The Alabama Legislature established the State Oil and Gas Board in 1945 (Act No. 1 of the 1945 Acts of Alabama). In the preamble, the Board's statutory charge is stated as follows:
In recognition of past, present, and imminent evils occuring in the production and use of oil and gas, as a result of waste in the production and use thereof and as a result of waste in the absence of co-equal or correlative rights of owners of crude oil or natural gas in a common source of supply to produce and use the same, this law is enacted for protection against such evils by prohibiting waste and compelling ratable production.
"Waste" is defined in Section 9-17-1(19) of the Code of Alabama (1975) to include:
- (a) The inefficient, excessive, or improper use or dissipation of reservoir energy; and the locating, spacing, drilling, equipping, operating, or producing of any oil or gas well or wells in a manner which results, or tends to result, in reducing the quantity of oil or gas ultimately to be recovered from any pool in this State.
- (b) The inefficient storing of oil; and the locating, spacing, drilling, equipping, operating, or producing of any oil or gas well or wells in a manner causing, or tending to cause, unnecessary or excessive surface loss or destruction of oil or gas.
- (c) Abuse of the correlative rights and opportunities of each owner of oil and gas in a common reservoir due to non-uniform, disproportionate, and unratable withdrawals causing undue drainage between tracts of land.
- (d) Producing oil or gas in such manner as to cause unnecessary water channeling or coning.
- (e) The operation of any oil well or wells with an inefficient gas-oil ratio.
- (f) The drowning with water of any stratum or part thereof capable of producing oil or gas.
- (g) Underground waste however caused and whether or not defined.
- (h) The creation of unnecessary fire hazards.
- (i) The escape into the open air, from a well producing both oil and gas, of gas in excess of the amount which is necessary in the efficient drilling or operation of the well.
- (j) The use of gas, except sour gas, for the manufacture of carbon black.
- (k) Permitting gas produced from a gas well to escape into the air.
- (l) Production of oil and gas in excess of reasonable market demand.
In order to prevent waste, the Board has been given broad authority to promulgate and enforce rules and regulations.