CHAPTER 101. COOPERATIVE DEVELOPMENT
NATURAL RESOURCES CODE
TITLE 3. OIL AND GAS
SUBTITLE C. POOLING AND COOPERATIVE AGREEMENTS
CHAPTER 101. COOPERATIVE DEVELOPMENT
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 101.001. DEFINITION. In this chapter, "commission" means
the Railroad Commission of Texas.
Acts 1977, 65th Leg., p. 2566, ch. 871, art. I, Sec. 1, eff.
Sept. 1, 1977.
Sec. 101.002. EXISTING AGREEMENT RIGHTS. None of the provisions
in this chapter restrict any of the rights that a person now may
have to make and enter into unitization and pooling agreements.
Acts 1977, 65th Leg., p. 2566, ch. 871, art. I, Sec. 1, eff.
Sept. 1, 1977.
Sec. 101.003. APPLICABILITY. None of the provisions in this
chapter impair the power of the commission to prevent waste under
the oil and gas conservation laws of the state except as provided
in Section 101.004 or repeal, modify, or impair any of the
provisions of Sections 85.002 through 85.003, 85.041 through
85.055, 85.056 through 85.064, 85.125, 85.201 through 85.207,
85.241 through 85.243, 85.249 through 85.252, or 85.381 through
85.385, Subchapter J of Chapter 85, or Subchapter P of Chapter
91, relating to oil and gas conservation.
Acts 1977, 65th Leg., p. 2566, ch. 871, art. I, Sec. 1, eff.
Sept. 1, 1977.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
816, Sec. 7, eff. September 1, 2007.
Sec. 101.004. CONFLICT WITH ANTITRUST ACTS. (a) Agreements and
operations under agreements which are in accordance with the
provisions in this chapter, being necessary to prevent waste and
conserve the natural resources of this state, shall not be
construed to be in violation of the provisions of Chapter 15,
Business & Commerce Code, as amended.
(b) If a court finds a conflict between the provisions in this
chapter and Chapter 15, Business & Commerce Code, as amended,
the provisions in this chapter are intended as a reasonable
exception to that law, necessary for the public interests stated
in Subsection (a) of this section.
(c) If a court finds that a conflict exists between the
provisions in this chapter and Chapter 15, Business &
Commerce Code, as amended, and finds that the provisions in this
chapter are not a reasonable exception to said Chapter 15, it is
the intent of the legislature that the provisions in this
chapter, or any conflicting portion of them, shall be declared
invalid rather than declaring Chapter 15, Business & Commerce
Code, as amended, or any portion of it, invalid.
Acts 1977, 65th Leg., p. 2567, ch. 871, art. I, Sec. 1, eff.
Sept. 1, 1977.
SUBCHAPTER B. COOPERATIVE AGREEMENTS IN SECONDARY RECOVERY
OPERATIONS
Sec. 101.011. AUTHORIZED AGREEMENTS FOR SEPARATELY OWNED
PROPERTIES. Subject to the approval of the commission, as
provided in this chapter, persons owning or controlling
production, leases, royalties, or other interests in separate
property in the same oil field, gas field, or oil and gas field
may voluntarily enter into and perform agreements for either or
both of the following purposes:
(1) to establish pooled units, necessary to effect secondary
recovery operations for oil or gas, including those known as
cycling, recycling, repressuring, water flooding, and pressure
maintenance and to establish and operate cooperative facilities
necessary for the secondary recovery operations;
(2) to establish pooled units and cooperative facilities
necessary for the conservation and use of gas, including those
for extracting and separating the hydrocarbons from the natural
gas or casinghead gas and returning the dry gas to a formation
underlying any land or leases committed to the agreement.
Acts 1977, 65th Leg., p. 2567, ch. 871, art. I, Sec. 1, eff.
Sept. 1, 1977.
Sec. 101.012. PERSONS BOUND BY AGREEMENTS. Agreements for
pooled units and cooperative facilities do not bind a landowner,
royalty owner, lessor, lessee, overriding royalty owner, or any
other person who does not execute them. The agreements bind only
the persons who execute them, their heirs, successors, assigns,
and legal representatives. No person shall be compelled or
required to enter into such an agreement.
Acts 1977, 65th Leg., p. 2567, ch. 871, art. I, Sec. 1, eff.
Sept. 1, 1977.
Sec. 101.013. COMMISSION APPROVAL. (a) Agreements for pooled
units and cooperative facilities are not legal or effective until
the commission finds, after application, notice, and hearing:
(1) that the agreement is necessary to accomplish the purposes
specified in Section 101.011 of this code;
(2) that it is in the interest of the public welfare as being
reasonably necessary to prevent waste and to promote the
conservation of oil or gas or both;
(3) that the rights of the owners of all the interests in the
field, whether signers of the unit agreement or not, would be
protected under its operation;
(4) that the estimated additional cost, if any, of conducting
the operation will not exceed the value of additional oil and gas
so recovered, by or on behalf of the several persons affected,
including royalty owners, owners of overriding royalties, oil and
gas payments, carried interests, lien claimants, and others as
well as the lessees;
(5) that other available or existing methods or facilities for
secondary recovery operations or for the conservation and
utilization of gas in the particular area or field concerned or
for both are inadequate for the purposes; and
(6) that the area covered by the unit agreement contains only
that part of the field that has reasonably been defined by
development, and that the owners of interests in the oil and gas
under each tract of land in the area reasonably defined by
development are given an opportunity to enter into the unit on
the same yardstick basis as the owners of interests in the oil
and gas under the other tracts in the unit.
(b) A finding by the commission that the area described in the
unit agreement is insufficient or covers more acreage than is
necessary to accomplish the purposes of this chapter is grounds
for the disapproval of the agreement.
Acts 1977, 65th Leg., p. 2568, ch. 871, art. I, Sec. 1, eff.
Sept. 1, 1977.
Sec. 101.014. JOINTLY OWNED PROPERTIES. None of the provisions
in this chapter shall be construed to require the approval of the
commission of voluntary agreements for the joint development and
operation of jointly owned property.
Acts 1977, 65th Leg., p. 2568, ch. 871, art. I, Sec. 1, eff.
Sept. 1, 1977.
Sec. 101.015. COMMISSION REGULATION. An agreement executed
under the provisions of this chapter is subject to any valid
order or rule of the commission relating to location, spacing,
proration, conservation, or other matters within the authority of
the commission, whether adopted prior to or subsequent to the
execution of the agreement.
Acts 1977, 65th Leg., p. 2568, ch. 871, art. I, Sec. 1, eff.
Sept. 1, 1977.
Sec. 101.016. PERMISSIBLE PROVISIONS. (a) An agreement
authorized by this chapter may provide for the location and
spacing of input wells and for the extension of leases covering
any part of land committed to the unit as long as operations for
drilling or reworking are conducted on the unit or as long as
production of oil or gas in paying quantities is had from any
part of the land or leases committed to the unit. However, no
agreement may relieve an operator from the obligation to develop
reasonably the land and leases as a whole committed to the unit.
(b) An agreement authorized by this chapter may provide that the
dry gas after extraction of hydrocarbons may be returned to a
formation underlying any land or leases committed to the
agreement and may provide that no royalties are required to be
paid on the gas so returned.
Acts 1977, 65th Leg., p. 2568, ch. 871, art. I, Sec. 1, eff.
Sept. 1, 1977.
Sec. 101.017. PROHIBITED PROVISIONS. (a) No agreement
authorized by this chapter may attempt to contain the field rules
for the area or field, or provide for or limit the amount of
production of oil or gas from the unit properties, those
provisions being solely the province of the commission.
(b) No agreement authorized by this chapter may provide directly
or indirectly for the cooperative refining of crude petroleum,
distillate, condensate, or gas, or any by-product of crude
petroleum, distillate, condensate, or gas. The extraction of
liquid hydrocarbons from gas, and the separation of the liquid
hydrocarbons into propanes, butanes, ethanes, distillate,
condensate, and natural gasoline, without any additional
processing of any of them, is not considered to be refining.
(c) No agreement authorized by this chapter may provide for the
cooperative marketing of crude petroleum, condensate, distillate,
or gas, or any by-products of them.
Acts 1977, 65th Leg., p. 2569, ch. 871, art. I, Sec. 1, eff.
Sept. 1, 1977.
Sec. 101.018. EFFECT OF APPROVAL OUTSIDE OF UNIT. The approval
of an agreement authorized by this chapter shall not of itself be
construed as a finding that operations of a different kind or
character in the portion of the field outside of the unit are
wasteful or not in the interest of conservation.
Acts 1977, 65th Leg., p. 2569, ch. 871, art. I, Sec. 1, eff.
Sept. 1, 1977.
SUBCHAPTER C. PUBLIC LAND
Sec. 101.051. AUTHORITY OF COMMISSIONER OF GENERAL LAND OFFICE.
Subject to the approval specified in Section 101.052 of this
code, the Commissioner of the General Land Office, on behalf of
the State of Texas or of any fund belonging to the state, may
execute contracts committing to the agreements declared lawful by
the provisions of this chapter (1) the royalty interests in oil
or gas or both reserved to the state, or any fund of the state,
by law, in any patent, in any contract of sale, or under the
terms of any oil and gas lease lawfully issued by an official,
board, agent, agency, or authority of the state or (2) the free
royalty interests, whether leased or unleased, reserved to the
state pursuant to Section 51.201 or 51.054 of this code.
Acts 1977, 65th Leg., p. 2569, ch. 871, art. I, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1987, 70th Leg., ch. 948, Sec. 33,
eff. Sept. 1, 1987.
Sec. 101.052. NECESSARY APPROVAL BY OTHER PERSONS AND STATE
AGENCIES. (a) An agreement that commits (1) the royalty
interests in land set apart by the constitution and laws of this
state for the permanent free school fund and the several asylum
funds, in river beds, inland lakes, and channels, and the area
within tidewater limits, including islands, lakes, bays, inlets,
marshes, reefs, and the bed of the sea, or (2) the free royalty
interests, whether leased or unleased, reserved to the state
pursuant to Section 51.201 or 51.054 of this code, must be
approved by the School Land Board.
(b) An agreement that covers land leased for oil and gas under
the Relinquishment Act, codified as Subchapter F in Chapter 52 of
this code, must be executed by the owners of the soil.
(c) An agreement that commits the royalty interests in land or
areas other than those covered by Subsections (a) and (b) of this
section must be approved by the board, official, agent, agency,
or authority of the state vested with authority to lease or to
approve the leasing of the land or areas for oil and gas.
Acts 1977, 65th Leg., p. 2569, ch. 871, art. I, Sec. 1, eff.
Sept. 1, 1977. Amended by Acts 1987, 70th Leg., ch. 948, Sec. 34,
eff. Sept. 1, 1987.