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

Heading: Evidence of White Oil Production

Text: We have rejected the major premise on which the submission of the case to the jury was based. Casinghead gas must be produced with oil from an oil stratum. The question is not whether oil production from the brown dolomite was possible, but whether actual production or test results from the Kimberlin wells showed they would actually produce the required quantities of oil from that stratum. There was further error concerning the status of white oil production that should be avoided on retrial. The trial court, over Energy-Agri's objection but as requested by Amarillo Oil, gave the jury a definition of oil that did not expressly include the so-called white oil produced by condensing gas into liquids by using low temperature extraction (LTX) units. [6] The definition did not expressly state that LTX products were not included in oil production. The District Director for the Railroad Commission overseeing the Panhandle Field was allowed to testify, over objection by Amarillo Oil, that the Commission commonly included the LTX products in calculating the oil produced for well classification purposes. Other witnesses were also allowed to testify, over objection, that LTX products counted as crude oil for well classification purposes. At the time this case was tried, the practices of the Commission with respect to white oil were inconsistent and not based on court decisions construing the statute. Both the Railroad Commission and the courts have subsequently determined that the relevant Natural Resources Code provisions do not allow white oil to be counted as oil for well classification purposes. Hufo Oils v. Railroad Commission, 717 S.W.2d 405 (Tex.App.-Austin 1986, writ denied). Therefore LTX products also should be excluded from oil production to determine whether gas is produced from an oil stratum. After excluding LTX production, the Kimberlin wells apparently would not even qualify as oil wells as to the granite wash formation. [7] On remand, the definitions, instructions, and evidentiary rulings should be consistent with what has now been settledthat LTX products are not crude oil for determining whether sufficient oil is produced to make the stratum an oil stratum.