Texas Senate Bill SB118

Texas 2015 - 84th Regular

• Filed: 11/10/14

Caption

Relating to unit operations for oil, gas, or oil and gas production from depleting reservoirs or carbon dioxide storage; authorizing a fee.

Impact

The implications of SB118 could be significant in terms of changing the landscape of oil and gas regulation in Texas. By instituting a formal unitization process, the bill aims to prevent waste and ensure a fair division of resources among stakeholders, including working and royalty interest owners. This may also lead to a more collaborative approach among operators within the same reservoir, potentially maximizing resource recovery rates. However, the introduction of additional regulatory measures may also increase operational costs for companies as they adapt to the new requirements.

Summary

SB118 introduces regulations regarding unit operations for oil, gas, or oil and gas production from depleting reservoirs, as well as carbon dioxide storage. The bill mandates the establishment of a unitization process to enhance the recovery of resources and includes provisions for the allocation of production among different tracts of land based on their contribution. This is expected to lead to more efficient resource management and could potentially increase the overall output from both oil and gas operations and carbon sequestration efforts.

Contention

Notably, SB118 has generated some contention surrounding the rights of owners, especially regarding how the bill addresses liabilities and responsibilities of working interest owners versus royalty owners. Provisions that allow for the assignment of proceeds and the management of debts between these parties could lead to disputes regarding financial accountability. Additionally, concerns have been raised about the balance of rights between large operators and smaller stakeholders, as the bill's structure seems to favor organized operations that could potentially marginalize smaller or independent operators.