Alabama oil and gas laws can be found in Chapter 17, Title 9 of Code of Alabama. The purpose of the statute is to prevent waste of oil and gas and to protect correlative rights[i]. Pursuant to Code of Ala. § 9-17-3, the State Oil and Gas Board is created and established to be composed of three members to be appointed by the Governor.
Powers and Jurisdiction of the Board
The board has jurisdiction and authority over all persons and property necessary to administer and enforce effectively the provisions of this statute and all other statutes relating to the conservation of oil and gas[ii].
Pursuant to Code of Ala. § 9-17-6, the board has the authority and it is its duty to make such inquiries as it may think proper to determine whether or not waste, over which it has jurisdiction, exists or is imminent. In the exercise of such power the board has the authority to perform the following:
- Collect data.
- Make investigation and inspection.
- Examine properties, leases, papers, books and records, including drilling records, logs, and other geological and geophysical data.
- Examine, check, test and gauge oil and gas wells, tanks, plants, processing facilities, structures, natural gas pipelines and gathering lines, and storage and transportation equipment and facilities, and other modes of transportation.
- Hold hearings.
- Appoint a hearing officer for the purpose of conducting public hearings on behalf of the board and making recommendations to the board.
- Require the keeping of records and making of reports.
- Take such action as may be reasonably necessary to enforce this statute.
Regulation of Production
In order to prevent the waste of oil and gas resources, to protect and enforce the correlative rights of the owners and producers in a pool and to avoid the drilling of an excessive and unnecessary number of wells, the board, after notice and hearing, will establish drainage or production units for each pool[iii].
When any mineral or other related interests deriving from two or more separately owned tracts of land are embraced within an established or a proposed drilling or production unit, or when there are separately owned interests in all or a part of an established or proposed drilling or production unit, or any combination of such, the persons owning the interests therein may validly agree to integrate or pool the interests and to develop the interests and associated lands as a drilling or production unit[iv].
Code of Ala. § 9-17-13 provides that the board may permit or require the cycling of gas in any pool or portion thereof, to prevent waste and avoid the drilling of unnecessary wells.
Civil Actions
Pursuant to Code of Ala. § 9-17-15, any interested person aggrieved by any rule, regulation or order made or promulgated by the board and who may be dissatisfied therewith should, within thirty days from the date of said order, rule or regulation, have the right to institute a civil action by filing a complaint in the circuit court of the county in which all or part of the aggrieved person’s property affected by any such rule, regulation, or order is situated.
Appeals
In any civil action, either the board or the interested party, has the right of an immediate appeal to the supreme court from any judgment or order therein granting or refusing an injunction, whether temporary restraining order, preliminary injunction or permanent injunction, or other character of injunctive relief, or from any order granting or overruling a motion to dissolve such injunction[v].
Penalties
Any person who knowingly and willfully violates any provision of this statute, or any rule, regulation or order of the board will be subject to a fine not to exceed $10,000.00 a day for each and every day of such violation and for each and every act of violation.
Such fine is to be recovered by a civil action in the circuit court of the county where the defendant resides, or in the county of the residence of any defendant if there is more than one defendant, or in the circuit court of the county where the violation took place[vi].
Leases
Code of Ala. § 9-17-60 provides that the commissioner of conservation and natural resources, on behalf of the state, is authorized to lease any lands or interest therein under the jurisdiction of the department of conservation and natural resources for the exploration, development, and production of oil, gas and other minerals or any one or more of them, on, in and under such lands.
The revenues that accrue from rentals, royalties, and all other sources subject to the cost of administration will be the property of the department or institution to which said lands belong or in which said department or institution owns the beneficial interest[vii].
[i] Code of Ala. § 9-17-2.
[ii] Code of Ala. § 9-17-6.
[iii] Code of Ala. § 9-17-12.
[iv] Code of Ala. § 9-17-13.
[v] Code of Ala. § 9-17-18.
[vi] Code of Ala. § 9-17-32.
[vii] Code of Ala. § 9-17-68.
