By:  Armbrister                                                   S.B. No. 1170


A BILL TO BE ENTITLED

AN ACT

relating to the regulation of gas production by the Railroad 
Commission of Texas.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Subsection (a), Section 86.081, Natural 
Resources Code, is amended to read as follows:
	(a)  For the protection of public and private interests, the 
commission, on written complaint by an affected party or on its own 
initiative and after notice and an opportunity for a hearing, shall 
prorate and regulate the daily gas well production from a [each] 
common reservoir if the commission finds that action to be 
necessary to:
		(1)  prevent waste; or [and]                          
		(2)  adjust the correlative rights and opportunities of 
each owner of gas in a common reservoir to produce and use or sell 
the gas as permitted in this chapter.
	SECTION 2.  Subsection (a), Section 86.084, Natural 
Resources Code, is amended to read as follows:
	(a)  The commission, on written complaint by an affected 
party or on its own initiative, may [shall] determine the status of 
gas production from any reservoir [all reservoirs] in the state.
	SECTION 3.  Section 86.085, Natural Resources Code, is 
amended to read as follows:
	Sec. 86.085.  DETERMINATION OF DEMAND AND VOLUME.  On or 
before the last [25th] day of each month, the commission or a person 
authorized by the commission[, after notice and hearing,] shall 
determine:
		(1)  the lawful market demand for gas to be produced 
from each prorated reservoir during the following month; and
		(2)  the volume of gas that can be produced without 
waste from each prorated [the] reservoir and each well in the 
reservoir during the following month.
	SECTION 4.  Section 86.086, Natural Resources Code, is 
amended to read as follows:
	Sec. 86.086.  MONTHLY RESERVOIR ALLOWABLE.  After 
determining demand for and volume of production from a prorated 
reservoir as provided in Section 86.085 [of this code], the 
commission shall fix the monthly reservoir allowable of gas to be 
produced from the reservoir at the lawful market demand for the gas 
or at the volume that can be produced from the reservoir without 
waste, whichever is the smaller quantity.
	SECTION 5.  Section 86.087, Natural Resources Code, is 
amended to read as follows:
	Sec. 86.087.  MONTHLY WELL ALLOWABLE.  The monthly reservoir 
allowable shall be allocated among all wells entitled to produce 
gas from a prorated [the] reservoir to give each well its fair share 
of the gas to be produced from the reservoir, but each well is 
restricted to the amount of gas that can be produced from it without 
waste.  The volume of gas allocated to each well is the monthly 
allowable for that well.
	SECTION 6.  Subsection (a), Section 86.089, Natural 
Resources Code, is amended to read as follows:
	(a)  In determining the daily allowable production for each 
gas well in a prorated reservoir, the commission shall take into 
account:
		(1)  the size of the tract segregated with respect to 
the surface position and common ownership on which the gas well or 
wells are located;
		(2)  the relation between the daily producing capacity 
of each gas well and the aggregate daily capacity of all gas wells 
producing the same kind of gas in the same common reservoir or zone; 
and
		(3)  other factors that are pertinent.                                        
	SECTION 7.  Section 86.094, Natural Resources Code, is 
amended to read as follows:
	Sec. 86.094.  AUTHORITY TO INCREASE TAKE ABOVE ALLOWABLE.  
If unforeseen contingencies increase the demand for gas required by 
a distributor, transporter, or purchaser to an amount in excess of 
the total allowable production of the wells to which the person [he] 
is connected, the distributor, transporter, or purchaser may 
increase the person's [his] take ratably from all these wells in 
order to supply the person's [his] demand for gas, provided that 
notice of the increase and the amount of the increase are given to 
the commission within five days; and provided further, the 
commission may[, at its next hearing, shall] adjust the inequality 
of withdrawals caused by the increase in fixing the allowable 
production of the various wells in the common reservoir or zone.
	SECTION 8.  This Act takes effect immediately if it receives 
a vote of two-thirds of all the members elected to each house, as 
provided by Section 39, Article III, Texas Constitution.  If this 
Act does not receive the vote necessary for immediate effect, this 
Act takes effect September 1, 2005.