Opinion ID: 2437936
Heading Depth: 1
Heading Rank: 3

Heading: new definition of casinghead gas

Text: The court arrives at a new definition of casinghead gas by concluding that the statute is unambiguous and reading together the statutory definitions of casinghead gas and oil well. Maj. opinion page 22. Casinghead gas is statutorily defined as any gas or vapor indigenous to an oil stratum and produced from the stratum with oil. Tex.Nat.Res.Code Ann. § 86.002(10). The court today rewrites this definition by inappropriately equating stratum with oil well. An oil well is defined as any well that produces one barrel or more of oil to each 100,000 cubic feet of gas. Tex.Nat.Res.Code Ann. § 86.002(6). The end result of the court's new definition is that a stratum must produce at least one barrel of oil for each 100,000 cubic feet of gas in order to be an oil stratum. This is an unorthodox view, and I am surprised that the court attempts to justify its decision by merely stating the intent of the legislature is apparent from the face of the statute. Maj. opinion page 24. There is absolutely no authority for equating a stratum with an oil well. In my opinion, the definition of casinghead gas is ambiguous, and the RRC has construed this definition for over half a century. If the legislature was dissatisfied with this construction, they would have changed it by now. Rather than mucking up the definition of casinghead gas, the court should follow the RRC's construction. The legislature clearly applied the 100,000:1 gas oil ratio (GOR) only to an entire well's production, as opposed to each individual stratum from which the well produces. Section 86.043 of the Texas Natural Resources Code authorizes the RRC to fix and determine the gas-oil ratio of all wells in the state (emphasis added) without mentioning any determination of the gas-oil ratio for individual strata. Neither the legislature nor the RRC have made provisions for calculating a GOR for strata. Moreover, before today, oil wells could produce from strata which individually produce at more than a 100,000:1 GOR and produce from other strata that produce at less than a 100,000:1 GOR, so long as total production from the entire well met the 100,000:1 GOR. See Tex.Nat.Res.Code Ann. §§ 86.002(10) and 86.097 (Vernon 1978). This practice will have to cease; according to the court's new definition of casinghead gas, the only way an oil well will actually produce at the 100,000:1 GOR permitted by statute is if all strata also produce at a 100,000:1 GOR. If any strata produce at more than a 100,000:1 GOR, production will be violative of the new definition. If any strata produce at less than 100,000:1 GOR, the well's GOR will be less than 100,000:1 because no strata greater than 100,000:1 will be allowed to offset it. [6] If the legislature had intended this construction of these statutes, they would have said so. Instead, the legislature, in the protection of public and private interests, granted the RRC broad discretion in administering the provisions of this chapter.... Tex.Nat.Res.Code Ann.§§ 86.001, 86.041. I am not suggesting that Energy-Agri's oil wells should be entitled to draw from horizons which produce only gas. This is impermissible. See Tex.Nat.Res.Code Ann. § 86.097 (No person ... operating an oil well may produce from the oil well gas found in a horizon productive of gas only.).