Oklahoma Natural Gas Company, a Division of Oneok Inc., a Delaware Corporation v. Mahan & Rowsey, Inc.

786 F.2d 1004, 89 Oil & Gas Rep. 152, 1986 U.S. App. LEXIS 23227
CourtCourt of Appeals for the Tenth Circuit
DecidedMarch 21, 1986
Docket85-1826
StatusPublished
Cited by9 cases

This text of 786 F.2d 1004 (Oklahoma Natural Gas Company, a Division of Oneok Inc., a Delaware Corporation v. Mahan & Rowsey, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Oklahoma Natural Gas Company, a Division of Oneok Inc., a Delaware Corporation v. Mahan & Rowsey, Inc., 786 F.2d 1004, 89 Oil & Gas Rep. 152, 1986 U.S. App. LEXIS 23227 (10th Cir. 1986).

Opinion

*1005 SAFPELS, District Judge.

This action was initially brought by Oklahoma Natural Gas [hereinafter ONG] in the United States Bankruptcy Court for the Western District of Oklahoma. ONG sought damages plus injunctive relief to prevent Mahan & Rowsey, Inc. [hereinafter MRI] from producing gas from the Manes # 1 and # 3 wells. A request for preliminary injunction by ONG was denied on September 30, 1982. The matter was subsequently tried to the Bankruptcy Court on November 21, 1983 through November 25, 1983, and the Bankruptcy Court found in favor of ONG. Written proposed findings of fact and conclusions of law were transmitted to the district court for approval. MRI filed a motion on December 9, 1983, for the district court to disapprove the proposed findings and conclusions and to conduct an evidentiary hearing. The district court entered its memorandum opinion on March 20, 1985 in favor of ONG, 48 B.R. 767.

On appeal, MRI claims the district court erred by failing to consider the nature of subsurface geology when reaching its conclusion that MRI’s explanation of the gas/water contact at Observation Well # 4 was contrived; by shifting the burden of proof by accepting ONG’s tilted water table theory without finding a supporting cause; by concluding a tilted water table existed without evidence supporting a causal factor and by declining to appoint an expert engineering witness to aid the court in interpreting engineering testimony.

The standards governing appellate review are well-established. The findings of a trial court on appeal will not be reversed unless they are clearly erroneous. Burgert v. Tietjens, 499 F.2d 1 (10th Cir.1974). The appellate court is not to determine whether the trial court reached the correct decision, but rather is to determine whether it reached a permissible one in light of the evidence. E.E.O.C. v. Gaddis, 733 F.2d 1373 (10th Cir.1984). A reviewing court may not reverse the findings of the trial court simply because it would have decided the case differently. Anderson v. City of Bessemer City, — U.S. -, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985). Likewise, an appellate court is not to decide factual issues de novo. Id. Where two permissible views of evidence exist, the factfinder’s choice between them cannot be clearly erroneous. United States v. Yellow Cab Co., 338 U.S. 338, 70 S.Ct. 177, 94 L.Ed. 150 (1949). These rules apply even when the trial court’s findings do not rest on credibility determinations, but are based on physical or documentary evidence or inferences from other facts. Anderson, 105 S.Ct. 1504.

We have carefully reviewed the record and the findings of the district court and conclude that the judgment of the district court should be affirmed. The district court carefully weighed the evidence along with expert testimony and arrived at a logical and permissible conclusion. There is nothing in the record to lead us to find that the ruling by the trial court is clearly erroneous. When viewing the decision of the trial court in its entirety, it is apparent that MRI's arguments lack merit.

The facts as summarized by the district court are essentially as follows. In 1950, ONG obtained permission to use the depleted Dutcher sandstone formation underlying the Depew gas field in Creek County, Oklahoma. ONG used this area to store extraneous natural gas that it had produced elsewhere. In the early 1960’s, the De-pew storage began to reflect the loss of substantial quantities of the stored natural gas. Eight (8) observation wells were drilled between 1964 and 1968 and it was determined that gas was escaping to the northeast of the storage area. ONG drilled a series of water injection wells to block the loss and no further gas loss was recorded until May, 1982.

In 1981, MRI began drilling wells in an area three miles south of the active storage area. Two of the wells, the Manes # 1 and the Manes # 3 produced natural gas while a third well, the Manes # 2, resulted in a dry hole. The geographic location of the Manes wells in relation to the location of *1006 the storage area and observation wells is as follows.

Observation Well No. 1 is at the far northern extremity of the storage area. Directly to the south is the M. Lewis Well, an injection and withdrawal well inside the storage area. To the southwest of the Lewis, also within the storage area, is a second injection and withdrawal well, the Big Pond. To the south and slightly to the east of the Lewis, approximately four thousand feet (4,000') from the active storage area, is Observation Well No. 2. Due south of the Lewis, approximately eight thousand feet (8,000') from the active storage area, is Observation Well No. 4. Due south of Observation Well No. 4 is Observation Well No. 6, some fifteen thousand feet (15,000') from the active storage area. The Manes wells are to the west of Observation Well No. 6, almost due south of the active storage area.

The Dutcher sandstone formation is found below these wells. As it extends south from Observation Well No. 1, it occurs deeper with respect to sea level altitude and at the Manes wells it is some one hundred twenty feet (120') lower than the main storage area.

ONG contended that the gas in its storage reservoir migrated through the Dutch-er formation to the Manes wells, therefore MRI was producing its natural gas which was injected for storage purposes. MRI denied that this occurred and contended that the gas in the storage area and the gas at the Manes wells and Observation Well No. 6 are separated by a solid column of water causing the wells to exhibit a pressure relationship, but not allowing a communication of gas.

The district court required ONG to prove three factual contentions: (1) that the Manes wells are completed in the Dutcher sandstone, the formation in which the De-pew storage reservoir is found and in which Observation Well No. 6 is completed; (2) that the Manes wells are in gas communication with Observation Well No. 6; and, (3) that the system of wells comprised of the Manes wells and Observation Well No. 6 is in gas communication with the Depew storage area.

The district court found the Manes wells to be completed in the Dutcher sandstone formation, the same formation in which Observation Well No. 6 and the Depew storage reservoir are found, thereby rejecting testimony of MRI’s geology expert on the basis of flawed charts and conflicting testimony with that of MRI’s other experts. The district court then found the Manes wells to be in gas communication with Observation Well No. 6 because of a striking pressure relationship between the wells, the close proximity of the wells, and the similar, if not identical, gas produced from the wells.

The district court finally concluded that the Manes wells and Observation Well No. 6 are in gas communication with the Depew storage area and it is this finding which MRI so vigorously challenges. The district court noted MRI’s opposition to ONG’s theory of gas communication to be well-based; however, found it to depict the natural conditions of the Dutcher sandstone at equilibrium.

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Bluebook (online)
786 F.2d 1004, 89 Oil & Gas Rep. 152, 1986 U.S. App. LEXIS 23227, Counsel Stack Legal Research, https://law.counselstack.com/opinion/oklahoma-natural-gas-company-a-division-of-oneok-inc-a-delaware-ca10-1986.