Alpha Petroleum Co. v. Terrell

59 S.W.2d 372, 122 Tex. 257, 1933 Tex. LEXIS 139
Texas Supreme Court·Decided February 17, 1933·No. No. 6363; Motion No. 10608·Published·Cited by 109 cases

Opinion

Mr. Judge CRITZ

delivered the opinion of the Commission of Appeals, Section A.

This suit was instituted in the district court of Montgomery County, Texas, by Alpha Petroleum Company, a Texas Corporation, against the Texas Railroad Commission and certain other parties, to restrain the enforcement against it of the following two oil and gas rules of thé Railroad Commission:

“Therefore,' it .is ordered by the Railroad Commission of' Texas, that, effective at seven o’clock A. M., September 24, 1932, and until further ordered by the Commission, the following regulation shall be observed the Gulf Coast District, to-wit:
“No well shall after the effective date of this order, produce in excess of Two Hundred and Forty (240) barrels of crude oil daily; provided that the Commission, in order to prevent consequential injury to any well or wells or to any oil producing formation in said district, may grant exceptions to this regulation upon application and a proper showing of facts supporting such application. In immediate recognition of the claim of operators in said district that wells on piercement type dome structures can not in every case be safely restricted below the flow at which they have been set after experimentation in rates of flow, and to test that claim, all wells completed on such structures are hereby granted temporary exceptions to this regulation until the agents of the Commission may observe the effect of cutting down the flow of said wells; and all owners and operators of said wells which produce in excess of Two [261] Hundred and Forty (240) barrels of crude oil daily, as to the date hereof, shall be quickly as practicable to do so, under observation of the Commission’s agents, and in no event in less than within thirty days from the effective date of this order, unless otherwise permitted by the Commission, make actual effort in good faith to reduce the flow of such wells to accord with the maximum production per well per day fixed herein, and, in any event, the flow of such wells shall be restricted to as nearly to Two Hundred and Forty (240) barrels of crude oil daily, as may be done without injury to said wells or to the oil producing formations in which they are completed.”

jThe above is known as Rule 24.*

“Rule 1. Rule 37 adopted November 26, 1919, is hereby amended insofar as it applies to the Conroe or Strake Field in Montgomery County or extensions thereof, so as to hereafter read as follows:

“No well shall hereafter be drilled for oil or gas at any point less than 933 feet from any drilling or completed well, and no well shall hereafter be drilled for oil or gas at any point less than 466 feet from any property line or division line. In order to prevent the impairment of vested rights in the carrying out of this rule and to protect the owners of small tracts in the enjoyment of such rights, the Commission shall require the several owners of adjacent small tracts of less than 20 acres and the owners of larger tracts adjacent to such small tracts to combine or pool their acreage in such way as to constitute units of 20 acres or approximately 20 acres, and upon such equitable and reasonable terms as the Commission may prescribe after notice to the owners of such adjacent tracts and after hearing. It is the purpose of this rule to limit the drilling of wells to one well to 20 acres or approximately 20 acres of surface ownership. This rule shall apply to the spacing of all wells not already actually spudded in on June 25, 1932. In order further to protect vested rights as against wells actually spudded in, drilling or completed on such date, and to conform to the irregularities in the shape of separately owned or combined tracts of 20 acres or approximately 20 acres, the Commission will, after hearing, grant exceptions permitting drilling within a less or shorter distance than hereinabove prescribed upon application duly filed fully stating the facts, notice of such application and hearing having been given to the owners of all adjacent leases affected thereby; provided that if the owners of all adjacent leases affected thereby waive in writing notice of hearing [262] on or objection to the granting of such application, the Commission may proceed to determine such application without hearing. The mere filing of an application to drill prior to the effective date of this rule or of this order shall not entitle the party filing the same to a permit in exception to this rule or any special privileges to violate the same. Wells already spudded in prior to July 1, 1932, on 330 and 660 foot spacing under authority of the temporary rule as adopted by order of June 14, 1932, will be considered regular locations, and offsets thereto will be granted similar spacing.”

The petition prays for the issuance of temporary restraining orders or temporary injunctions, prohibitory or mandatory, and in either case to be made permanent on final hearing, to the end that plaintiff may be permitted to produce and transport its oil as heretofore without injury to its wells and to the end that it may be permitted to drill at least one additional well on one of its leases, and that defendants and all of them be prohibited from instituting any suit against the plaintiff for penalties, or for other relief of any character, other than to answer this suit, etc.

On September 23, 1932, the plaintiff’s petition was presented- to the Honorable S. A. McCall, judge of said district court, who, in chambers, and without notice or hearing, indorsed thereon the following order:

“In Chambers
“At Conroe, Texas.
“This, the 23rd day of September, 1932, the foregoing petition coming on to be considered by the undersigned Judge, in Chambers, the same has been examined and considered, and I assume jurisdiction of this case and order it filed.
“It is ordered, adjudged and decreed that a temporary restraining order issued against the Defendants, and each of them, as prayed for by the Plaintiff, to continue until the further orders of this court that may be signed and entered herein. The parties are advised of the desire and purposes of the court to hear, at the convenience of the parties, any motion of any Defendant that may be filed and desired heard herein, and of the further desire and purpose of the court to hear such motion within ten (10) days of the date hereof, the Clerk will issue notice to the defendants forthwith; provided, however, that the Plaintiff shall first file a good and sufficient bond, to be approved by the Clerk, in the sum of one thousand dollars ($1,000.00), payable to the undersigned Judge of this court, for the use and benefit and protection of the Defendants named [263] herein, and each of them, and otherwise conditioned as provided by law.
“S. A. McCall
“Judge of the 9th Judicial District of Texas.” Bond was given as provided by the above order, and writ of injunction issued. The writ enjoined the Railroad Commission from enforcing only the rule first above quoted, known as rule 24, “until the further order of said court.”

We here copy the following from the opinion of the Court of Civil Appeals:

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Alpha Petroleum Co. v. Terrell, 59 S.W.2d 372, 122 Tex. 257, 1933 Tex. LEXIS 139 (Tex. 1933).

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