As used in the Oil and Gas Act:

1. A. "person" means:

   1. (1) any individual, estate, trust, receiver, cooperative association, club, corporation, company, firm, partnership, joint venture, syndicate or other entity; or
   2. (2) the United States or any agency or instrumentality thereof or the state or any political subdivision thereof;
2. B. "pool" means an underground reservoir containing a common accumulation of crude petroleum oil or natural gas or both. Each zone of a general structure, which zone is completely separate from any other zone in the structure, is covered by the word "pool" as used in the Oil and Gas Act. "Pool" is synonymous with "common source of supply" and with "common reservoir";
3. C. "field" means the general area that is underlaid or appears to be underlaid by at least one pool and also includes the underground reservoir or reservoirs containing the crude petroleum oil or natural gas or both. The words "field" and "pool" mean the same thing when only one underground reservoir is involved; however, "field", unlike "pool", may relate to two or more pools;
4. D. "product" means any commodity or thing made or manufactured from crude petroleum oil or natural gas and all derivatives of crude petroleum oil or natural gas, including refined crude oil, crude tops, topped crude, processed crude petroleum, residue from crude petroleum, cracking stock, uncracked fuel oil, treated crude oil, fuel oil, residuum, gas oil, naphtha, distillate, gasoline, kerosene, benzine, wash oil, waste oil, lubricating oil and blends or mixtures of crude petroleum oil or natural gas or any derivative thereof;
5. E. "owner" means the person who has the right to drill into and to produce from any pool and to appropriate the production either for the person or for the person and another;
6. F. "producer" means the owner of a well capable of producing oil or natural gas or both in paying quantities;
7. G. "gas transportation facility" means a pipeline in operation serving gas wells for the transportation of natural gas or some other device or equipment in like operation whereby natural gas produced from gas wells connected therewith can be transported or used for consumption;
8. H. "correlative rights" means the opportunity afforded, so far as it is practicable to do so, to the owner of each property in a pool to produce without waste the owner's just and equitable share of the oil or gas or both in the pool, being an amount, so far as can be practicably determined and so far as can be practicably obtained without waste, substantially in the proportion that the quantity of recoverable oil or gas or both under the property bears to the total recoverable oil or gas or both in the pool and, for such purpose, to use the owner's just and equitable share of the reservoir energy;
9. I. "potash" means the naturally occurring bedded deposits of the salts of the element potassium;
10. J. "casinghead gas" means any gas or vapor or both indigenous to an oil stratum and produced from such stratum with oil, including any residue gas remaining after the processing of casinghead gas to remove its liquid components;
11. K. "produced water" means a fluid that is an incidental byproduct from drilling for or the production of oil and gas;
12. L. "commission" means the oil conservation commission; and
13. M. "division" means the oil conservation division of the energy, minerals and natural resources department.

History: Laws 1935, ch. 72, § 24; 1941 Comp., § 69-230; Laws 1949, ch. 168, § 26; 1953 Comp., § 65-3-29; Laws 1965, ch. 58, § 4; 1982, ch. 51, § 1; 1986, ch. 56, § 1; 2004, ch. 87, § 2; 2019, ch. 197, § 8.

ANNOTATIONS

Cross references. — For definition of "waste," see 70-2-3 NMSA 1978.

For definition of "carbon dioxide gas," see 70-2-34 NMSA 1978.

The 2019 amendment, effective July 1, 2019, defined "commission" and "division", and revised the definition of "produced water", as used in the Oil and Gas Act; in Subsection K, after "means", deleted "water" and added "a fluid"; and added Subsections L and M.

Applicability. — Laws 2019, ch. 197, § 12 provided that the provisions of Laws 2019, ch. 197 apply to contracts entered into on and after July 1, 2019.

The 2004 amendment, effective May 19, 2004, added Subsection K.

The 1986 amendment, effective May 21, 1986, added Subsection J and made stylistic changes throughout the section.

Relationship between prevention of waste and protection of correlative rights. — The prevention of waste is of paramount interest to the legislature and protection of correlative rights is interrelated and inseparable from it. The very definition of "correlative rights" emphasizes the term "without waste." However, protection of correlative rights is a necessary adjunct to the prevention of waste. Continental Oil Co. v. Oil Conservation Comm'n, 1962-NMSC-062, 70 N.M. 310, 373 P.2d 809.

Protection of correlative rights. — Although subservient to prevention of waste and perhaps to the practicalities of the situation, protection of correlative rights must depend upon commission's findings as to extent and limitations of the right. This the commission is required to do under legislative mandate. Continental Oil Co. v. Oil Conservation Comm'n, 1962-NMSC-062, 70 N.M. 310, 373 P.2d 809.

Required findings by commission to protect correlative rights. — In order to protect correlative rights, it is incumbent upon commission to determine, "so far as it is practical to do so," certain foundationary matters, without which correlative rights of various owners cannot be ascertained. Therefore, the commission, by "basic conclusions of fact" (or what might be termed "findings"), must determine, insofar as practicable: (1) amount of recoverable gas under each producer's tract; (2) total amount of recoverable gas in the pool; (3) proportion that (1) bears to (2); and (4) what portion of the arrived at proportion can be recovered without waste. That extent of the correlative rights must first be determined before commission can act to protect them is manifest. Continental Oil Co. v. Oil Conservation Comm'n, 1962-NMSC-062, 70 N.M. 310, 373 P.2d 809.

Commission's findings upheld. — When commission exercises its duty to allow each interest owner in a pool his just and equitable share of the oil or gas underlying his property, mandate to determine the extent of those correlative rights is subject to the qualification as far as it is practicable to do so, and where commission established participation formula giving each owner in the unit a share in production in the same ratio as his acreage bore to the acreage of the whole units, the supreme court found that such a formula was reasonable and logical, if perhaps not the most complete or accurate method that may be used when more subsurface information becomes available. Rutter & Wilbanks Corp. v. Oil Conservation Comm'n, 1975-NMSC-006, 87 N.M. 286, 532 P.2d 582.

New proration formula to be based on recoverable gas. — Lacking a finding that a new gas proration formula is based on the amounts of recoverable gas in the pool and under the tracts, insofar as these amounts can be practically determined and obtained without waste, a supposedly valid order in current use cannot be replaced. Such findings are necessary requisites to the validity of order, for it is upon them that the very power of commission to act depends. Continental Oil Co. v. Oil Conservation Comm'n, 1962-NMSC-062, 70 N.M. 310, 373 P.2d 809.

Prevention of drainage between producing tracts. — In addition to making findings to protect correlative rights, commission, "insofar as is practicable, shall prevent drainage between producing tracts in a pool which is not equalized by counter-drainage," under the provisions of 70-2-16C NMSA 1978. Continental Oil Co. v. Oil Conservation Comm'n, 1962-NMSC-062, 70 N.M. 310, 373 P.2d 809.

Elements of property rights of natural gas owners. — The legislature has stated definitively the elements contained in property right of natural gas owners. Such right is not absolute or unconditional. It consists of merely (1) an opportunity to produce, (2) only insofar as it is practicable to do so, (3) without waste, (4) a proportion, (5) insofar as it can be practically determined and obtained without waste, (6) of gas in the pool. Continental Oil Co. v. Oil Conservation Comm'n, 1962-NMSC-062, 70 N.M. 310, 373 P.2d 809.

Law reviews. — For comment on Cont'l Oil Co. v. Oil Conservation Comm'n, 70 N.M. 310, 373 P.2d 809 (1962), see 3 Nat. Res. J. 178 (1963).

For article, "Compulsory Pooling of Oil and Gas Interests in New Mexico," see 3 Nat. Res. J. 316 (1963).

For comment on El Paso Natural Gas Co. v. Oil Conservation Comm'n, 76 N.M. 268, 414 P.2d 496 (1966), see 7 Nat. Res. J. 425 (1967).

Am. Jur. 2d, A.L.R. and C.J.S. references. — 38 Am. Jur. 2d Gas and Oil §§ 145, 157.

58 C.J.S. Mines and Minerals §§ 229, 240.