• 1,200 feet minimum distance from a well to the nearest lease line (on a standard 40-acre unit)

If you need to drill a well closer than these minimums, you must file for a Rule 37 spacing exception with the RRC. This requires demonstrating “good cause” — a valid technical or economic reason for the closer spacing.

What the Agent Does

The Rule 37 agent helps you through four main steps:

1. Spacing Calculation

The agent calculates the exact distances from your proposed well location to:

• The nearest lease line(s)
• All offset wells within regulatory distance

It then determines whether each distance meets the standard or requires an exception, showing a clear PASS or FAIL for each measurement.

2. Offset Well Analysis

The agent queries the knowledge graph to find all wells near your proposed location. For each offset well, it identifies:

• Well name and API number
• Operator name
• Well type and current status
• Distance from your proposed location

This is essential because the RRC requires you to notify the operators of affected offset wells when filing an exception.

3. Good Cause Narrative

The agent drafts the “good cause” argument that justifies why the closer spacing should be allowed. Common justifications include:

• Preventing waste of reservoir resources
• Protecting correlative rights
• Geological or engineering factors that support closer spacing
• Voluntary pooling agreements with affected parties

The narrative is drafted in the formal style expected by the RRC and references specific rules and precedent.

4. Filing Assembly

The agent compiles all the data, calculations, and narrative into a complete Form W-1 filing package. This includes:

• Completed form fields with operator, well, lease, and location data
• Spacing calculations and exception justification
• List of offset wells and affected operators
• Required attachments checklist

Example Prompts

Here are some effective ways to start a conversation with the Rule 37 agent:

“File a Rule 37 spacing exception for Mitchell Ranch 1H (API 42-329-40001-0000)”

“Calculate the spacing for a proposed well at the Johnson Unit, Section 12, Block 33, T-1-S”

“I need a spacing exception for a well that will be 350 feet from the lease line. What do I need?”

“Analyze offset wells within 1,200 feet of our proposed location on the Davis Ranch lease”

What to Expect

When you ask the Rule 37 agent to prepare a filing:

1. The agent identifies the well and lease from your request (or asks for clarification if needed).
2. You will see status messages as the agent runs each calculation tool.
3. The agent presents the assembled filing package with all form data, spacing analysis, and narrative.
4. A HITL banner appears indicating the filing is ready for review.
5. Click Review to go to the filing queue and make your approval decision.

Key Outputs

Tips

• Always provide the API number or well name so the agent can look up the correct entity.
• If the agent marks form fields as “[REQUIRED],” those need manual input during the review step.
• The spacing standards (467 ft / 1,200 ft) are for a standard 40-acre proration unit. If your unit differs, let the agent know.
• Review the good cause narrative carefully for factual accuracy — the agent bases it on available data, but you may have additional context.