Railroad Commission of Texas v. Gardner

338 S.W.2d 753, 13 Oil & Gas Rep. 1050, 1960 Tex. App. LEXIS 2509
CourtCourt of Appeals of Texas
DecidedJuly 27, 1960
DocketNo. 10798
StatusPublished
Cited by2 cases

This text of 338 S.W.2d 753 (Railroad Commission of Texas v. Gardner) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Railroad Commission of Texas v. Gardner, 338 S.W.2d 753, 13 Oil & Gas Rep. 1050, 1960 Tex. App. LEXIS 2509 (Tex. Ct. App. 1960).

Opinion

HUGHES, Justice.

Roy R. Gardner, appellee, brought this suit as an appeal from the following order of the Railroad Commission of Texas made December 14, 1959, effective January 1, 1960:

“This is to advise that the Commission, at a formal conference held December 14, 1959, considered the application of Christie, Mitchell and Mitchell [754]*754to merge the'Bruce-Flo (E-3) Field into the Palacios (Frio E Sand) Field, Matagorda County, Texas. The Commission ruled that effective January 1, 1960, the Bruce-Flo (E-3) Field will be merged into the Palacios (Frio E Sand) Field and the existing field rules for the Palacios Field will remain in effect.”

Appellee, and others in whose behalf this suit was brought, are the owners and ap-pellee is the operator of the Gardner-Lowe-Beaverson lease of 1,030 acres in Mata-gorda County, on which is located Beaver-son No. 1 gas well, completed December 21, '1958.

This well was originally classified by the Railroad Commission as a new and separate field and was named the Bruce-Flo (Frio E 3) Field, Matagorda County. Under this classification the well was allowed to produce and did produce approximately 4,000,000 cubic feet of gas daily following its connection to a gas pipe line in November, 1959. The daily gross, revenue from this well was about $800.

The practical effect of the order of the Commission recited above is to reduce the production of gas from this well to about 600,000 cubic feet per day and the monetary income to about $100 per day.

Christie, Mitchell and Mitchell, a Téxas corporation at whose instance the order appealed .from was made by the Commission, intervened in this suit and is aligned with the Commission.

A non jury trial resulted in a judgment decreeing the above order,. and all supplementary and incidental orders based thereon, of the Commission to be null and void and enjoining their enforcement.1

One of the supplementary orders' was the formal order of the Commission entered December 30, 1959, in which the Commission found that the Bruce-Flo Field and the Palacios Field were “in fact a single common reservoir.”

Art. 6008, Secs. 2(c) and 10 (Title 102, Oil and Gas) Vernon’s Ann.Civ.St., provide :.

“(c) The term ‘Common Reservoir’ as used in this Article shall mean any oil and/or gas field or part thereof which comprises and includes any area which is underlaid, or which from geological or other scientific data or experiments or from drilling operations or other evidence appears to be under-laid by a common pool or accumulation of oil and/or gas;”
“Sec. 10. It shall be the duty of the Commission to prorate and regulate the daily gas well production from each common reservoir in the manner and method herein set forth. The Commission shall prorate and regulate such production for the protection of public and private interests :
“(a) In the prevention of waste as ‘waste’ is defined herein;
“(b) In the adjustment of correlative rights and opportunities of each owner of gas in a common reservoir., to produce and use or sell such gas as permitted in this. Article.”

The first three points of appellants are to the effect that the order of the Commission is supported by substantial evidence and that the Trial Court erred in not so holding.

It is our opinion that there is substantial evidence reasonably supporting the order of the Commission, the most forceful and persuasive evidence being that relating to the variation shown in the bottomhole pressure of appellee’s well when it was in [755]*755a shut-in or semishut-in state. Tests re-fleeting these variations were taken hy appellee, or Under his direction and control, The results of these tests are shown below

12-22-58 8400 4228 9020

1-27-59 8400 4225 9020

8-24-59 9000 4200 9020

9-13-59 9000 4192 9020

10- 9-59 9000 4161 9020

11- 3-59 9008 4148 9008’

Production from the Beáverson (appel-lee’s) well began November 11, 1959. Production from the wells to the south (Pala-cios Field) began in June 1959.

It is apparent that the first two tests shown on the above schedule should reflect virgin bottomhole pressure since they were conducted under similar conditions and prior to any gas production in the area. The difference of three pounds in the two tests was regarded by appellee’s expert witness as being within the normal limitations of accuracy of the test and even closer than he would expect.

The third and forth tests (those of 8-24-59 and 9-13-59) were made at a time when- appellee’s well had produced no gas, but the wells to the south had been in production since June 1959.

When the fifth and sixth tests were taken (10-9-59 and 11-3-59) appellee’s well had produced not to exceed ten million cubic feet of gas which escaped while the well was being reworked, and the wells to the south had been in constant commercial production since June 1959.

The constant drop in the bottomhole pressure of appellee’s well while it was shut-in or in a semishut-in state defies explanation except upon the premise of inaccuracy of the tests or the escape of gas from the reservoir in which the well was located.

The only possible manner in which this gas could have escaped from such reservoir, except the amount lost from appellee’s well, was through production from other wells in the same reservoir. Under this record, such wells can only bé identified as wells which are located to the south in the Palacios Field.

The drop in bottomhole pressure of ap-pellee’s well as shown above was 80 pounds. Mr. Orville K. Haynie, a petroleum engineer, testifying for appellants, stated that the loss of gas from this well while it was being worked over could not explain the 80 pound drop in bottomhole pressure. He further testified that “The only way we can explain the 80 pound pressure drop in that well is reflected from the production in the Christie, Mitchell and Mitchell wells and the other field wells. * * * ”

Mr. Park J. Jones, a petroleum engineer and witness for appellants, testified that it would require a production of 624 million cubic feet of gas to cause a drop of pressure of 80 pounds in a reservoir containing 39 billion cubic feet of gas, the amount ap-pellee'estimated to be in the reservoir in which his well was located.

There is also evidence that a calculated pressure test (without the use of a bottom-hole pressure bomb) made December 26, 1959, showed a bottomhole pressure of 4,182 pounds per square inch. This was a drop of 46 pounds from the original pres[756]*756sure of 4,228. This test was after 46 days of production from the well. _

Mr. Jones testified that these calculated pressures were not accurate and that it was “common” to be off as much as 100 pounds in calculating pressures at the depth of appellee’s well. He stated that expensive bomb pressure tests would not be used if calculated pressures were accurate.

Conceding, however, the 4,182 figure to be correct, the evidence is that, assuming appellee’s well was producing at full legal capacity, such well would have produced about 200 million cubic feet of gas. Mr.

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338 S.W.2d 753, 13 Oil & Gas Rep. 1050, 1960 Tex. App. LEXIS 2509, Counsel Stack Legal Research, https://law.counselstack.com/opinion/railroad-commission-of-texas-v-gardner-texapp-1960.