BILL ANALYSIS


                                                    C.S.S.B. 1357
                                                      By: Haywood
                                                Natural Resources
                                                          3-24-95
                                   Committee Report (Substituted)
BACKGROUND

Surface commingling of oil and gas is a production handling method
used by operators to reduce operating expenses.  Current law
authorizes surface commingling of production if working and royalty
interests are common or if the production is metered separately
before being commingled.  For economic reasons, however, it is
preferable to meter production at a single point and allocate
production to specific tracts or horizons.

When interests differ and metering production separately is not
preferred, the Texas Railroad Commission requires the operator to
obtain 100 percent approval from the working and royalty interest
owners.  Obtaining this approval can become difficult when the
royalty interests are very small, or if recipients of ballots do
not return them.  Under the current system, a single, small
interest owner can prevent the approval of an application by not
returning a ballot even though the owner may not be opposed to the
action.

PURPOSE

As proposed, C.S.S.B. 1357 authorizes the Railroad Commission of
Texas to permit surface commingling of oil or gas, or oil and gas,
production from tracts and horizons under certain conditions.

RULEMAKING AUTHORITY

It is the committee's opinion that rulemaking authority is granted
to the Railroad Commission of Texas under SECTION 1 (Section
85.046(c), Natural Resources Code) of this bill.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 85.046, Natural Resources Code, by adding
Subsection (c), to authorize the Railroad Commission of Texas
(commission), after notice and opportunity for hearing, to permit
the commingling of oil or gas, or oil and gas, production from two
or more tracts of land producing from the same reservoir, or from
one or more tracts of land producing from different reservoirs, if
the commission finds that the commingling will prevent waste,
promote conservation, or protect correlative rights.  Authorizes
the commission to permit the commingling regardless of whether the
tracts or horizons have the same working or royalty interest
ownership.   Requires the amount of production attributable to each
tract or horizon to be determined in a manner consistent with this
title.  Grants the commission broad discretion in administering
this subsection, and requires the commission to adopt and enforce
rules or orders necessary to administer this subsection.

SECTION 2. Effective date: September 1, 1995.

SECTION 3. Emergency clause.