Official report to the House of Representatives of the 58th Legislature of Texas Page: 89 of 94
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3. Commissioner Murray stated "we plan to get as tough as we can with any
operator who deliberately rigs a well to gain marginal certification.
By the end of December support was growing among majors and independents
for the new commission proposal to add a full acreage factor to the 1947 yardstick
for fixing the oil allowables in new fields. This plan would make Texas more competitive
with Louisiana in production on the basis of acreage and depth. The purpose
of giving full credit for wide spacing in the allowables is to encourage less waste in
the fields without sacrificing allowables. This yardstick change would make Texas
more competitive with other states.
The historic tender system currently used in Texas to account for production
will likely be terminated in January and replaced by a machine accounting system
which would cut sharply the amount of clerical work required by both the commission
and the industry.
The Wall Street Journal reporting on the hearings stated:
The system (statewide quota) unquestionally has kept Texas
oil from flooding the market. Though its wells could supply
two thirds of the U. S. demand if they pumped full speed,
the state accounted for only 35% of the U. S. oil production
But critics now charge the system, while throttling output
from big wells, has let small ones multiply. This, they say,
has both raised industry costs and unwittingly encouraged the
Until recently, a big Texas landowner could sink an oil well
every 20 acres; an operator with a smaller plot can still drill
no matter how close he may be to a neighboring well. He often
has an incentive, too, because the rules frequently make it
more profitable to own a "marginal" well than a big, efficient
In the East Texas Field, a well is ruled marginal--and eligible
to operate every day--if it can't pump 20 barrels a day. If
it pumps 19 barrels a day, it can legally flow 570 barrels in
a 30 day month. By contrast, a regulated well capable of
flowing 1,000 barrels a day might be allowed to operate only
eight days, under a 30 barrels-a-day quota, and so produce
only 240 barrels a month.
These regulations, one oil economist says , have spurred Texas
oil men to sink twice as many wells as would be needed to recover
the state's oil efficiently. The result, he says, is that
the industry has been wasting $500 million a year in
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Texas Legislature. House of Representatives. General Investigating Committee. Official report to the House of Representatives of the 58th Legislature of Texas, book, 1963; Austin, Texas. (texashistory.unt.edu/ark:/67531/metapth5869/m1/89/: accessed June 28, 2017), University of North Texas Libraries, The Portal to Texas History, texashistory.unt.edu; .