Hanson v. Industrial Commission of North Dakota

466 N.W.2d 587, 116 Oil & Gas Rep. 294, 1991 N.D. LEXIS 14, 1991 WL 21525
CourtNorth Dakota Supreme Court
DecidedFebruary 21, 1991
DocketCiv. 900254
StatusPublished
Cited by23 cases

This text of 466 N.W.2d 587 (Hanson v. Industrial Commission of North Dakota) is published on Counsel Stack Legal Research, covering North Dakota Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hanson v. Industrial Commission of North Dakota, 466 N.W.2d 587, 116 Oil & Gas Rep. 294, 1991 N.D. LEXIS 14, 1991 WL 21525 (N.D. 1991).

Opinion

ERICKSTAD, Chief Justice.

Robert E. Hanson has appealed from a district court judgment affirming the Industrial Commission’s denial of his application to dispose of produced saltwater from the State F-24 well by injecting it into the Madison formation through the State F-22A well. We affirm.

Hanson is a working interest owner in the State F-24 well in the NEVi NE 1 /) of Section 36, Township 160 North, Range 95 West, and in the State F-22A well in the NEVí SEVi of Section 36. The State F-24 well produces about 13 barrels of oil and 165 barrels of water per day from the Madison formation. The State F-22A well is an abandoned producer. From 1971 through 1980, the State F-22A well was used as an injection well in the now terminated North Tioga-Madison Unit.

*589 Imperial Oil of North Dakota, Inc., another working interest owner in the State F-24 and F-22A wells, has obtained a permit to dispose of produced saltwater into the separate, saltwater bearing Dakota formation through the State F-22A well. 1 Hanson applied to the Industrial Commission for permission to dispose of up to 200 barrels of produced saltwater per day from the State F-24 well by injecting it into the oil bearing Madison formation through the State F-22A well, which would be less expensive than disposal in the Dakota formation. Petro-Hunt Corporation (Petro-Hunt), the operator of the F-20 well (also known as the Ray 0. Hanson # 1 well), which produces from the Madison formation and is located about 2660 feet south of the State F-22A well, opposed Hanson’s request.

In denying Hanson’s application, the Commission made the following findings and conclusions:

“(8) That Petro-Hunt opposes applicant’s request to utilize the Madison Pool in the State F-22A well as a disposal zone for produced waters. Petro-Hunt presented evidence which indicates that production from its Ray 0. Hanson # 1 well is adversely affected by injection of water into the State F-22A well.
“(9) That since water injection into the State F-22A well ceased in 1980, the daily oil production from the Ray O. Hanson # 1 well ... has steadily increased. The percentage of water production from the well decreased from 1980 through 1985, and is still below the 1980 water production level. This indicates that production from the Ray O. Hanson # 1 well is influenced by the injection of water into the State F-22A well.
“(10) That Dr. Mohan Kelkar, testifying on behalf of Robert E. Hanson, stated if a reservoir is affected by a bottom water drive, water cut will increase rapidly at the beginning of a well’s life but will soon stabilize. He also stated that production from the Ray O. Hanson # 1 well clearly indicates that the perform-anee of the well is controlled by a bottom water drive, although the State F-24 well was ‘flooded out’ as a result of the wat-erflood.
“(11) That early in the well life, water cut increased very slowly in the Ray 0. Hanson # 1 well and in the State F-24 well, indicating the production from the wells was not being affected by a bottom water drive.
“(12) That the plots of water cut versus time for the Ray 0. Hanson # 1 and State F-24 wells appear virtually identical, with low water cuts prior to injection and rapidly increasing water cuts subsequent to the commencement of injection, indicating a response to fluid injections into the North Tioga-Madison Pool.
* * * * * *
“(16) That injection of fluids into an oil and gas reservoir causing the movement of reservoir fluids across property lines, in the absence of unitization, will cause or tend to cause a violation of correlative rights.
“(17) That applicant failed to submit credible evidence to indicate that the proposed injection will not cause movement of reservoir fluids across property lines in the North Tioga-Madison Pool. Evidence submitted indicates that injection into the pool will cause the movement of fluids through the reservoir.
“(18) That injection of water into the North Tioga-Madison Pool through the State F-22A well may result in the bypassing of oil and gas due to fingering effect, cause oil and gas to move across property lines, and cause premature watering out of off-set wells.
“(19) That in order to prevent waste and protect correlative rights, this application should be denied.”

Hanson appealed to the district court, which affirmed the Commission’s decision. On appeal to this court, Hanson contends: (1) The evidence shows that water injected into the Madison formation through the *590 State F-22A well will not harm the F-20 well and findings 9, 11, 12 and 17 are not supported by substantial evidence; (2) The Commission’s order violates § 38-08-01, N.D.C.C., because it hinders, rather than promotes, oil development; (3) The Commission’s conclusions and decision are not supported by the findings of fact because the Commission failed to make the minimum findings of fact necessary to determine the extent of the correlative rights of the parties, the order violates Hanson's correlative rights and results in waste, and conclusions 16 and 18 are not sustained by the law and by substantial and credible evidence; and (4) The Commission’s rules of procedure have not afforded him a fair hearing because of its arbitrary and capricious disregard of Dr. Kelkar's opinion.

The usual standard of review for administrative agency decisions under § 28-32-19, N.D.C.C., which requires that an agency’s findings of fact be supported by a preponderance of the evidence, is not applicable in this case. Amoco Production Co. v. North Dakota Industrial Commission, 307 N.W.2d 839 (N.D.1981). Section 38-08-14(4), N.D.C.C., provides the standard of judicial review for Industrial Commission orders: “Orders of the commission must be sustained if the commission has regularly pursued its authority and its findings and conclusions are sustained by the law and by substantial and credible evidence.” As we noted in Amoco Production Co., supra, 307 N.W.2d at 842: “The ‘substantial evidence’ test was the test employed in reviewing all administrative agency orders prior to 1977 when the Legislature amended Section 28-32-19 adopting the ‘preponderance of the evidence’ test.” See also Geo. E. Haggart, Inc. v. North Dakota Workmen’s Compensation Bureau, 171 N.W.2d 104 (N.D.1969), holding that the substantial evidence test was the appropriate standard of review for administrative agency findings of fact. Thus, pri- or decisions applying the substantial evidence rule were held to be applicable to the Industrial Commission. Amoco Production Co., supra.

In Application of Bank of Rhame, 231 N.W.2d 801

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Bluebook (online)
466 N.W.2d 587, 116 Oil & Gas Rep. 294, 1991 N.D. LEXIS 14, 1991 WL 21525, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hanson-v-industrial-commission-of-north-dakota-nd-1991.