extraction of natural gasoline and separation of condensate .from ~a11 gas delivered by Lessee under said Contracts shall, except as otherwise provided in said Contracts, be returned into the formation or form- ations from which such gas was produced through certain input wells located at points selected by Le,ssee on the above described land per on othe,r lands or leases in the Aqua Lulce Field subject to such .Agua Duke Contract or subject to such Alexander Contract, '..
, Mr. R. A. Shepherd, Rag 31, 1939, page 5 O-851
"It Is recognizedand agreed that In order to secure efficientand profitable operation of the plants in which Lessee's gas is processed, it may not be feasible to produce gas from each and every lease or tract of land in the Agua Dulce Field subject to said Agua Lulce Contract.or sub- ject to said Alexander Contract, or to return to each said lease or tract of land subject to either of said Contracts the quantity of gas equivalentto the gas remaining from that delivered from the said lease or tract of land after the extraction of natural gasoline and the separationof condensate therefrom. Therefore,Lessee shall have the.right to produce the,gas marketed or used by Lessee.and ,thegas d,elFvered by.Lessee under 'a either of.safd Contracts,from any,of the leases .ortracts of.'.land subject to,either of said~contracts.ILess.ee 'Shall.. also~.have the right'to cause ,thegas remaining -af- ter processingIn aald~~plants to be.returned~,to : the formatlon orformations ~fromwhich produc.ed.'I- t&?ougkinput wells .locatedat points.selectedbg, Lessee .on~my lease ortract of land .lnthe Agua lXllce.Field subject to'elther ,ofsaid Contracts.;"? In this connectionwe have consulted-withMr. John E. Taylor, ,the,ChiefSupervls.or'ofthe Oil and Gas Divlsion..of~the~ Railroad Commission,and Dr.FX;L. fatten,:Drrectorof Produc- tion In Ijtad:l)lvision.They concur in our opinion t.hatit is .not gas to-the exact ,Pormation.fromwhich It was withdrawn,.nor~thatthe exact the gas be returnsd~eachday to,the formations from which .thegas was wlthdrawn,,butthat It Is suffici~ent,~under the present orders of the Railroad~Commis~slon~, that a ratable proportion of the gas k;a;rurned to each formation within a reasonable'Time after wlth- Our opinion is abasedon our understanding that it would be a practical impossibilityto operate's recycling plant in a field such as the Agua.Dulce,gasafieldwithout.commingllng~the gas from several formations,and .thatl,twould be practically lm- possible to keep the amount of gas relnjected Into .eachformation each day~exactlg proportionalto the amount withdrawn. Of course, these provlsions of the contracts.tomake'any orders necessary to preventwaste, such asorders limiting the amount of gas wLth- drawn from or reinjected into any formation in order to'prevent the reservoir pressure.fromgetting too hish or too low.. We also~wish to direct your attention to'the possibility of a conflict betweena portion of Paragraph I of the royalty contract and Sectlon 20 of Artfcle 5008, Revised ClvLl,Statutes. Paragraph I of the royalty contract provides, in part, wasfollows: -.
Mr. R. A. Shepherd, May 31, 1939, page 6 o-851
" ......Lesseeshall have the right to produce the gas marketed or'used by Lessee under either of said Contracts, from any of the leases or tracts of land subject to either of said Con- tracts." Section.20 of Article