Co-author Travis Booher
There are plenty of reasons why compulsory unitization is good for Texas, say the proponents of Texas House Bill 100, the Oil and Gas Majority Rights Protection Act.
More production = more money
The foremost benefit of fieldwide unitization is enhanced production. Oil and or gas that would otherwise be left behind would be produced. For example Mississippi, which has had production since 1939, has seen a substantial increase since C02-enhanced oil recovery projects were initiated. C02 oil now accounts for 49% of total Mississippi production. This increase is oil that presumably would have been left in the ground. Projections are similar for selected fields in Southeast Texas: Up to 25,000 bopd of production, resulting in $2.2 billion in addtional tax revenues.
This would, of course, mean more money to royalty owners. Oil left in the ground forever never ends up in a royalty check.
Economic prosperity a/k/a JOBS
The community in which fieldwide units are formed see more oil field jobs. The drilling and operation of injection wells, capture wells and other infrastructure in fields that are otherwise depleted create new jobs in areas that probably need them. That leads to more money circulating among local businesses and households.
More efficient production
Unitization in most cases means more production with fewer wells, which prevents waste. More oil will be produced, which leads to a higher utilization of our natural resources. This allows the most efficient development of resources with less environmental impact.
Protection of surface owners
Surface owners, who always like to see fewer tank batteries and other facilities, would benefit. In a typical secondary or tertiary recovery operation, fewer surface facilities are necessary because the owner of each tract is not required to a drill his own well and locate facilities on his tract. Although production will increase, the number of facilities should not increase, thereby resulting in higher utilization of natural resources with less environmental impact.
Defeats the “tyranny of the myopic minority”
Fieldwide units can be established by agreement, but owners who do not agree cannot be forced to join, leaving large swaths of acreage, often in the middle of operations, un-unitized. Without a mechanism for compulsory unitization, a few small owners situated in the wrong place have the power frustrate opportunities the majority would like to pursue. The bill would provide willing lessees and mineral owners an opportunity to obtain their “fair share” without hindrance from the neighbors.
These points demonstrate the purpose of unitization: Conservation of oil and gas, prevention of waste and protection of correlative rights: This is a favorite of law professors and policy wonks (but we repeat ourselves).
We could be more like Louisiana!
Seriously, our neighbor to the east and 38 other producing states have some form of compulsory unitization. Set aside your Texas pride for a moment: Can everybody else be so wrong? Is Texas that much smarter than they are? Given our great state’s inglorious national ranking in elementary and secondary education, I doubt it.
Coming soon: Compulsory Unitization is a Terrible Idea (Rhetorically Speaking)