HonorableOlin Culberson,ChaiI?iWn
RailroadCowission of Thxas
Austin,Texas

Dear Sirs                                 OpinionMO..O-7096
                                          Ret Whether dasingheadgas, v&%oh
                                          has not been processed~or+t thfough
                                          a gasolineplant for thb removal off
                                          bdrooarbons,mn be legallyutilized
                                          for the manufactureof cationblack
                                          where the recoveryis less than 5
                                          pounds of carbonblack to each 1,000
                                          cubic feet of cashingheadgase

                Your letterof Februaryll,,1946, reads as follows:

"The RailroadCommissionof Texas has had a requiestto grant authorityto
utilizecasingheadgas, which has not been processedor put througha gaso-
line plant for the removalof hydrocarbons,in a channel-blackplantmaking
carbonblack.

"This oasinghsadgas i8 in the categoryof sweet gas. The ohannelaslrbon
black plant will not reoovarfive pounds per thousandcubic feet.

"QUESTIOHI If casingheadgas,which is classifiedas sweat gas, does not
gg,$hrougha.gasolineplant for the extraotionof hydrooarbxxs,can the
RailroadConnnissionauthorizeit to be burned for aarbon-blackwhere the
recoveryis leas than the five pounts par ouMo feet of gas.*

       Your questionis no doubt propoundedin the light of Se&ion 3 of
Article 6006,Vernon'sAnnotatedCivil Statutes,particularlysubsection(i)
thereofwhioh provide8:

Vhs produotion,transportation, or use of naturalgas in suchmanner, in
auoh amount,or under such oonditionsik to constitutemste is hereby de-
olaredto be unlawfuland is prohiMted, The tern "waste"among other
things shall specificallyinclude:               _     .
”
    .   .   .



"‘(I) The UQO of naturalgas for the manufactureof carbonblack without
first.havingextractedthe naturalgasolinecontentfrom such gas, sxospt
where it is utilizedin a plant produoingan averagerecoveryof 'notless
than five (5) poundsof carbonblack 'coeach one thousand(1,000)cubic
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Hon. Olin Culbsrson,Page 2 (o-7095)



feet of gas it shall not ,benecessaryto first extractthe naturalgasoline
contentfrom such gas.
". . .*

         Prior to its amendmentby the 47th Legislature(Acts 1941, pags
117, chapter91) Subsection(i) read as follows:

"(i) The uss of naturalgas for the manufactureof oarbonbla& without
first havingextxaotedthsnatural gasolineoontentfrom such gas."

          In opinionNo. O-2199,dated April 25, 1940,addressedto I&. John
E. Taylor,Chief Supervisor,Oil and Gas Division,RailroadCamnissionof
Texas, this Dspartmsntheld, among other things,that casingheadgrsmay be
used in the manufaotursof oarbonblack "withoutthe impositionof the linit-
ationsin subsection(i) of 8sOtiOn3 of.Artiole~6008."This opinionwas
writtenin the light of Subseotion(i) as it read prior to the 1941 wend-
ment, but the conolusionappliesto presentSubseotion(i) with equal rele-
vancy.
         In additionto and apart from thereasons advanoedin OpinionNo.
O-2199,ws are of the opinionthat its oonolusionis oompslladbythe follow-
ing additionalstatutes.

          Article 6008, Section3, Subsection(g) provides:

*(g) The escapeinto the open air, from a well producingboth oil and gas,
of natural gas in exosss of the snaount
                                      vhioh is necessaryin the efficient
drillingor operationof the well." (One of snrnneratedspecificdefinitions
of Yvaste.")

          &ticle 6014, Section (a) providsss

"The production,storageor transportationofcrude petrolem oil or of nat-
ural gas in such manner, in such amount,or under such conditionsas to
constitutewaste is hereby dealaredto be unlawfuland is prohibited. The
term "noste"smong otherthings shall speoifioallyincludes

"(a) The operationof any oil well or walls with an ineffioientgas-oil
,ration, and the Commissionis hereby given authorityto fix and dstermineby
 order such ratio)providedthatthe utilizationfor manufactureof natural
 gasolineof gas producedfrom an oilwsll wit&n the permittedgas-oil
 ration shall not be includedwithinthe definitionof waste."

         The foregoingstatutesspecificallyregulatethe productionof
cashinghead gas and are controllingupon matters of statutorywaste.
"Casingheadgas is nothingother than gas from an oilwell)" Mussellarm
v. KagnoliaPetroleumCo., 107 Okla. 183, 231 Pac. 526* "There is a ~011~
defineddistinoti,onin law batwsengas producedfrea a gas wsll and
oashingheadgas: The latter is that which flows from oil wells . . ."
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Hon. Olin Culberson,Page 3 (O-7096)



HmableOil & R-finingCOO Vo Poe, 29 s,x (zd) 1019 (Camniesionof Appeals).
This constructionof the tsm "cashingheadgas" has also been adoptedin the
followingaascs: Mullendorev. Dennehcrma OU Co. (248 Pac. 837)~ Ctilitis*
ProductionCorp.v. Carter Oil Co*, 72 F&L (2d)'655$GeneralPetroleumCorp.
of Californiav. United S+ate*,24 Fed, Sup, 2853 Brea CannonOil Co. vo Cam-
mission of InternalRevenue,77 Fed. (2d) 67*

         Thus it i* that casingheadgas is definedas follows in subsection
(i), ScctiPn2, Article 60081 "The term 'casinghead baa' shallmean any gas
and/or vapor indigenousto an oil stratmeand preduoedfrom su~ohstmtm with
oil." Subsection(h) section2, Article 6008 defines"smet gas" as meaning
'all.naturalgas except 'sourgas* and 'casingheadgas.," 'Thefactthat the
oaslngheadgas which is the subjeotof your letter is desoribedas being "in
the categorywith sweet gas" doesnotaffect the applicationof the statutes
regulatingcasingheadgas as such. %e held in Opinion Eo. O-1760 dated
March 13, 1940, addressedto Mr. John E. Taylor,Chief Supervisor,Oil and Gas
Division,RailroadCanmSssion,that the tens "casinghead   gas" is restrictedto
gas which is producedfrom an "011 well" as that term 'isdefinedin subsection
(0) of Section2, Artiole 6008, and the-terms"sweet gas*~and"sour gas" to gas
producedfrom a "gas well" as that term is d&finedin Subsection(d), Seotion
2 of Artiole 6008.

          Casingheadgae not being Foduoed separatelybut only as sn incident
to the productionof oil, section(a) of &tie10 6014 authorisesthe Railroad
Cammissionto fix the efficientgas-oilratio for such production. The gas
producedunder the fixed ratio may, under Subseotion(g), Seotion3, Artiole
6008,be permittedto escapeinto the~openair and the provisoof Section(a),
&ticle 6014, is a specificlegislativedeclarationthat the utilizationof
this casingheadgas for the manufactureof naturalgasolineshall not be includ-
ed within "he definitionof statutorywastei Therefore,easingheadgas is
removedfrom the operationof subsection(i), sectionS, Article 6008,the
purposeof which is the conservationof the naturalgasolinecontent.

          It is manifest,however,that any beneficialuse of cashingheadgas
lawfullyproduced(any productionin exoessof the effioientand fixed gas-oil
ratio being of courseunlawful),ratherthan its esoape intothe open air,
would be in the publicinterestand is contemplatedby subreotion(3), Section
7, article 6008, providingas fellows:

"(3) Casingheadgas may be used for any beneficialpurpose,which include8
the manufaotureof naturalgasoljns.!'

          Aacordingly,it is the opinionof this departmentthat cashinghead
gas which ha8 not been processedfor the removalof bydrooarbws maybe legally
utilizedfor the manufactureof carbonblaok where the recoverywill be less than
five poundsof carbonblack to each one thousandoubio feet of cashinghead
                                                                      gas.

                                             Yours very truly
ZCCms:egnr
APPROVEDFEB 26, 1946                       ATTORNEYGEI?ERAL
                                                          OFTMIS
/*/ CARLOSASHLEY
FIRSTASSISTANT   ATTORNEY   GENERAL         By /a/ eo11iec. steak1ey
                                                       Assistant
