By Haywood S.B. No. 1354
74R3038 SMH-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the production of oil or gas commingled from multiple
1-3 stratigraphic or lenticular accumulations.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subchapter C, Chapter 85, Natural Resources Code,
1-6 is amended by adding Section 85.0465 to read as follows:
1-7 Sec. 85.0465. ADMINISTRATIVE APPROVAL OF PRODUCTION BY
1-8 COMMINGLING. (a) On application, the commission, without notice
1-9 or hearing, may permit production by commingling oil or gas or oil
1-10 and gas from multiple stratigraphic or lenticular accumulations of
1-11 oil or gas or oil and gas if:
1-12 (1) the record working and royalty interest ownership
1-13 in each stratigraphic or lenticular accumulation is the same;
1-14 (2) the production from each stratigraphic or
1-15 lenticular accumulation is separately measured; or
1-16 (3) the stratigraphic or lenticular accumulations have
1-17 different record working or royalty interest ownership.
1-18 (b) If the stratigraphic or lenticular accumulations have
1-19 different working or royalty interest ownership, the applicant must
1-20 include with the application a sworn statement that:
1-21 (1) the applicant by certified mail sent to each
1-22 record owner of a working or royalty interest a notice of the
1-23 application; or
1-24 (2) the applicant is unable to provide actual notice
2-1 to each record owner of a working or royalty interest but has
2-2 published notice of the application at least once a week for four
2-3 consecutive weeks in a newspaper of general circulation in the
2-4 county in which the property is located.
2-5 (c) A notice required by Subsection (b) must:
2-6 (1) state that the applicant is applying for
2-7 permission for production by commingling;
2-8 (2) describe the property from which production is to
2-9 be commingled;
2-10 (3) inform the owner of the owner's right to protest
2-11 to the commission the commingling; and
2-12 (4) include any other information the commission
2-13 requires by rule.
2-14 (d) The commission without notice or hearing may permit
2-15 production by commingling oil or gas or oil and gas from multiple
2-16 stratigraphic or lenticular accumulations that have different
2-17 working or royalty interest ownership only if the commission has
2-18 not received protests against approval of the application from the
2-19 record owners of more than 10 percent of all the affected working
2-20 or royalty interest before the 22nd day after the last date the
2-21 notice required by Subsection (b) was mailed or published.
2-22 SECTION 2. Section 85.053(b), Natural Resources Code, is
2-23 amended to read as follows:
2-24 (b) When, as provided in Subsection (b) of Section 85.046,
2-25 Section 85.0465, or Subsection (b) of Section 86.012 of this code,
2-26 as amended, the commission has permitted production by commingling
2-27 oil or gas or oil and gas from multiple stratigraphic or lenticular
3-1 accumulations of oil or gas or oil and gas, the commission may
3-2 distribute, prorate, apportion, or allocate the production of such
3-3 commingled separate multiple stratigraphic or lenticular
3-4 accumulations of oil or gas or oil and gas as if they were a single
3-5 pool; provided, however, that:
3-6 (i) the commingling and distribution, proration,
3-7 apportionment, or allocation of separate accumulations with
3-8 commission established discovery dates after January 1, 1940, and
3-9 prior to June 1, 1945, shall not serve to expand, add to, or extend
3-10 the vertical or areal extent of any single pool;
3-11 (ii) such commingling shall not cause the allocation
3-12 of allowable production from a well producing from any separate
3-13 accumulation or accumulations to be less than that which would
3-14 result from the commission applying the provisions of Section
3-15 86.095 of this code to such accumulation or accumulations;
3-16 (iii) the allocation of the allowable for such
3-17 commingled production shall be based on not less than two factors
3-18 which the Railroad Commission shall take into account as directed
3-19 by Section 86.089 of this code; and
3-20 (iv) No gas well in any field falling within the
3-21 classification under Subdivision (i) above where commingled
3-22 separate accumulations of gas are being prorated under the
3-23 authority granted by this Subsection (b) shall be assigned an
3-24 allowable in excess of its production during the most recent
3-25 production period reported to the commission and in the absence of
3-26 any reported production the assigned allowable shall not exceed the
3-27 open-flow potential of such well as reported to the commission;
4-1 provided, however, that the commission may, if it finds special
4-2 conditions require such, make a greater assignment.
4-3 SECTION 3. Section 85.055(d), Natural Resources Code, is
4-4 amended to read as follows:
4-5 (d) When, as provided in Subsection (b) of Section 85.046,
4-6 Section 85.0465, or Subsection (b) of Section 86.012 of this code,
4-7 as amended, the commission has permitted production by commingling
4-8 oil or gas or oil and gas from multiple stratigraphic or lenticular
4-9 accumulations of oil or gas or oil and gas, the commission may
4-10 allocate, distribute, or apportion the production of such
4-11 commingled separate multiple stratigraphic or lenticular
4-12 accumulations of oil or gas or oil and gas as if they were a single
4-13 common source of supply; provided, however, that:
4-14 (i) the commingling and distribution, proration,
4-15 apportionment, or allocation of separate accumulations with
4-16 commission established discovery dates after January 1, 1940, and
4-17 prior to June 1, 1945, shall not serve to expand, add to, or extend
4-18 the vertical or areal extent of any single common source of supply;
4-19 (ii) such commingling shall not cause the allocation
4-20 of allowable production from a well producing from any separate
4-21 accumulation or accumulations to be less than that which would
4-22 result from the commission applying the provisions of Section
4-23 86.095 to such accumulation or accumulations;
4-24 (iii) the allocation of the allowable for such
4-25 commingled production shall be based on not less than two factors
4-26 which the Railroad Commission shall take into account as directed
4-27 by Section 86.089 of this code; and
5-1 no gas well in any field falling within the classification under
5-2 (i) above where commingled separate accumulations of gas are being
5-3 prorated under the authority granted by this Subsection (d) shall
5-4 be assigned an allowable in excess of its production during the
5-5 most recent production period reported to the commission and in the
5-6 absence of any reported production the assigned allowable shall not
5-7 exceed the open-flow potential of such well as reported to the
5-8 commission; provided, however, that the commission may, if it finds
5-9 special conditions require such, make a greater assignment.
5-10 SECTION 4. Section 86.081(b), Natural Resources Code, is
5-11 amended to read as follows:
5-12 (b) When, as provided in Subsection (b) of Section 85.046,
5-13 Section 85.0465, or Subsection (b) of Section 86.012 of this code,
5-14 as amended, the commission has permitted production by commingling
5-15 oil or gas or oil and gas from multiple stratigraphic or lenticular
5-16 accumulations of oil or gas or oil and gas, the commission may
5-17 prorate, allocate, and regulate the production of such commingled,
5-18 separate multiple stratigraphic or lenticular accumulations of oil
5-19 or gas or oil and gas as if they were a single common reservoir;
5-20 provided, however, that:
5-21 (i) the commingling and distribution, proration,
5-22 apportionment, or allocation of separate accumulations with
5-23 commission established discovery dates after January 1, 1940, and
5-24 prior to June 1, 1945, shall not serve to expand, add to, or extend
5-25 the vertical or areal extent of any single common reservoir;
5-26 (ii) such commingling shall not cause the allocation
5-27 of allowable production from a well producing from any separate
6-1 accumulation or accumulations to be less than that which would
6-2 result from the commission applying the provisions of Section
6-3 86.095 of this code to such accumulation or accumulations;
6-4 (iii) the allocation of the allowable for such
6-5 commingled production shall be based on not less than two factors
6-6 which the Railroad Commission shall take into account as directed
6-7 by Section 86.089 of this code; and
6-8 no gas well in any field falling within the classification under
6-9 Subdivision (i) above where commingled separate accumulations of
6-10 gas are being prorated under the authority granted by this
6-11 Subsection (b) shall be assigned an allowable in excess of its
6-12 production during the most recent production period reported to the
6-13 commission and in the absence of any reported production the
6-14 assigned allowable shall not exceed the open-flow potential of such
6-15 well as reported to the commission; provided, however, that the
6-16 commission may, if it finds special conditions require such, make a
6-17 greater assignment.
6-18 SECTION 5. This Act takes effect September 1, 1995.
6-19 SECTION 6. The importance of this legislation and the
6-20 crowded condition of the calendars in both houses create an
6-21 emergency and an imperative public necessity that the
6-22 constitutional rule requiring bills to be read on three several
6-23 days in each house be suspended, and this rule is hereby suspended.