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Texas Commission Rules in Favor of Phillips in ‘White Oil’ Fight

May 13, 1985

AUSTIN, Texas (AP) _ The Texas Railroad Commission on Monday ruled in favor of Phillips Petroleum Co. in its 31/2 -year struggle against so-called ″white oil″ operators in the state’s largest natural gas field.

The commission voted 3-0 to accept a recommendation by its examiners to retest wells that Phillips claims are taking its gas in the Panhandle Field that underlies eight counties. According to testimony, reserves in the field are worth $27 billion.

At issue is whether independents using refigeration units to condense natural gas vapor into a liquid can classify their projects as oil wells rather than natural gas wells.

Among the advantages of such a classification is that one oil well can be drilled on each 10 acres, while 640 acres are required for each natural gas well.

Independents began using the refigeration devices, or ″LTX units,″ in the late 1970s. Austin lawyer Ivan Hafley estimated that 500 to 1,000 units may now be in operation.

The commission will now require the LTX units to be tested within 75 days of the effective date of the order, which has yet to be set.

″We’re pleased with the ruling,″ Phillips’ spokesman Jere Smith said at the company’s headquarters in Bartlesville, Okla. ″In light of the evidence, it seems to be the only reasonable decision they could have made.″

Hafley and independent operators have testified that shutting down the LTX units on the grounds they do not qualify as an oil well would be devastating to the Panhandle’s economy.

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