Railroad Commission v. Gulf Production Co.

115 S.W.2d 505, 1938 Tex. App. LEXIS 1027
CourtCourt of Appeals of Texas
DecidedMarch 9, 1938
DocketNo. 8474.
StatusPublished
Cited by12 cases

This text of 115 S.W.2d 505 (Railroad Commission v. Gulf Production Co.) 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 v. Gulf Production Co., 115 S.W.2d 505, 1938 Tex. App. LEXIS 1027 (Tex. Ct. App. 1938).

Opinions

BAUGH, Justice.

This is a rule 37 case. On May 17, 1935, the Railroad Commission granted to J. C. Tippett, lessee, a-permit to drill a third well on a 4.77-acre tract of land in the East Texas oil field in Gregg county, as an exception to rule 37 to prevent confiscation. The Gulf Production Company, owner of a lease oivadjacent lands to the south, sued to set aside the permit as invalid, to enjoin the drilling of or production from such weil, and prayed that the court order the well plugged. Upon a trial to the court on the merits the relief prayed for was granted, from which judgment this appeal is prosecuted.

This is the second appeal in this case. The former appeal was from an order of. the trial court dismissing the suit which we reversed upon a confession of error. See Tex.Civ.App., 84 S.W.2d 359. We think the case presents no new questions of law. The tract of land here involved, recovered by the state as vacant land, lease on which is held by Tippett, is 175 feet wide north and south, and 1,187.5 feet long east and west. At the time this permit was -granted the leases surrounding this tract were owned and developed as follows: On the south the Gulf Production Company lease of 48.1 acres, drilled to a density of one well to each 6.8 acres; on the east Shell Production Company lease of 47.9 acres drilled to a density of one well to each 7.9 acres; on the north the Tidewater Oil Company lease of 35 acres, drilled to a density of one well *507 to each S.8 acres; on the north and west the Hensley-Tom and Sallie Bell lease of an estimated area of 7.8 acres, drilled to a dcn'sity of one well to each 2.9 acres. The Tippett Tease here involved with the two wells thereon, prior to the granting of this permit, was drilled to a density of one well to each 2.38 acres.

In this connection the trial court found, in response to appellee Tippett’s request for findings of fact, as follows:

“That J. C. Tippett’s wells Nos. 1 and 2 as located on his Acklin and Mary Nichols lease, had on said date, and now have, drainage advantage over the adjacent leases; that said two wells were and are permitted to produce a daily allowable of approximately 8.51 barrels of petroleum oil to each acre of leasehold estate; that Gulf Production Company’s wells were and are permitted to produce a daily allowable of approximately 2.91 barrels for each acre of its leasehold estate; that the H. C. Hensley Tom Bell 'B’ lease next adjoining J. C. Tip-pett’s lease on the North, was and is permitted to produce a daily allowable of approximately 7.7 barrels of petroleum oil and gas for each acre of leasehold estate, and that the Tidewater’s Tom Bell lease next immediately North of the H. C. Hensley Tom Bell ‘B’ lease and North of the said J. C. Tippett’s lease, was and is permitted to produce approximately 3.42 barrels of petroleum oil for each acre of leasehold estate, thus affording the said J. C. Tippett a ■daily allowable of approximately four barrels per acre over and above the average barrels per acre allowable of said four leases ; that if the J. C. Tippett well No. 3 here complained of shall be permitted to produce under the present allowable, production from the three wells on the J. C. Tippett lease will aggregate 12.7 barrels per acre of leasehold estate, or 8.2 barrels per acre per day in excess of the average daily allowable permitted said four leasehold estates.

“The third well here' complained of was’ not necessary to prevent confiscation of J. C. Tippett’s property nor to prevent waste, but, on the contrary, if permitted to produce petroleum oil and gás, it will tend to, and will, create or occasion waste of petroleum oil and gas.”

Only two witnesses testified in the trial upon the issues here presented, R. D. Parker and J. S. Hudnall, both as expert petroleum engineers. Both testified that under the conditions on the surrounding leases at the time the permit was granted, a third well was not needed to prevent confiscation of Tippett’s property. On .the contrary, it was shown that his tract had a drainage advantage over surrounding leases without the additional well. It was not shown whether these witnesses testified in the hearing before the Railroad Commission or not. The only ground, therefore, on which it was attempted to sustain the permit was that it was necessary to prevent physical waste,'which was not the ground recited in the order of the commission granting it. On that issue, Parker testified that it was not only not necessary to prevent waste, but that it would cause waste and drain oil from underneath appellee’s lease. Hudnall testified that it was needed to prevent waste. This opinion, however, he admitted upon cross-examination, was predicated upon his disagreement with the wisdom and efficacy of the 660-330 feet spacing provisions of rule 37; and his belief that the more wells that are drilled on a given area, the greater will be the ultimate recovery of oil therefrom. That consequently, in order to prevent waste, the surrounding leases regard-' less of size should be drilled to a greater density than the spacing provisions of rule 37 permit.

The same character of testimony by the same witness was before us in Railroad Commission v. Marathon Oil Co., Tex.Civ. App., 89 S.W.2d 517, writ refused, wherein we held that it amounted to a collateral attack upon the validity of rule 37, and was entitled to no weight as a basis of support to an exception to the rule.

It is now settled that a lessee is entitled only to an equal opportunity with the lessees of adjacent lands to recover his fair share of the oil in place beneath his tract; and when he is enabled to do so, the requirements of the law and the commission’s rule to protect him against confiscation have been met. Railroad Commission v. Marathon Oil Co., supra; Edgar v. Stanolind Oil & Gas Co., Tex.Civ.App., 90 S. W.2d 656, writ refused; Arkansas Fuel Oil Co. v. Reprimo Oil Co., Tex.Civ.App., 91 S.W.2d 381; Empire Gas & Fuel Co. v. Railroad Commission, Tex.Civ.App., 94 S. W.2d 1240, writ refused. The uncontro-verted evidence in the instant case showed that at the time this permit was granted, Tippett had such opportunity without a third well on his tract.

*508 The Railroad Commission also contends that appellee, Gulf Production Company, did not show itself to be “an interested person affected by” the permit here involved; . within the meaning of the amended statute, article 6049c, section 8, Vernon’s Ann.Civ.St., authorizing it to attack the permit. This, contention is not sustained. Of the two wells on Tippett’s tract, one was 50 feet and the other 87.5 feet from the line of the Gulf’s lease. Whereas, of the two wells on the Gulf lease, south of these two wells, . one was 183 feet >and the other 141 feet from Tip-pett’s line, thus giving Tippett a clear drainage advantage on that side of his tract. The third well granted thereon was located 87.5 feet from the Gulf’s line, thus increasing- the drainage from the Gulf lease. Manifestly, the Gulf was affected by such permit within the meaning of the statute. Empire Gas & Fuel Co. v. Railroad Commission, Tex.Civ.App., 94 S.W.

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Bluebook (online)
115 S.W.2d 505, 1938 Tex. App. LEXIS 1027, Counsel Stack Legal Research, https://law.counselstack.com/opinion/railroad-commission-v-gulf-production-co-texapp-1938.