Phillips Petroleum Co. v. Corporation Commission

1969 OK 179, 461 P.2d 597
CourtSupreme Court of Oklahoma
DecidedNovember 12, 1969
Docket42060
StatusPublished
Cited by15 cases

This text of 1969 OK 179 (Phillips Petroleum Co. 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
Phillips Petroleum Co. v. Corporation Commission, 1969 OK 179, 461 P.2d 597 (Okla. 1969).

Opinion

BERRY, Vice Chief Justice.

The principal question concerns the sufficiency of evidence to support the Corporation Commission’s modification of its prior order, deleting a producing gas well from a common source of supply. Procedural and factual matters not essential to the issues involved will be to a great extent minimized or omitted.

A brief history shows the outer perimeter of the involved area was established by drilling of Yingling-Wiggins # 1 to the north. The southern and western perimeters already had been established by earlier drilling. Subsequently wells were drilled in between the wells on the perimeter.

The controversy arose after plaintiff in error, hereafter referred to as Phillips, applied for and obtained 640 acre spacing units in the entire Morrow formation in Townships 1 and 2 North, Range 14 and 15 ECM, Texas county, Oklahoma, under Order No. 58465, dated March 31, 1965. The effect of this extension order was to place the defendant in error’s (hereafter referred to as Yingling) Wiggins # 1 (drilled 12/62) in Section 10, Township 2N, Range 15E, under the prior spacing order and field rules affecting Morrow Zone gas production of the wells to the south and southwest. Phillips owned and operated a large number of the other wells in the field. Application of these field rules resulted in Yingling’s allowable being cut in half, but in conformity with the allowable on the Phillips’ wells.

After realizing the effect of the field rules Yingling applied (October 1965) for amendment to Order No. 58465, and prior orders, insofar as these orders spaced the Upper Morrow Zone as a common source of supply in 16 sections in the area. The application sought to establish another 640 acre spacing unit out of the 16 sections, which would include section 10 (Wiggins # 1) and 5 other sections. The primary purpose was to re-establish its prior allowable stricken by Order No. 58465. Ying-ling also sought an underage allowance to reinstate for the overage charged under the then existing field rules.

After hearing'the application in February 1966 the Commission entered its Order No. 62166. Yingling was denied underage, but the Commission modified Order No. 58465 and prior and subsequent orders. The Commission found Order No. 51679 (1/9/63) had established 640 acre spacing units in 12 sections (including Wiggins # 1 in Section 10) as a common source, and that the Wiggins # 1 was dually completed to produce separately from the Upper Morrow Sand and Lower Morrow Sand in compliance with Order *599 No. 51679. The Commission further found that in vacating Order No. 51679 by Order No. 58465 the two Morrow formations in the Wiggins # 1 were treated as one common source of supply.

The Commission then determined there had been a. change of condition since the entry of Order No. 58465, and that the Upper Morrow Sand common source of supply found in the Wiggins # 1 was a separate common source as previously determined. The Commission Order No. 58465 was amended by deleting the Upper Morrow Sand common source of supply in 4 sections (including Wiggins # 1 in section 10). The Wiggins # 1 was the only production in the 4 sections deleted.

In appealing from this order Phillips advances 3 propositions. The propositions attack the right of the Corporation Commission to delete a portion of a gas field from a previously determined common source of supply, unless shown by substantial evidence that there had been a change of conditions, or knowledge of conditions, to support such order of modification. Phillips contends Yingling had the burden to show, by substantial evidence, that new knowledge had been acquired, or there had been a change of conditions since the prior order had been entered, and that Yingling had failed to show a scintilla of evidence upon which the Corporation Commission predicated the order from which this appeal is taken.

The following facts are not in dispute: The Upper and Lower Morrow are naturally separate and distinct sources of supply, but are now in pressure communication by the commingling of the two zones in many wells in the area. Yingling-Wig-gins # 1 and Skelly-Wiggins wells are dually completed, while all of the Phillips wells which lie to the south and southwest were commingled. No additional drilling has occurred since Order No. 58465 (3/31/65) from which any evidence could be derived to show a change in conditions, or knowledge of conditions. The Morrow Zone allowable was calculated upon a formula composed of acreage and pressure. Both parties developed and completed their wells in compliance with procedures and orders of the Corporation Commission.

Phillips contends a spacing order cannot be vacated by a subsequent order absent showing by substantial evidence of a change of condition, or change in knowledge of conditions, in the area since the former order was entered. After citing 52 O.S.1961, § 111, it is urged any attempt to vacate or modify a prior final order, absent such substantial evidence, would constitute a collateral attack upon the final order and as such would be prohibited. See Wood Oil Co. v. Corp. Comm., 205 Okl. 534, 239 P.2d 1021, and other cases of similar effect.

Yingling’s position, based upon Application of Bennett, Okl., 353 P.2d 114, is that Commission’s Order No. 62166 did not constitute a collateral attack upon Order No. 58465. And, further, the Commission does have authority to delete a reservoir from purview of prior orders when supported by evidence showing a change in knowledge of conditions; and Order No. 62166 is supported by substantial evidence in this respect. See Cameron v. Corp. Comm., Okl., 414 P.2d 266.

In Carter Oil Co. v. State, 205 Okl. 374, 238 P.2d 300, at pages 303 and 304, we stated:

“* * * The application herein to change the units established by order No. 20585 solely upon the basis of facts existing at the time the order was entered and in evidence is but an effort to have said order reviewed and modified on account of error therein contrary to the provisions of 52 O.S.1941 § 111.”

We conclude the unappealed from final Order No. 58465 in the present case can be modified only upon substantial evidence which shows a change in conditions, or a change in knowledge of conditions, arising since the last order.

Thus disposition of this case rests upon determination as to what is meant by change of conditions, or a change of *600 knowledge of conditions, of the area since the prior final order. Review of the evidence claimed to support a new order is required.

The factual issue for determination is whether the Upper Morrow Zone in the four sections (including Wiggins # 1) deleted from Order No. 58465 by Order No. 62166 is a separate source of supply from the Upper Morrow Zone found in the other wells (remaining under Order No. 58465) lying to the south and southwest.

The parties concede there was no new information derived from drilling which took place in the area subsequent to Order No. 58465.

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1969 OK 179, 461 P.2d 597, Counsel Stack Legal Research, https://law.counselstack.com/opinion/phillips-petroleum-co-v-corporation-commission-okla-1969.