NATURAL RESOURCES CODE

SUBTITLE C. POOLING AND COOPERATIVE AGREEMENTS

CHAPTER 101. COOPERATIVE DEVELOPMENT

SUBCHAPTER A. GENERAL PROVISIONS


	§ 101.001.  DEFINITION.  In this chapter, "commission" 
means the Railroad Commission of Texas.

Acts 1977, 65th Leg., p. 2566, ch. 871, art. I, § 1, eff. Sept. 1, 
1977. 


	§ 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, § 1, eff. Sept. 1, 
1977. 


	§ 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 of this code 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 of this code or Subchapters E and J of Chapter 
85 of this code, relating to oil and gas conservation.

Acts 1977, 65th Leg., p. 2566, ch. 871, art. I, § 1, eff. Sept. 1, 
1977. 


	§ 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, § 1, eff. Sept. 1, 
1977. 
	[Sections 101.005 to 101.010 reserved for expansion]                           

SUBCHAPTER B. COOPERATIVE AGREEMENTS IN SECONDARY RECOVERY 
OPERATIONS


	§ 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, § 1, eff. Sept. 1, 
1977. 


	§ 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, § 1, eff. Sept. 1, 
1977. 


	§ 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, § 1, eff. Sept. 1, 
1977. 


	§ 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, § 1, eff. Sept. 1, 
1977. 


	§ 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, § 1, eff. Sept. 1, 
1977. 


	§ 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, § 1, eff. Sept. 1, 
1977. 


	§ 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, § 1, eff. Sept. 1, 
1977. 


	§ 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, § 1, eff. Sept. 1, 
1977. 
	[Sections 101.019 to 101.050 reserved for expansion]                           

SUBCHAPTER C. PUBLIC LAND


	§ 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, § 1, eff. Sept. 1, 
1977.  Amended by Acts 1987, 70th Leg., ch. 948, § 33, eff. Sept. 
1, 1987.


	§ 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, § 1, eff. Sept. 1, 
1977.  Amended by Acts 1987, 70th Leg., ch. 948, § 34, eff. Sept. 
1, 1987.