Grison Oil Corp. v. Corporation Commission

1940 OK 79, 99 P.2d 134, 186 Okla. 548, 1940 Okla. LEXIS 51
CourtSupreme Court of Oklahoma
DecidedFebruary 13, 1940
DocketNo. 28821.
StatusPublished
Cited by16 cases

This text of 1940 OK 79 (Grison Oil Corp. v. Corporation Commission) 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
Grison Oil Corp. v. Corporation Commission, 1940 OK 79, 99 P.2d 134, 186 Okla. 548, 1940 Okla. LEXIS 51 (Okla. 1940).

Opinion

DAVISON, J.

On June 28, 1938, the Corporation Commission promulgated an order in connection with the administration of the law authorizing the pro-ration of oil, fixing a marginal daily allowable of 165 barrels per well for all wells in the Oklahoma City field producing from the Wilcox zone.

*549 The order was designated No. 12,430. It was entered pursuant to a hearing before the commission in cause No. 451 styled:

“In the matter of the Application of Wm. J. Armstrong, Conservation Officer, for establishment of Rules and Regulations for Taking Potentials, Adjusting Minimum Allowable, and Production of Oil in the Wilcox Zone of the Oklahoma City Field.”

By its terms the order became effective July 1, 1938. By paragraphs 1 and 2 of the order it is provided:

“1. That effective as of July 1, 1938, at 7 o’clock, a. m., there is hereby established for each well in the Wilcox zone of the Oklahoma City field a marginal allowable of 165 barrels; that is, each well in said zone shall be permitted to produce 165 barrels of oil per day, or its full production if incapable of producing that amount.
“2. That the allocation to said Wilcox zone shall be divided as follows: Each well shall be allowed to produce 165 barrels, or its total production if incapable of producing 165 barrels; and the remainder of the allocation to said zone shall be divided among the wells having potentials in excess of 165 barrels as the potential of each such well bears to the total potentials of the wells having potentials in excess of the marginal allowable of 165 barrels.”

The Grison Oil Corporation and H. I. Grimes, doing business as the Grimes-Abilene Oil Company, are operators in the Oklahoma City oil field and produce oil from the Wilcox zone. They present the case on appeal from the Corporation Commission, asserting the invalidity of the foregoing provisions of the order. In their original brief, they present their argument under three propositions, the first of which is:

“The orders of the Corporation Commission appealed from herein are contrary to and in conflict with the statutes of this state relating to the production of oil from the various common sources of supply thereof within the state, and are not authorized thereby.”

Under this proposition the appellants challenge the power of the Corporation Commission to fix daily minimum or marginal allowable in excess of 25 barrels, prescribed by the last provision of section 6 of the Conservation Act (ch. 131, S. L. 1933). The argument relates to the general power of the commission to take an action of the character herein taken in any case as distinguished from the reasonableness and propriety of the action taken in this particular case.

The Conservation Law enacted as chapter 131, S. L. 1933, was amended by chapter 59, S. L. 1935. The matter added by amendment is not, however, germane to the questions involved in this controversy. Our allusion in this opinion to the number and context of the sections will therefore refer to them as they appear in chapter 131, S. L. 1933.

The appellants point with emphasis to sections 4, 5, and 6 of the act. Section 4 contemplates the ratable taking of oil from any common source of supply “except as otherwise authorized and/or in this act provided.” Section 5 directs the commission to consider certain specific factors which might result in the production of waste and authorizes variations from the rule of ratable taking in order to combat such waste, but limits the authority therein directed to be exercised by prohibiting its use in such a manner as to unreasonably discriminate against operators not granted exceptions. And section 6 provides for a determination of the capacity of wells to produce and authorizes the lease instead of the well to be adopted as a unit of production under certain conditions and prohibits the commission from reducing the allowable production of any well below 25 barrels per day.

The appellants take the position that when proration has been established in connection with any common source of supply, production by each well therein situated must be in direct proportion to its capacity to produce, except that all wells must be allowed to produce at least 25 barrels per day by reason of section 6, and that in special cases ex *550 cessive production may be allowed under authority conferred by section 5 of the act.

It is urged that, since the act does not specifically authorize a minimum allowable in excess of the 25 barrels established by statute, authority of the commission to establish such an allowable' does not exist.

The appellees take the position that sections 2 and 3 of the act also claim a degree of consideration and by necessary implication vest in the commission board authority concerning rules, regulations, and orders which may be promulgated in connection with the proration of oil, and that by reason thereof almost any rule regulating the taking of oil may be promulgated which will prevent waste and is reasonably consistent with the ratable taking of oil. They also urge that the provisions of section 5 in themselves justify the departure from ratable taking involved in the case at bar.

Section 2 of the act defines waste in connection with the production of oil and imposes ;upon the commission the duty of making rules and regulations calculated to prevent the commission of such waste. Section 3 defines waste as applied to gas and gas energy and authorizes the promulgation of rules to prevent that type of waste.

The authority of the commission to act in connection with the prevention of waste and the proration of the production of oil is derived from the act and limited to the power expressly or by necessary implication conferred upon it. H. F. Wilcox Oil & Gas Co. v. Walker et al., 168 Okla. 355, 32 P. 2d 1044. However, the general language employed by the Legislature in sections 2 and 3 of the act vests the commission with broad powers in connection with the prevention of waste. Gilmer Oil Co. v. Corporation Commission et al., 177 Okla. 505, 61 P. 2d 22.

The legislative direction contained in section 4 of the act, prescribing that production by the various operators shall be in direct proportion to their respective abilities to produce, does not prohibit a variation from ratable production if such departure is pursuant to an authorized and justifiable order of the commission. This by reason of the clauses contained in section 4, reading “except as otherwise authorized and/or in this act provided.”

The expression “and/or,” as used in the exception, may embrace a multitude of situations, and when all of its implications are considered, renders the exception broad enough to comprehend any variation from ratable taking contemplated by the terms of the act or authorized by lawful order of the commission. (Concerning the meaning of “and/or,” see annotation 118 A. L. R. 1367, also Tulsa County Truck & Fruit Growers Ass’n v. McMurphey, 185 Okla. 132, 90 P. 2d 927.)

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Bluebook (online)
1940 OK 79, 99 P.2d 134, 186 Okla. 548, 1940 Okla. LEXIS 51, Counsel Stack Legal Research, https://law.counselstack.com/opinion/grison-oil-corp-v-corporation-commission-okla-1940.