TX NATURAL RESOURCES CODE

TITLE 3. OIL AND GAS

SUBTITLE A. ADMINISTRATION

CHAPTER 91. PROVISIONS GENERALLY APPLICABLE

SUBCHAPTER F. UNDERGROUND NATURAL GAS STORAGE AND CONSERVATION



§ 91.171. SHORT TITLE.
     This subchapter may be cited as the Underground Natural Gas Storage and Conservation Act of 1977.

Added by Acts 1979, 66th Leg., p. 1996, ch. 785, § 3, eff. June 13, 1979.

§ 91.172. DECLARATION OF POLICY.
     The underground storage of natural gas promotes the conservation of natural gas, permits the building of reserves for orderly withdrawal in periods of peak demand, makes more readily available natural gas resources to residential, commercial, and industrial customers of this state, provides a better year-round market to the various gas fields, and promotes the public interest and welfare of this state.

Added by Acts 1979, 66th Leg., p. 1996, ch. 785, § 3, eff. June 13, 1979.

§ 91.173. DEFINITIONS.
     In this subchapter:
          (1) "Person" means any natural person, partnership or other combination of natural persons, corporation, group of corporations, trust, or governmental entity.
          (2) "Gas utility" means a gas utility as defined in Section 101.003, Utilities Code, or Subchapter A, Chapter 121, Utilities Code.
          (3) "Natural gas" means any gaseous material composed predominantly of the following hydrocarbons or mixtures thereof: methane, ethane, propane, butane (normal or isobutane), in either its original or manufactured state, or gas which has been processed to separate it into one or more of its component parts after its withdrawal from the earth.
          (4) "Native gas" means:
               (A) natural gas which has not previously been withdrawn from the earth; or
               (B) natural gas which has been withdrawn from the storage facility, processed, and reinjected into the storage facility.
          (5) "Storage facility" means any subsurface sand, stratum, or formation used or to be used for the underground storage of natural gas and all surface and subsurface rights and appurtenances necessary to the operation of a facility for the underground storage of natural gas.
          (6) "Storer" means (A) a gas utility, (B) a wholly owned subsidiary of a gas utility, (C) the parent corporation of a gas utility, or (D) a wholly owned subsidiary of a parent corporation which also wholly owns a subsidiary gas utility, but a nonutility storer included in category (B), (C), or (D) must operate the storage facility pursuant to a contract with its affiliated gas utility that provides that all withdrawals of natural gas from the storage facility must be delivered to the affiliated gas utility.
          (7) "Substantially depleted" means that at least 75 percent of the estimated volume of recoverable native gas reserves originally in place in any gas-bearing sand, formation, or stratum have been withdrawn from the sand, formation, or stratum.
          (8) "Interested person" means any person who enters an appearance at the commission hearing required by Section 91.174 of this code.
          (9) "Commission" means the Railroad Commission of Texas.

Added by Acts 1979, 66th Leg., p. 1996, ch. 785, § 3, eff. June 13, 1979. Amended by Acts 1999, 76th Leg., ch. 62, § 18.41, eff. Sept. 1, 1999.

§ 91.174. FINDINGS OF COMMISSION.
     (a) Any storer desiring to exercise the right of eminent domain for the acquisition of a storage facility shall, as a condition precedent to the filing of its petition in the appropriate court, obtain from the commission an order finding:
          (1) that the underground formation or stratum sought to be acquired is classified by the commission as a gas reservoir and is suitable for the underground storage of natural gas and that the storage of natural gas is necessary for the gas utility to provide adequate service to the public and is in the public interest;
          (2) that the use of the formation or stratum as a storage facility will cause no injury to surface or underground water resources;
          (3) that the formation or stratum does not contain native gas producible in paying quantities unless the recoverable volumes of native gas originally in place are substantially depleted and unless the formation or stratum has a greater value of ultimate use to the consuming public as a storage facility to ensure an adequate supply of natural gas or for the conservation of natural gas than the production of native gas which remains;
          (4) the extent of the horizontal limits of the reservoir expected to be penetrated by displaced or injected gas; and
          (5) that no portion of the formation or stratum sought to be acquired has been condemned or is being utilized for the injection, storage, and withdrawal of gas by others.
     (b) The designation of a storage facility does not prevent any storer from instituting additional proceedings in the event it is later determined that the underground reservoir should be extended to prevent the escape, displacement, or withdrawal by others of injected gas.

Added by Acts 1979, 66th Leg., p. 1996, ch. 785, § 3, eff. June 13, 1979.

§ 91.175. COMMISSION JURISDICTION.
     The commission shall have jurisdiction to supervise the construction and operation of all storage facilities formed pursuant to this subchapter, and in addition to the findings required by Section 91.174 of this code, the commission shall include in any order of approval a requirement that the storer file a report each month, including each month prior to the time the storage facility is in operation, with the commission showing, for that month, the volume of gas injected and stored gas withdrawn from storage.

Added by Acts 1979, 66th Leg., p. 1996, ch. 785, § 3, eff. June 13, 1979.

§ 91.176. WITHDRAWAL OF NATIVE GAS.
     A storer may withdraw from storage injected and stored gas as market demand dictates. However, any time a storer's withdrawals from a storage facility equal the volume of gas injected for storage, the storer shall not withdraw additional gas from the storage facility without first obtaining specific authority from the commission.

Added by Acts 1979, 66th Leg., p. 1996, ch. 785, § 3, eff. June 13, 1979.

§ 91.177. STORAGE OPERATIONS MUST BE BONA FIDE.
     (a) A storer must initiate injection operations for gas storage within 12 months after the condemnation order of the court becomes final and storage operations must continue with reasonable diligence after that time.
     (b) Should the monthly reports to the commission indicate that bona fide underground gas storage operations are not being conducted, the commission may, on its own motion or on motion of any interested person, schedule a public hearing, giving the storer the opportunity to show cause why the commission approval of the project should not be withdrawn.
     (c) If the commission finds that the storage project is not being conducted in a bona fide manner, it shall issue an order withdrawing approval of the storage facility, and all property, both mineral and surface, that was condemned by the storer shall revert to those who owned the property at the time of condemnation or their successors.

Added by Acts 1979, 66th Leg., p. 1996, ch. 785, § 3, eff. June 13, 1979.

§ 91.178. RELOCATION OF FACILITIES.
     In the event the acquisition or operation of a storage facility acquired through the exercise of the power of eminent domain requires the relocation or alteration of any railroad, electric, telegraph, telephone, or pipeline lines or facilities, the expense of the relocation or alteration shall be borne by the storer. The expense of relocation means the actual cost incurred in providing a comparable replacement line or facility, less net salvage value from the sale or other disposition of the old facility.

Added by Acts 1979, 66th Leg., p. 1996, ch. 785, § 3, eff. June 13, 1979.

§ 91.179. APPROPRIATION OF STORAGE FACILITIES; LIMITATIONS.
     After an order of the commission is issued approving
      a storage facility, a storer may condemn without further attack as to its right to condemn, any subsurface sand, stratum, or formation for the underground storage of natural gas, condemning all mineral and royalty rights as are reasonably necessary for the operation of the storage facility, subject to the limitations of this subchapter, and the storer may condemn any other interests in property that may be required, including interests in the surface estate in the sand, stratum, or formation reasonably necessary to the operation of the storage facility, provided that:
          (1) no part of a reservoir is subject to condemnation unless the storer has acquired by option, lease, conveyance, or other negotiated means at least 66-2/3 percent of the ownership of minerals, including working interests, and 66-2/3 percent of the ownership of the royalty interests, computed in relation to the surface area overlying the part of the reservoir which as found by the commission to be expected to be penetrated by displaced or injected gas;
          (2) no dwelling, barn, store, or other building is subject to condemnation; and
          (3) the right of condemnation is without prejudice to the rights of the owners or holders of other rights or interests of land to drill through the storage facility under such terms and conditions as the commission may prescribe for the purpose of protecting the storage facility against pollution or escape of natural gas and is without prejudice to the rights of the owners or holders of other rights or interests of the land to all other uses so long as those uses do not interfere with the operation of the storage facility.

Added by Acts 1979, 66th Leg., p. 1996, ch. 785, § 3, eff. June 13, 1979.

§ 91.180. INSTITUTION OF CONDEMNATION PROCEEDINGS.
     (a) The finding by the commission that underground storage is in the public interest is binding on all persons whose property the storer has the right to condemn. After that finding of the commission, the storer has the right to condemn all of the underground storage area and any surface area required for the use and enjoyment of the storage facility.
     (b) The storer shall initiate eminent domain proceedings in the court having jurisdiction in the area in which a portion of the land is situated. The petition shall set forth the purpose for which the property is sought to be acquired, a description of the sand, stratum, or formation and of the land under which it is alleged to be contained, the names of the owners as shown by the deed records of the county, and a description of all other property and rights sought to be appropriated for use in connection with the storage facility, including any parts of the surface necessary for any facilities incidental to the operation of the storage facility.
     (c) The petition shall state facts showing that the storer has obtained the findings of the commission required by Section 91.174 of this code, that the storer in good faith has been unable to acquire the rights sought to be appropriated, that the storer has acquired, prior to the filing of the petition, by any means other than condemnation, at least 66-2/3 percent of the ownership of the minerals, including working interests, and 66-2/3 percent of the royalty interests of the property rights in the storage facility required for that purpose, and shall describe the surface area overlying the storage facility the storer seeks to acquire and the names of the owners of those rights and interests.
     (d) Where more than one tract of land is involved, all or any tracts may be joined in one proceeding, without prejudice to the right of the storer to institute additional proceedings; provided, that the failure to make service upon a defendant does not affect the right of the storer to proceed against any or all other of the defendants upon whom service has been made.

Added by Acts 1979, 66th Leg., p. 1996, ch. 785, § 3, eff. June 13, 1979.

§ 91.181. EXERCISE OF RIGHT OF EMINENT DOMAIN.
     All proceedings in connection with the condemnation and acquisition of storage facilities shall be in accordance with Articles 3264 through 3271, Revised Civil Statutes of Texas, 1925, as amended, and to the extent of any conflict between those articles and this subchapter, the provisions of this subchapter prevail.

Added by Acts 1979, 66th Leg., p. 1996, ch. 785, § 3, eff. June 13, 1979.

§ 91.182. OWNERSHIP OF STORED GAS.
     All natural gas in the stratum condemned which is not native gas, and which is subsequently injected into storage facilities is personal property and is the property of the injector or its assigns, and in no event is the gas subject to the right of the owner of the surface of the land or of any mineral or royalty owner's interest under which the storage facilities lie, or of any person other than the injector to produce, take, reduce to possession, either by means of the law of capture or otherwise, waste, or otherwise interfere with or exercise any control over a storage facility. Upon failure, neglect, or refusal of the person to comply with this section, the storer has the right to compel compliance by injunction or by other appropriate relief by application to a court of competent jurisdiction.

Added by Acts 1979, 66th Leg., p. 1996, ch. 785, § 3, eff. June 13, 1979.

§ 91.183. RIGHTS OF PURCHASERS OF NATIVE GAS.
     (a) In the event there are remaining reserves of native gas in the storage facility which are dedicated to a purchaser and the purchaser and storer are unable to agree on an equitable settlement of rights with respect to the remaining native gas within a period of time that will prevent interference with the operation of the storage facility, the storer or purchaser may apply to the commission for an adjudication concerning remaining reserves of native gas.
     (b) Upon application, the commission shall direct a settlement of remaining reserves of native gas that is equitable to all parties, but which does not interfere with the public benefits arising from the operation of the storage facility.
     (c) In addition to any other disposition that is equitable to all parties, the commission may make a finding of the quantity of remaining recoverable native gas and an allocation of future production on a reasonable production schedule and order delivery to the purchaser by the storer of the amounts of native gas that the commission finds would have been taken by the purchaser during the term of the purchase agreement.

Added by Acts 1979, 66th Leg., p. 1996, ch. 785, § 3, eff. June 13, 1979.

§ 91.184. ABANDONMENT.
     (a) When a storer has permanently abandoned the storage facility, the storer shall file with the commission a notice of abandonment, and shall file an instrument in the deed records in the appropriate county or counties, stating that the storage has ceased, and that all property, both mineral and surface, condemned by the storer has reverted to those who owned the property at the time of condemnation, or their heirs, successors, or assigns.
     (b) The storer shall also file in the deed records in the appropriate county or counties a list of the owners of the mineral, royalty, and surface owners to whom the various interests have reverted, together with an affidavit that the storer has compiled the list from a current examination of title records and that the list is true and correct to the best of the knowledge of the affiant.

Added by Acts 1979, 66th Leg., p. 1996, ch. 785, § 3, eff. June 13, 1979.