Texas casinghead gas and gas well gas: what the waste and gas-use statutes say
Two chapters of the Texas Natural Resources Code, 85 and 86, make waste unlawful and say what waste includes. Chapter 86 also lists what gas may be used for, and the list depends on which kind of gas it is. This page sets out those sections, with the definitions that decide which kind you have.
This is general information. It covers the Texas statutes named on this page, a few phrases from Railroad Commission Rule 32, and no court decisions. It reports what the statutes say and does not tell an operator, owner or power host whether a particular use of gas is lawful.
Two chapters of the Texas Natural Resources Code hold the waste and gas-use sections this page covers: Chapter 85 (conservation of oil and gas) and Chapter 86 (regulation of natural gas). Both make waste unlawful (§§ 85.045 and 86.011). Both list, among the things waste includes, permitting a gas well to burn wastefully and letting gas escape into the open air from a well producing both oil and gas “in excess of the amount” that is necessary in the efficient drilling or operation of the well (§§ 85.046(a) and 86.012(a)). Chapter 86 then lists what gas may be used for, and the list depends on the kind of gas. Casinghead gas “may be used for any beneficial purpose” (§ 86.183). Sweet gas from a gas well may not be used “for any purpose except” four listed ones, and the first is “light or fuel” (§ 86.181); § 86.182 adds chemical manufacturing uses for sour gas, and § 86.184 allows gas lift, up to 10,000 cubic feet per barrel of oil produced, with sweet, sour or casinghead gas. The definitions in § 86.002 decide which is which, and 100,000 cubic feet of gas to each barrel of oil is where the oil well and gas well definitions meet, though a well can also be a gas well on other grounds. The two chapters do not name engines, generators or computing, and neither sets a royalty rule for flared or lease-use gas. The text does not settle whether a particular use fits.
1Which gas is which
Chapter 86 defines its terms in § 86.002, and the definitions apply “in this chapter.” “Oil” means crude petroleum oil and “gas” means natural gas. The terms that matter for burned or stranded gas are these.
| Term | The statute’s words |
|---|---|
| Gas well§ 86.002(5) | “a well that: (A) produces gas not associated or blended with oil at the time of production; (B) produces more than 100,000 cubic feet of gas to each barrel of oil from the same producing horizon; or (C) produces gas from a formation or producing horizon productive of gas only encountered in a well bore through which oil also is produced through the inside of another string of casing” |
| Oil well§ 86.002(6) | “any well that produces one barrel or more of oil to each 100,000 cubic feet of gas” |
| Sour gas§ 86.002(8) | “gas: (A) containing more than one and one-half grains of hydrogen sulphide per 100 cubic feet; (B) containing more than 30 grains of total sulphur per 100 cubic feet; or (C) which in its natural state is found by the commission to be unfit for use in generating light or fuel for domestic purposes” |
| Sweet gas§ 86.002(9) | “all gas except sour gas and casinghead gas” |
| Casinghead gas§ 86.002(10) | “any gas or vapor indigenous to an oil stratum and produced from the stratum with oil” |
Casinghead gas is defined by where the gas comes from and what it is produced with. The oil well definition and part (B) of the gas well definition turn on 100,000 cubic feet of gas to the barrel of oil; parts (A) and (C) of the gas well definition do not use a ratio. Sweet gas is what is left: all gas that is neither sour nor casinghead.
Section 86.043 says the Commission “may fix and determine the gas-oil ratio of all oil wells in the state,” and that none of the provisions of Chapter 86 “may be construed to authorize the limitation of the production of marginal wells below the amount fixed by statute.” It adds that if a Commission restriction on the production of oil from an oil well “operates to increase the gas-oil ratio of the well so as to then classify it as a gas well under the provisions of this chapter, the well nevertheless shall be considered to be an oil well.”
Well A on the made-up Sample Creek lease makes 50 barrels of oil and 300 Mcf of gas a day. 300 Mcf is 300,000 cubic feet, and 300,000 divided by 50 barrels is 6,000 cubic feet of gas per barrel. Under § 86.002(6) an oil well makes one barrel or more of oil for each 100,000 cubic feet of gas, and 300,000 cubic feet of gas would call for 3 barrels, so Well A meets the oil well test. If its gas is indigenous to an oil stratum and is produced from that stratum with the oil, that gas is casinghead gas under § 86.002(10), and § 86.183 applies to it. In Chapter 86 a cubic foot of gas is a standard cubic foot, at 14.65 pounds per square inch absolute and 60 degrees Fahrenheit (§ 86.002(12)); the example treats its figures as already on that basis.
Well B on the same made-up lease makes 3 barrels of oil and 900 Mcf a day. 900,000 cubic feet divided by 3 barrels is 300,000 cubic feet per barrel. That is more than 100,000 cubic feet of gas to each barrel of oil, so, if the oil and gas come from the same producing horizon, Well B fits § 86.002(5)(B) and is a gas well. Its gas is sweet gas only if it is neither sour nor casinghead gas, and the ratio alone does not settle that: the casinghead gas definition in § 86.002(10) turns on where the gas comes from and what it is produced with, and does not mention a ratio. If the gas is sweet gas from a gas well, § 86.181 lists what it may be used for. A real well’s classification turns on the well’s own production and on the rest of the definitions, and, where the Commission has restricted oil production, on § 86.043.
2What counts as waste
Section 85.046(a) says the term waste, “among other things, specifically includes” eleven listed items, so its list is open by its own words. Section 86.012(a) says waste “includes” thirteen. The items that bear on burned, escaping or unused gas are these.
| Section | The statute’s words | Applies to |
|---|---|---|
| § 85.045 | “The production, storage, or transportation of oil or gas in a manner, in an amount, or under conditions that constitute waste is unlawful and is prohibited.” | Oil or gas |
| § 86.011 | “The production, transportation, or use of gas in a manner, in an amount, or under conditions which constitute waste is unlawful and is prohibited.” | Gas |
| § 85.046(a)(4) | “permitting any natural gas well to burn wastefully” | Oil or gas |
| § 86.012(a)(3) | “permitting a gas well to burn wastefully” | Gas |
| § 85.046(a)(9) | “escape of gas into the open air in excess of the amount necessary in the efficient drilling or operation of the well from a well producing both oil and gas” | Oil or gas |
| § 86.012(a)(6) | “the escape of gas from a well producing both oil and gas into the open air in excess of the amount that is necessary in the efficient drilling or operation of the well” | Gas |
| § 85.046(a)(8) | Among “other forms of surface waste or surface loss”: “unnecessary or excessive surface losses, or destruction without beneficial use, either of oil or gas” | Oil or gas |
| § 86.012(a)(10) | “permitting gas produced from a gas well to escape into the air before or after the gas has been processed for its gasoline content, unless authorized as provided in Section 86.185 of this code” | Gas |
| § 86.012(a)(7) | “the production of gas in excess of transportation or market facilities or reasonable market demand for the type of gas produced” | Gas |
| § 86.012(a)(12) | “the production of more than 100,000 cubic feet of gas to each barrel of crude petroleum oil unless the gas is put to one or more of the uses authorized for the type of gas so produced under allocations made by the commission or unless authorized as provided in Section 86.185 of this code” | Gas |
The statutes tell the Commission to act on waste. Section 85.201: the Commission “shall make and enforce rules and orders for the conservation of oil and gas and prevention of waste of oil and gas.” Section 86.042: it “shall adopt and enforce rules and orders to” “conserve and prevent the waste of gas” and to “prevent the waste of gas in drilling and producing operations and in the piping and distribution of gas,” among other things, including to “require records to be kept and reports made.” Section 85.203 adds that the Commission “may consider any or all of the definitions of waste stated in Section 85.046 of this code, whenever the facts, circumstances, or conditions make them applicable, in adopting rules or orders to prevent waste of oil or gas.”
The table gives the statutory wording. Whether a given flare, a given amount of unused gas or a given use is waste depends on facts this page does not have, and it does not predict the answer.
3What gas may be used for
Subchapter F of Chapter 86, titled Use of Gas, is where Chapter 86 says what gas may be used for. It sorts by kind of gas.
| Kind of gas | What the statute says |
|---|---|
| Casinghead gas§ 86.183 | “Casinghead gas may be used for any beneficial purpose, which includes the manufacture of natural gasoline.” |
| Sweet gas from a gas well§ 86.181 |
“No sweet gas produced from a gas well may be used for any purpose except:”
|
| Sour gas§ 86.182 | “In addition to the purposes for which sweet gas produced from a gas well may be used, sour gas may be used for efficient chemical manufacturing purposes including the manufacture of carbon black,” if it is used in a plant producing a recovery of not less than one pound of carbon black to each 1,000 cubic feet of gas and the gasoline content is removed and saved before the gas is used for carbon black. |
| Gas lift, sweet, sour or casinghead§ 86.184 | A producer may use the gas “as gas lift in the bona fide production of oil if the gas is not used in excess of 10,000 cubic feet per barrel of oil produced.” Subsection (b) lets the Commission permit additional quantities on stated conditions. |
| Gas from a gas well escaping into the air§ 86.185 | “No gas from a gas well may be permitted to escape into the air after the expiration of 10 days from the time the gas is encountered in the gas well, or from the time of perforating the casing opposite a gas-bearing zone if casing is set through the zone, whichever is later,” but the Commission “may permit the escape of gas into the air for an additional time if the operator of a well or other facility presents information to show the necessity for the escape”; and the section adds “provided that the amount of gas which is flared under that authority is charged to the operator’s allowable production.” Necessity includes but is not limited to cleaning a well of sand or acid or both following stimulation treatment of a well, and repairing or modifying a gas-gathering system. |
Two points about the wording.
- Section 86.002 does not define “beneficial purpose,” “light” or “fuel,” and no other section of Chapter 86 does either.
- The ten days in § 86.185 and the ten producing days in Rule 32, § 3.32(f)(1)(A), are worded differently and start from different events. The statute runs from the time gas is encountered in the gas well, or from perforating the casing opposite a gas-bearing zone if casing is set through the zone, whichever is later. The rule runs from initial completion, recompletion in another field, or workover operations in the same field. They are separate provisions, and this page does not say how they interact.
4What the two chapters do not say
Engines and power. Neither Chapter 85 nor Chapter 86 uses the words engine, generator or computing. Whether burning gas in an engine that runs a generator is “fuel” under § 86.181, or a “beneficial purpose” under § 86.183, is not spelled out in the text of either chapter. The answer can turn on which kind of gas the stream is.
Royalty. Neither chapter sets a royalty rule for gas that is flared or used on a lease. The word royalty appears in one section of each chapter. In Chapter 85 it is in § 85.046(c): the Commission, after notice and opportunity for hearing, may permit surface commingling of production from two or more tracts of land producing from the same reservoir, or from one or more tracts producing from different reservoirs, if it finds the commingling will prevent waste, promote conservation, or protect correlative rights. The subsection adds that the Commission may permit the commingling “regardless of whether the tracts or commission-designated reservoirs have the same working or royalty interest ownership.” In Chapter 86 it is in § 86.145, which says the Commission “shall require one of its duly authorized agents to inspect, read, or test any meter or meters through which gas is being measured or gauged on the request of a lessor, lessee, operator, or royalty owner from whose land, lease, or royalty interest gas is being produced.” That is a meter test on request. It is not a rule about what royalty is owed.
The word “flared” appears once in each chapter: in § 86.185, quoted above, and in § 85.065(c)(4), which lists what an accounting by a person who gathers or transports gas may include when a producer files an informal complaint about gas lost or not accounted for. Chapter 91, which holds the royalty payment and division order statutes, does not use the words flare, flared or flaring anywhere.
So whether royalty is owed on gas that is flared, burned as fuel on the lease, or sold to a power or compute host is not decided by the text of these chapters. The home page section on the meter covers the lease and its free-use clause.
5How Rule 32 sits beside them
The Railroad Commission’s Statewide Rule 32, 16 TAC § 3.32, is where the Commission sets its limits on flaring and venting. Its title is “Gas Well Gas and Casinghead Gas Shall Be Utilized for Legal Purposes,” and its general provision says all gas from any oil well, gas well, gas gathering system, gas plant or other gas handling equipment “shall be utilized for purposes and uses authorized by law, except as provided in this section” (§ 3.32(c)). The rule text does not cite the Natural Resources Code by section, and it does not define casinghead gas.
Compare the wording. Section 3.32(f)(1) calls the routine releases it lists “necessary in the efficient drilling and operation of oil and gas wells,” while § 85.046(a)(9) speaks of escape “in excess of the amount necessary in the efficient drilling or operation of the well.” The rule’s exceptions and time limits, and the Commission’s forms, are covered in the Rule 32 guide.
6The facts the statutory tests turn on
The statutory tests in sections 1 and 3 above turn on a few facts.
- The gas analysis. Hydrogen sulphide in grains per 100 cubic feet and total sulphur in grains per 100 cubic feet are the numbers in the sour gas definition, which also has a prong for gas the Commission finds unfit for use in generating light or fuel for domestic purposes (§ 86.002(8)(C)).
- Oil and gas volumes for the well. The oil well definition and part (B) of the gas well definition turn on 100,000 cubic feet of gas to the barrel of oil.
- What the gas would be used for. The use lists in §§ 86.181 to 86.184 differ by kind of gas.
The form on the home page has fields for the gas rate and the gas analysis, and a notes box.
7Sources
Last checked . Each page below was opened that day. The Texas statutes site said its statutes were current through the 89th 2nd Called Legislative Session, 2025. Statements that a word does not appear in a chapter come from a search of the full chapter text as posted that day. Laws change, so check the current text before relying on any of it.
- Texas Natural Resources Code, chapter 85, Conservation of Oil and Gas§§ 85.045 and 85.046 (waste); § 85.065 (accounting for gas gathered or transported); §§ 85.201 to 85.203 (rules and orders)https://statutes.capitol.texas.gov/Docs/NR/htm/NR.85.htmOpened September 29, 2026
- Texas Natural Resources Code, chapter 86, Regulation of Natural Gas§ 86.002 (definitions); §§ 86.011 and 86.012 (waste of gas); § 86.042 (rules and orders); § 86.043 (gas-oil ratio); § 86.145 (meter tests); §§ 86.181 to 86.185 (use of gas)https://statutes.capitol.texas.gov/Docs/NR/htm/NR.86.htmOpened September 29, 2026
- Texas Natural Resources Code, chapter 91, Provisions Generally ApplicableSearched for the words flare, flared and flaring, to support the statement that the chapter does not use themhttps://statutes.capitol.texas.gov/Docs/NR/htm/NR.91.htmOpened September 29, 2026
- 16 Tex. Admin. Code § 3.32, Legal Information Institute copyRule title and § 3.32(c) and (f)(1) as quoted in section 5, § 3.32(f)(1)(A) as described in section 3, and the check that the rule text does not cite the Natural Resources Codehttps://www.law.cornell.edu/regulations/texas/16-Tex-Admin-Code-SS-3-32Opened September 29, 2026
- The Rule 32 guide on this siteCovers the rule’s releases and exceptions and the Commission’s formshttps://methane.land/texas-rule-32-flaring-exceptions
Have gas that is flared or waiting on a line?
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