An Evaluation of Gas Field Rules In Light of Current Conditions and Production Practices In the Panhandle Non-Associated Gas Fields

Abstract

Abstract During the early years of development in the Panhandle fields the Rule of Capture was king. Under the Rule of Capture each property owner has the right to drill as many wells as desired at any location. Adjacent property owners protect their rights by doing the same. Courts adopted the Rule of Capture to protect mineral owners from liability due to migration of oil and gas across property boundary lines. This general practice "to go and do likewise" generally leads to enormous economic and natural resource waste. Established to offset the waste created under the Rule of Capture is the doctrine of Correlative Rights. Correlative Rights is the right of each mineral owner to obtain oil and gas from a common source of supply under lawful operations conducted from his property. However, each mineral owner has a duty to every other mineral owner not to extract oil and gas in a manner injurious to the common source of supply. This paper will examine the historical context of these common law principles with regard to the Panhandle non-associated gas fields. Discovered in 1917, the Panhandle fields are ideal to evaluate the merit of statutes and regulations enacted in response to production practices. As in many Texas fields, proration in the Panhandle fields is the primary mechanism to protect correlative rights and prevent waste. Signed and made effective May 1989, the current field rules pre-date much of the enhanced recovery techniques that use well-head vacuum compression. This paper reviews the gas rules in the 1989 Texas Railroad Commission order in light of current reservoir conditions and production practices.