Newspaper article THE JOURNAL RECORD

Estimates of `White Oil' Economic Loss Said High

Newspaper article THE JOURNAL RECORD

Estimates of `White Oil' Economic Loss Said High

Article excerpt

AUSTIN (AP) - Estimates that a ""white oil'' shutdown would cost the Panhandle economy hundreds of millions of dollars in the next few years seem too high, the House Study Group reported Thursday.

In a 45-page report on the white oil dispute, the research group said it would appear from economic data ""that a white-oil shutdown will contribute to a decline already occurring for other reasons.

""But considering that white oil and illegally perforated wells represent only a fraction of all wells and all production in the Panhandle region, estimates that put the economic effect of a shutdown in the hundreds of millions of dollars in the next few years seem excessive.''

The group said the state comptroller's office had placed the revenue tax loss to the state so far as a result of white oil cases at $3 million to $5 million.

Comptroller Bob Bullock had estimated that a large-scale shutdown of white oil wells could cost Texas $18 million a year in lost production taxes.

State District Judge Harley Clark's October ruling that allowed the Railroad Commission to proceed with the retesting and shut-in of white oil wells has been appealed to the 3rd Court of Appeals inAustin. Oral arguments could be heard this spring.

White oil gets its name from a water-white liquid that is produced by some Panhandle Field operators who have used low-temperature-extraction, or LTX, units to chill vapors to as low as 20 degrees below zero.

Beginning in the late 1970s, some operators would count the liquid as crude oil in their reports to the commission, which in turn classified the wells as oil wells. This oil well classification gave the operators certain production and pricing advantages over gas well operators.

Phillips Petroleum Co. in Bartlesville, Okla., and other major companies that opposed the reporting of white oil as crude oil appealed to the commission, which ruled against white oil operators. …

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