TEXAS TO EXAMINE GAS PRORATION SYSTEM

The Texas Railroad Commission has called a hearing Oct. 9-10 in Austin to examine effects of its gas proration system. TRC Chairman Lena Guerrero said the commission intends to find out whether its gas production rules are contributing to waste of Texas gas. If so, TRC will review options that could prevent further waste from occurring.

Sept. 30, 1991

2 min read

The Texas Railroad Commission has called a hearing Oct. 9-10 in Austin to examine effects of its gas proration system.

TRC Chairman Lena Guerrero said the commission intends to find out whether its gas production rules are contributing to waste of Texas gas. If so, TRC will review options that could prevent further waste from occurring.

Leaders of Texas Mid-Continent Oil & Gas Association (Tmoga) and Texas Independent Producers and Royalty Owners Association (Tipro), both of Austin, met last week to try to resolve long standing differences of opinion on gas prorationing rules. Officials of the associations hoped to close the gap separating their positions in time for TRC's hearing.

Tipro last August called on TRC to curb waste of gas by aligning monthly allowables with market demand (OGJ, Sept. 2, p. 45).

TRC sets allowables for Texas's prorated gas fields based on purchaser nominations. Tipro said TRC needs to find a totally different approach to determining market demand.

INEQUITIES CHARGED

Among other criticisms, Tipro leaders say TRC has introduced inequities into its gas proration system by overriding traditional allocation formulas with so-called alphabet allowables.

"In the proration system that has evolved at the TRC, production dictates allowables, and operators who produce the most gas are rewarded with higher allowables," a Tipro official said. "in a properly functioning proration system, allowables dictate production."

Instead of purchaser nominations, Tipro says, the TRC should base monthly gas allowables on its own data.

TRC Commissioners Guerrero and Robert Krueger at Tmoga's annual meeting Sept. 18-19 in Houston pledged to do whatever is possible to prevent waste by properly allocating the state's gas resources.

TRC Commissioner Jim Nugent says the commission's gas production rules are too cumbersome for today's competitive gas markets. He advocates streamlining proration rules to give all producers equal opportunity to sell gas.

Several panels, formed in the past to study Texas's gas proration system, have recommended changes. But major reforms have not been implemented.