Jones v. Continental Oil Company

420 P.2d 905, 1966 WL 146992
CourtSupreme Court of Oklahoma
DecidedNovember 1, 1966
Docket41415
StatusPublished
Cited by2 cases

This text of 420 P.2d 905 (Jones v. Continental Oil Company) 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
Jones v. Continental Oil Company, 420 P.2d 905, 1966 WL 146992 (Okla. 1966).

Opinion

HALLEY, Chief Justice.

The Corporation Commission of Oklahoma, on December 29, 1964, entered Order No. 57171 in Cause CD No. 15,732 before it and by its order approved the creation of the Bayou Unit in Carter County, Oklahoma. The applicants therein were Continental Oil Company and Rockland Oil Company. Jones Oil Company protested the approval of the application and has appealed the denial of its protest and the creation of the Unit.

There was a full hearing before the Commission as is evidenced by a record of some 750 pages and one volume of exhibits. The Commission proceeded under the provisions of 52 O.S.1961, Sections 287.1-287.15.

It appears from the record that approximately three years prior to the hearing on this matter before the Corporation Commission the majority of the oil operators in the Bayou Field began a study of the secondary recovery possibilities of this field. A total of some 204 wells have been drilled in the field.

There are 21 producing sands in the field, said sands being generally designated as Pennsylvanian Sand Members. It was shown that some of the wells were producing from one or more of the sands, some from as many as 14 or 15 different sands, but that none of the wells were producing from all of the 21 sands.

The field, as envisioned by the Unitization Plan covers 1,230 acres. It was estimated that some 13,294,000 barrels of oil would be recovered by the secondary recovery operations.

Jones Oil Company, the Protestant, owned some 20.32% of the surface acres and had, at the time of the hearings before the Commission, 27.1% of the production in the area. ■,

When the Plan of Unitization was circulated, 78% of the royalty owners and 71% of the lessees approved it. This is in excess of the statutory requirements. 52 O.S. 1961, Section 287.5.

Our review of this matter will follow the rule that we have heretofore adhered to in similar matters, as we set forth in the case of Vogel v. Corporation Commission, Okl., 399 P.2d 474, wherein it was stated:

“The rule is well established that if an order of the Corporation Commission appealed from is found to be supported by substantial evidence, it will be affirmed by this Court. The rule is clearly stated in Woody v. State Corporation Commission, Okl., 265 P.2d 1102, 1106, wherein it is stated in the body of the opinion: * * * In the orderly administration of law we must indulge the presumption that the Commission’s order is just, reasonable, and correct.
* * *
“ ‘Our appellate jurisdiction, as applied to the case before us, is judicial only, and is limited to a consideration whether the Commission has legally pursued its authority, and whether its findings and conclusions are sustained by the law and substantial evidence. * * * ’ ”

The Protestant raises five propositions as to the validity of Order No. 57171 and the Plan of Unitization approved by it. We will discuss them in order.

The first proposition made is that the 21 oil producing sands that underlie the Unit area are not a common source of supply and for that reason cannot be joined in one unitization plan. Protestant predicates this *908 proposition on three points. It assei'ts that the evidence is patently clear that the Pennsylvanian series of sands are composed of 21 different reservoirs. That when nature formed these reservoirs, they were distinct and separate accumulations of oil and gas. That the evidence offered by the applicants to the effect that because of the development, method and manner of production and operation, these 21 reservoirs now constitute a single common source of supply is insufficient because it was also shown that not all of the reservoirs were in communication with each other as not a single well was opened in all 21 zones.

Protestant, for its second point under its first proposition maintains that the proposed method of waterflooding negatives the presumption of a single common source of supply. This point is based on applicants evidence that the waterflooding in the Unit was to be a multi-stage flood, that is in four different stages, wherein a certain group of reservoirs will be open during one stage and another group will be open during another stage.

Its third point is to the effect that before the order of the Commission can be valid, the order must be separately applicable to the 21 reservoirs, each as a common source of supply. That since the order in question failed to treat the 21 reservoirs separately, it is invalid.

With Protestant’s first proposition and its points thereunder, we do not agree. Witnesses, on behalf of the applicants, testified that all of the 21 producing sands were in communication with each other as a result of the completion and production practices used in the field. Evidence of a substantial nature was adduced that a common source of supply could be created, and was created in this instance, as to the particular sands involved, by opening them to the well bore in several sands. A portion of paragraph 4 of the-Order of the Corporation Commission, omitting the description contained therein is set out as follows:

“4. That a part of Carter County, Oklahoma, described' as * * * known as the Bayou Field is underlain by one or more of some twenty-one (21) Pennsylvanian Sand Stringers, which are generally found between the depths of 2,030 feet and 4,400 feet, and are identified as various members of the Bayou, M Series, and Lone Grove groups or the Stray, Norris and Chubby Sands. Development of the Pennsylvanian Sand in the Bayou Field commenced in the early 1920s; additional drilling was conducted in the late 1940s and the early 1950s, and at this time the field has been fully developed for approximately twelve (12) years; the existence and location of a large East-West trending fault across the northern portion of the field has been proven. There are in excess of two hundred (200) wells in the field. The typical well penetrates as many as fifteen (15) of the some twenty-one (21) Pennsylvanian Sand stringers, and many of the productive stringers penetrated have been perforated and commingled in the well bore. In a number of the wells in the field, the lower sand members were completed in the open hole and simultaneously produced with various perforated and commingled Pennsylvanian Sand stringers found above the point where pipe was set. In the history of the field, there has been no significant effort to isolate or segregate the various Pennsylvanian Sand stringers; the pattern of development and producing operations in the field have been to treat the various productive Pennsylvanian Sand stringers as a single common source of supply of oil and gas. There is considerable question as to whether it is now physically possible to completely and effectively separate and segregate the various stringers. In nature there was little, if any, effective communication between the various stringers of the Pennsylvanian Sand in the field. However, as a result of the completion and producing practices over many years, such Pennsylvanian Sand stringers are now in direct and/or indirect pressure communication with each other and the pressures within the stringers have equalized so as to: *909

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Bluebook (online)
420 P.2d 905, 1966 WL 146992, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jones-v-continental-oil-company-okla-1966.