Ahk-a- il. -a WXLL. WILSON **AX-l-G- GENX!XXAL**  **truly 11,**  1960

Honorable Bill Allcorn Opinion NO. W-878 Commissioner General Land Office Re: Authority under Austin 14, Texas Article 6008b, V.C.S., for the extension of term leases by entering into a secondary Dear Mr. Allcorn: recovery program.

You have requested the opinion of this office with respect to the authority of the Commissionerof the General Land Office and the School Land Board to extend a State mineral. lease beyond its principal term of 25 years by the execution and approval 0f.a unitization agreementunder the provisions of Article 6008b, V.C.S.

The lease In questionwas executed in 1940, pursuant to the Sales Act then In force, for "aperiod of five years and as long thereafter as any minerals ;,. .are produced therefrom

not to exceed 25 years
. . . . ieks'legally were The primary and principal sus ended from 1941 to 1947 and its explration date is December isi , 1971. The lessee asserts the advlsability of the institution of a water flood operation In the field as a means of conservationand increasing the ultimate recovery and proposes unitizationunder Article 6008b with other tracts composing the field. Apparently, the expenditure of substantial sumswill be necessary to carry out the proposed secondary recoveryprogram and It is estimated that field depletion will not occur until 1981, or some ten years after the expiration of the principal term of the lease in question.

Supposedly, the programwill not be institutedunless the proposed unitization agreement legally can extend the prlncipal term of the lease to the duration of production. It is contended that the Act wherein'lt states that unitization agreements for secondary recoveryprogramsmay provide "for the extension of leases covering any part of lands committed to the unit

. so long as production of oil or gas In paying quantities is'hid from any part of the lands or leases committed there-
&:s: .", supplies the requisite authority. Art. 6008b, Sec. 1,HonorableBill Allcorn,page 2 (WW-878)

This Department In ~~-185 rendered the opinion that & leaseGouldnot be extended beyond itsprincipal term by the executionand approval of a unitizationagreement 'pursuantto the provisionsof'Atit. 5382c, despite the fact that this statute authorized such &n agreement to contain a ~provlslonthat the lease "withrespect to the lnteiest~of the State, shall remain in force'as ldnn as oil or zas . . . is vroduced from the unit In paying quantitiesand royaltiespaid to the State thereon." (Article5382c, Sec. 2(s).)

' Without deciding,becauseunnecessary,whether this statute,passed in 1951, supersedes the pertinentprovlslons of Article 6008b, It is to be noted that the portion of the latter statute,quoted above, Is not substantiallydifferent from Its cdunterpart in Article 5382~. "extension"' The statutoryprovision for

of a lease for so long as productionobtains is, In our opinion, simplyanother way of saying that the lease shall "remainin force'.for suchproductiveperiod. Neither is it of piirticular

Import,as we view thematter, that Article 6008b relates to secondary recovery operations,while Article 5382~ presiunably

Qertalns to primary or initialmineral development. The fact remains that **in** both instances, If the statutesare given the effect contended for, and assuming that productionwill continuebeyond the principal tern'of the lease, the State,without having received a bonus or other direct consideration therefor, till1 have disposed of at least a,Bnt.ial portion of Its reversionary interestrather than committing to theunit merely Its royalty Interestas authorizedby the unitization statutes.

We thereforebelieve, aid you are so advised, that for the reasons therein set forth, the answer to thepresent question Is controlledby our former OpinionNo. ~~-185. Although the Commissionerand the School Land Board are authorized to enter into and approve a unltlzation agreement for secondaryrecovery operations,they cannot thereby legally extend the leasebeyond Itsprincipal term of 25 years. SUMMARY Under present law the State cannot,by entering into a unitizationagreement under Article 6008b, V.C.S., extend a term mineral leasebeyond lts'prlncipal term of 25 years. Yours very truly,

JHR:bh WILL WILSONHonorable Bill Allcorn, page 3 (W-878)

APPROVED: OPINION COMMITTEE W. V. Geppert, Chairman
Leon F. Pesek Virgil R. Pulliam John C. Steinberger
REVIEWED FOR THE ATTORNEY GENERAL BY: Leonard Passmore