Continental Oil Co. v. Oil Conservation Commission

373 P.2d 809, 70 N.M. 310
CourtNew Mexico Supreme Court
DecidedMay 16, 1962
Docket6830
StatusPublished
Cited by52 cases

This text of 373 P.2d 809 (Continental Oil Co. v. Oil Conservation Commission) is published on Counsel Stack Legal Research, covering New Mexico Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Continental Oil Co. v. Oil Conservation Commission, 373 P.2d 809, 70 N.M. 310 (N.M. 1962).

Opinion

CARMODY, Justice.

Appellants seek to reverse the judgment of the district court, which, on appeal, affirmed a contested order by the appellee commission.

Appellants are seven of the producers of natural gas in the Jalmat Pool, and the appellees, in addition to the Oil Conservation Commission, consist of one of the producers in the same field and three pipeline companies which take gas from the field. Th,e Oil Conservation Commission, as appellee, is also a cross-appellant on a question which will later be discussed.

The law creating the Oil Conservation Commission was originally enacted as Ch. 72, Sess.Laws of 1935, which, as amended, is now § 65-3-2 et seq., N.M.S.A.1953. It is a compliment to the members of the commission and the industry that, throughout the years, this is the first case to reach this court concerning the merits of any controversy determined by the commission. The parties were, however, before us in State ex rel. Oil Conservation Commission v. Brand, 1959, 65 N.M. 384, 338 P.2d 113, wherein the appellees sought, in an original action, to prohibit the trial court from receiving additional evidence other than that which had been considered by the commission. Upon our denial of proliibition, the trial court considered the record before the commission, heard additional evidence, and confirmed the commission’s order. The trial court, at the time of the trial, prohibited the appellee — cross-appellant commission from participating as an. adverse party, and this is the subject of-the cross-appeal.

In 1954, the commission prorated the Jalmat Pool in Lea County, New Mexico. At that time, the natural gas allowables for the individual wells were determined by the use of the “pure acreage” formula. Under such a system, each producer is allowed to produce his portion of the total allowable, based upon the acreage of his tract as compared to the total • acreage overlying the pool or gas reservoir. In January 1958, following the application of appellee, Texas Pacific Coal & Oil Company, seeking termination of proration, or, alternatively, a change of the gas proration formula, the commission held a hearing, as a result of which it determined to continue proration but did grant the change of the formula. Order No. R-1092-A was issued by the commission, which directed that the method of computing allowables in the Jalmat Pool should be changed to one based upon 25% acreage and 75% deliverability. Appellants sought a rehearing and, at its conclusion, the commission affirmed Order No. R-1092A by Order No. R-1092-C. The appeal to the district court and here followed, under the provisions of § 65-3-22(b), N.M.S.A. 1953 Comp.

It should be observed at this time that,, although the appeal under the statute must be from the order entered by the commission on rehearing, actually the commission,, with one minor change, merely affirmed its-original order and declared that the same' should remain in full force and effect, Therefore, from a practical standpoint, it is the validity of Order No. R-1092-A that is in issue.

Appellants urge that the order of the commission is unlawful and unreasonable-in depriving appellants of their property without due process of law, in that: (1} The order does not rest upon an authorized statutory basis; '(2) the order is not supported by substantial evidence; and (3) the order is incomplete, vague and indefinite.

For clarity, we hereinafter quote the statutes, or portions thereof, with which we are concerned on this main appeal:

“65-3-2. Waste prohibited. — The production or handling of crude petroleum oil or natural gas of any type or in any form, or the handling of products thereof, in such manner or under such conditions or in such amounts as to constitute or result in waste is each hereby prohibited.
“65-3-3. Waste — Definitions.—As used in this act the term ‘waste,’ in addition to its ordinary meaning, shall include:
* * * * * *
“(e) The production in this state of natural gas from any gas well or wells, or from any gas pool, in excess of the reasonable market demand from such source for natural gas of the type produced or in excess of the capacity of gas transportation facilities for such ■type of natural gas. The words 'reasonable market demand,’ as used herein with respect to natural gas, shall be construed to mean the demand for natural gas for reasonable current requirements, for current consumption and .for use within or outside the state, together with the demand for. such amounts as..are necessary for building up or maintaining reasonable storage reserves of natural gas or products thereof, or both such natural gas and .products.
=N % * *
' “65-3-5. Commission’s powers and -'duties. — The commission shall have, and it is hereby given, jurisdiction and ■ authority over all matters relating to ' the conservation of oil and gas in this [■state, and of the enforcement of all the provisions of this act, and of any other law of this state relating' to the conservation of oil or gas. It shall have [jurisdiction and control of and over all [ persons , or things , necessary or proper to enforce effectively the provisions of this act or any other law of this state relating to the conservation of oil or gas.
(( sfi >}: jjc
“65-3-10. Power of commission to prevent waste and protect correlative rights. — The commission is hereby empowered, and it is its duty, to prevent the waste prohibited by this act and to protect correlative rights, as in this act provided. To that end, the commission is empowered to make and enforce rules, regulations and orders, and to do whatever may be reasonably necessary to carry out the purposes of this act, whether or not indicated or specified in any section hereof.
<( * * * * * *
“65-3-13. Allocation of allowable production in field or pool. — * * *
* * * * * * *
“(c) Whenever, to prevent waste, the.total allowable natural gas production from gas wells producing from any pool in this state is fixed by the commission in an amount less than that which the pool could produce if no restrictions were imposed, the commission shall allocate the allowable production among the gas wells in the pool" de.-livering to a gas transportation facility -upon a reasonable basis 'and récognis:- ■ ing correlative'rights, and shall ihdude in the proration schedule of such pool any well which it finds is being unreasonably discriminated against through denial of access to a gas transportation facility which is reasonably capable of handling the type of gas produced by such well.

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Bluebook (online)
373 P.2d 809, 70 N.M. 310, Counsel Stack Legal Research, https://law.counselstack.com/opinion/continental-oil-co-v-oil-conservation-commission-nm-1962.