Application of British-American Oil Producing Co.

1950 OK 5, 213 P.2d 841, 202 Okla. 344, 1950 Okla. LEXIS 351
CourtSupreme Court of Oklahoma
DecidedJanuary 17, 1950
Docket33367
StatusPublished

This text of 1950 OK 5 (Application of British-American Oil Producing Co.) is published on Counsel Stack Legal Research, covering Supreme Court of Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Application of British-American Oil Producing Co., 1950 OK 5, 213 P.2d 841, 202 Okla. 344, 1950 Okla. LEXIS 351 (Okla. 1950).

Opinion

ARNOLD, V.C.J.

Appeal by Davon Oil Company et al. from an order of the Corporation Commission made on application of British-American Oil Producing Company in cause No. C. D. 1354, being Orders Nos. 20313 and 20336.

On January 29, 1947, British-American Oil Producing Company and F. E. Harper and Roy J. Turner filed an application before the Commission, and on June 6, 1947, they filed an amended application, in which they alleged that 11 wells, which they described, in the Lovell-Crescent field, were natural gas wells, producing no oil; that the applicants owned an interest in certain of those wells, each drilled on an 80-acre tract; that an allowable should be fixed for the natural gas wells, and that in fixing the same acreage should be taken into consideration. They alleged that one natural gas well would adequately and economically drain 80 acres, and that, for the purpose of preventing waste and protecting correlative rights, the Commission should fix allowables for the wells described, and should allocate a double allowable for the wells described obviating the necessity of drilling another well on each of the 80-acre tracts. Later Bahan Brothers joined in that application.

*345 Davon Oil Company filed an objection to the granting of the application, in which it stated that it had drilled over 70 wells in the Lovell-Crescent Pool and was the operator of the greatest number of wells in that pool; that the Commission had no jurisdiction of the application, because the same constituted a collateral attack upon the spacing orders theretofore made; that under the prior orders the applicants and all other operators were permitted to drill one well to each 40 acres, and that applicants, having drilled only one gas well to 80 acres, should not be given double allowables on such wells.

After hearings were had on the application the Commission entered its Order No. 20313 on September 9, 1947, and thereafter, on September 15th, corrected an obvious error therein by Order No. 20336. It is from this correction order that this appeal is brought by the protestants.

For reversal of this order protestants rely in their brief and argument on two primary propositions, as follows:

“1. That the order of the Commission should be vacated, as it is contrary to law and not supported by substantial evidence.
“2. That the order of the Commission should be vacated because the application of the applicants was a collateral attack on the previous spacing and allowable gas and oil ratio orders of the Commission.”

In their argument the first proposition is presented in three subdivisions, A, B, and C. It is first contended that applicants are precluded by law from seeking a change in an established proration formula without compliance with existing spacing pattern by drilling additional wells on their 80-acre tracts.

In support of this contention protestants cite and quote from a number of decisions by the Texas Civil Appeals Courts announcing a rule of “self-help” where one party complains of drainage without drilling additional wells allowed under spacing regulations. We are not inclined to circumscribe the statutory power and authority of the Corporation Commission by following a rule of a foreign jurisdiction in its application of statutory language similar to but not identical with ours, especially when the question there under consideration was not limited to gas production.

Under subdivision B it is asserted that the order was not supported by substantial evidence as it related to correlative rights.

It must be remembered that the Commission was already well advised as to conditions in the Lovell-Crescent field through previous hearings held resulting in successive orders having to do with oil well spacing units, extensions of territory resulting from development and conservation of the oil and gas supply. These successive hearings and orders covered a period of time from January 13 1941, to June 6, 1946. At least two of these orders reached this court and were here sustained. (In re Lovell-Crescent Field, 198 Okla. 284, 178 P. 2d 876; In re Application of Continental Oil Co., 198 Okla. 288, 178 P. 2d 880.) With this background of administrative and legislative action by the Commission concerning this particular field, we think that this contention of protestants is without substantial merit.

Eight expert witnesses testified on this hearing, three being called by applicants and five by protestants. There was practical unanimity in their testimony to 'the effect that the underlying producing sand in the field pinched out to the east of applicants’ present wells and that the odds were against production being obtained by drilling wells on the east 40 acres of their 80-acre tracts. There was conflicting testimony as to the extent of drainage of gas to and from applicants’ 80-acre tracts. The evidence showed that the cost of drilling a well in the area was approxmiately $35,000.

*346 On June 6, 1946, the Commission had entered its conservation Order No. 19001 fixing allowable production of oil and gas in the field under established spacing units at 125 barrels of oil or 500,000 cubic feet of gas per well, whichever was first produced. The instant application sought an exception to or modification of that order by reason of pool-edge location. By specific language in 52 O.S. Supp. 1947 §87.1, subd. (b), the Commission is authorized to make such an exception when reasonably necessary, but “Whenever such an exception is granted, the Commission shall adjust the allowable production for said spacing unit and take such other action as may be necessary to protect the rights of interested parties.

By the order here involved applicants were excused from drilling on each east 40 acres of their 80-acre tracts, but were denied the double allowable of gas production sought. Instead, and by way of adjusting the conflicting rights and claims of the parties, the Commission fixed the allowable gas production from the seven named and described wells of applicants at 875,000 cubic feet per well.

We cannot say that this adjustment was not reasonable and not sustained by substantial evidence.

Protestants’ contention under subdivision C is that there was no substantial evidence to support the order as it relates to waste. It is true that there is no evidence in the record which shows the existence of any of the seven conditions mentioned in 52 O.S. Supp. 1947 §86.3, which would legally constitute gas waste, but there is evidence that one well will adequately and economically drain an 80-acre tract, and that adjoining 80-acre producing units on which two wells have been drilled will drain gas from the 80-acre tract of applicants. The order here complained of does not purport to be intended to prevent gas waste as defined by section 86.3, Id., but expressly states “that in order to protect the correlative rights of the interested operators, prevent unfair drainage and prevent economic waste that might be caused by the drilling of unnecessary wells,” the application for modification of Order No. 19001, fixing allowable production in the Lovell-Crescent pool, should be granted. Those wells producing both oil and gas by Order No.

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Related

In re Lovell-Crescent Field
1947 OK 65 (Supreme Court of Oklahoma, 1947)
In Re Application of Continental Oil Co.
1947 OK 64 (Supreme Court of Oklahoma, 1947)

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1950 OK 5, 213 P.2d 841, 202 Okla. 344, 1950 Okla. LEXIS 351, Counsel Stack Legal Research, https://law.counselstack.com/opinion/application-of-british-american-oil-producing-co-okla-1950.