Corzelius v. Harrell.

179 S.W.2d 419, 1944 Tex. App. LEXIS 656, 1944 WL 66538
CourtCourt of Appeals of Texas
DecidedMarch 15, 1944
DocketNo. 9409.
StatusPublished
Cited by8 cases

This text of 179 S.W.2d 419 (Corzelius v. Harrell.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Corzelius v. Harrell., 179 S.W.2d 419, 1944 Tex. App. LEXIS 656, 1944 WL 66538 (Tex. Ct. App. 1944).

Opinion

McCLENDON, Chief Justice.

Appeal from a final judgment setting aside an original order of the Commission (Railroad Commission of Texas) and various extensions thereof which limited the gas withdrawals for light and fuel purposes from the Bammel field in Harris County to 20,000,000 cubic feet per day, and prorated gas withdrawals from the field in accordance with a stated formula, but provided that the formula “shall apply only after the net daily volume of gas produced, averaged over a thirty (30) day period, has exceeded an amount of nineteen million (19,000,000) cubic feet.” The judgment also. permanently enjoined the Commission from continuing in effect these orders and “from entering or continuing in effect any similar orders.” Corzelius, one of the two sole producers in the field, was enjoined from producing under the orders or similar ones. The suit was by Harrell, the other producer, against the Commission in the nature of an appeal to set aside the orders. Corzelius and Meincke '(one of his lessors) intervened. The judgment was by the court, who took the case from the jury after the evidence was concluded. The appeal is by the in-terveners only.

The controlling issue in the case concerns the validity of the above-quoted proviso of the orders, which issue in turn involves the question whether, under the factual situation presented, it was the mandatory duty of the Commission to prorate the actual production or market demand from the field prior to the time when that production should reach- 19,000,000 cubic feet. For convenience, we shall use the abbreviation MMCF for million cubic feet.

The record is quite large, including over 600 pages of statement of facts and numerous original exhibits sent up with the record. It will be necessary, however, to state only in broad outline what we regard as the salient facts, which are these:

The Bammel field was classed as primarily a gas field. The sands were located some 6,100 feet below sea level, and the proven area covered about 3,200 acres. Along its southern edge was a long narrow strip of oil sand of about 260 acres. Prior to October, 1941, the Harrell holdings covered practically the entire field. In that month his leases covering 79 acres (about 4.1% of the field) lapsed, and this acreage was acquired by Corzelius (partly in fee and partly under two leases). Corzelius drilled one well on his holdings and began production, as below detailed, about January 10, 1942. In 1939 Harrell obtained an order from the Commission authorizing him to put in a recycling plant. This plant had a capacity of 35 MMCF per day. The gas was piped from his various production wells (15 in all) to a centrally located plant where the liquids were extracted and the residue (33 MMCF of dry gas) was rein-jected into the gas reservoir through two injection wells located near the center of the field; the result of this process being a net loss in volume of gas from the reservoir of 2 MMCF per day. Under this process the liquids (distillates) extracted amounted to about 25 barrels per 1 MMCF of gas processed, having a value at the time of the trial of $1.40 per barrel. Harrell had a pooling agreement with his several lessors under which the proceeds from the distillates produced from the recycling operation were apportioned in accordance with a stated formula. The effect of this recycling process was to draw the wet (sweet) gas from the 15 wells and to replace-it in the reservoir with dry gas to the extent stated. The dry gas would thus spread out in all directions from the two injection wells, and gradually force the wet *421 gas to the area depleted by the production wells. This process would not be entirely uniform, hut there would be fingering of dry gas into the wet gas area and a certain amount of commingling of dry and wet gas, thus reducing the amount of liquids in the admixture. Thus the production from the producing wells would gradually contain a lower percentage of liquids until, through the process of recycling, that percentage should reach a point where recycling would be unprofitable. And thus the reservoir would eventually contain only practically dry gas, without any loss of pressure in the reservoir, except that resulting from the net loss of gas volume through the recycling process. It was Harrell’s purpose not to market any gas from the reservoir for lighting and heating purposes until the entire process of recycling had been completed and the gas content of the entire reservoir was practically dry gas. Corzelius was the owner of two distributing corporations that sold gas for lighting and heating purposes to the city of Houston and some war industries located in and near that city. As stated, he completed his well and began production therefrom in January, 1942. Meanwhile he had constructed a pipe line from his well to Houston (operated by a corporation which he owned), through which gas was piped which he sold to his two distributing corporations. This was the only outlet to market for any gas from the field, and this market amounted to between four and five MMCF per day, on the average. Through a process simple and inexpensive in comparison to that employed in recycling (which required very expensive machinery), he extracted a portion of the liquids from the gas he produced, before delivering it into the pipe line. Through this process he obtained about 15.7 bbls. of distillate per 1 MMCF of gas produced. By April, 1943, this amount had dropped to 6.65 bbls.; the exact figures being: 1942, Jan. 15.7; Feby. 12.64; Mar. 10.41; April 12.87; May 12.65; June 14.26; July 9.06; Aug. 11.05; Sept. 10.46; Oct. 9.05; Nov. 8.56; Dec. 5.72; 1943, Jan. 5.31; Feb. 6.51; Mar. 5.83; April 6.65. While the figures fluctuated from month to month, it is clear that there was a gradual trend downward, amounting in the 16 months to approximately 60% decrease. No reasonable explanation of this decrease is afforded other than that the recycled dry gas had already invaded the Corzelius holdings. In fact, the evidence, fairly interpreted, conclusively shows that such was the case. The total original volume of recoverable' gas in the field was estimated at approximately 71,000 MMCF. Of this amount Harrell had recycled 40,000 MMCF prior to May, 1943 (the trial began May 25, 1943). Harrell’s holdings comprised 94.8% of the field containing originally approximately 67,308 MMCF of recoverable gas. On the other side of the picture, Corzelius’ holdings comprised 4.1% of the field underlaid originally with approximately 2,911 MMCF of recoverable gas. Up to February, 1943, he had produced approximately 1,500 MMCF.

Harrell applied to the Commission for an order prohibiting withdrawals of gas from the field until the recycling process should be completed, or, in the alternative, prorating the withdrawals from the field. A hearing, after notice, was had on this application on December 23, 1941, and based upon that hearing the original order here in issue was promulgated January 17, 1942. In addition to the provisions already stated, this order found as a fact that limited net withdrawals from the field not to exceed 20 MMCF daily would not produce “appreciable waste,” and net withdrawals to that amount were authorized. There were various subsequent hearings upon the subject between that date and the filing of the suit (March 27, 1943), each resulting in a continuance of the original order. Harrell meantime filed in the Supreme Court a motion for permission to file a petition for mandamus to compel the Commission to promulgate a proration order for the field. This motion was overruled July 22, 1942, without written opinion.

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Bluebook (online)
179 S.W.2d 419, 1944 Tex. App. LEXIS 656, 1944 WL 66538, Counsel Stack Legal Research, https://law.counselstack.com/opinion/corzelius-v-harrell-texapp-1944.