Salmon Corporation v. Forest Oil Corporation

1974 OK 51, 536 P.2d 909, 52 Oil & Gas Rep. 413, 1974 Okla. LEXIS 306
CourtSupreme Court of Oklahoma
DecidedApril 16, 1974
Docket43855
StatusPublished
Cited by4 cases

This text of 1974 OK 51 (Salmon Corporation v. Forest Oil Corporation) 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
Salmon Corporation v. Forest Oil Corporation, 1974 OK 51, 536 P.2d 909, 52 Oil & Gas Rep. 413, 1974 Okla. LEXIS 306 (Okla. 1974).

Opinion

BARNES, Justice:

The parties to this appeal are oil producing companies. They will be referred to as “Forest”, “Wiser”, and “Salmon”, respectively.

Beginning in 1939, and continuing into the latter part of 1957, Forest operated several oil and gas leases it and Wiser owned on land in Sections 15, 21, 22 and 28, Township 27 North, Range 12 East, Osage County, all of which land belonged to the Osage Tribe of Indians. On these leases a total of 71 wells had been drilled to the Wayside Sand, encountered at varying depths of 750 to 800 feet below the surface; and many of the wells produced oil from said sand. Toward the end of this 18-year period, when this production became greatly depleted, Forest, after concluding that the leases held little promise for additional profitable production by inaugurating some secondary recovery method, applied to, and received permission from, the Osage Indian Agency to plug the wells and abandon the leases. Further reference to these wells will be by individual number, such as “Well No. 17”, for instance.

Thereafter, in 1961, Salmon acquired oil and gas leases on the same, and nearby, sections of land, for the purpose of attempting further production from the Wayside Sand by a system of waterflood-ing said Sand, called the “5-spot” method. This entailed the drilling of a hole or well called a “water injection well” in each of the four corners of square 10-acre surface areas, and then injecting water into the sand through these wells to force oil remaining in the sand to come to the surface through a fifth well called the “producing well”, drilled in the center of the 10-acre square.

By June, 1962, Salmon had installed said waterflooding system and had begun operating it. This operation caused pressure in the Wayside Sand reservoir to increase, and, in November of that year, salt water was seen emerging to the surface in what had been Forest’s old Well No. 13. Salmon, with the permission of the Osage Indian Agency, then went into this old well and replugged it, as it did Well No. 17 early in 1964 when salt water appeared in a creek near it. In time, all 71 of the old wells Forest had previously operated were reentered and plugged, or replugged, by Salmon.

*911 Two actions were thereafter instituted by Salmon against Forest and Wiser to recover damages in recoupment of its costs and losses in plugging these wells. As in the trial of these cases, Forest assumed sole responsibility, as operator of the leases, for the acts of which complaint was made against both of said defendants, we will hereafter omit Wiser from our discussion. In its petitions in the two cases, later consolidated, Salmon alleged that Forest failed to plug certain of the 71 old wells in a manner sufficient to seal off the Wayside Sand and to prevent the escape therefrom of oil, gas, or other substances, including the salt water injected into it by Salmon for its above described waterflood-ing project. This was alleged to violate applicable laws and rules and regulations, both of the United States and of the State of Oklahoma, and to constitute gross negligence and to create a nuisance, which continued until abated by Salmon’s reentering and replugging the 71 wells, as aforesaid. Although it alleged that none of the wells was plugged in the manner Forest reported to the Osage Indian Agency, Salmon alleged that it could not be definitely established that the way 46 of the old wells were plugged injuriously affected the wat-erflooding operation. Salmon did allege, however, that because 25 of the 71 wells had been discovered to have been so negligently or improperly plugged as to affect the waterflooding operation, plaintiff had to reenter and replug the other 46 wells to make sure that they had not been so poorly plugged that they would also detrimentally affect the waterflooding operation or cause pollution.

The recovery Salmon'sought for its expenses in reentering and replugging the above mentioned 25 wells was the total sum of $26,841.65. For its expenses on the other 46 wells, Salmon sought a total recovery of $43,609.86.

In addition to a general denial, Forest’s answer to Salmon’s petitions included aver-ments, in effect, denying that, at the time it plugged the wells in 1957, Forest had any duty to plug them in such a way as to withstand a buildup of the Wayside Sand’s reservoir pressure from future waterflood-ing projects such as Salmon inaugurated years later [as aforesaid].

At the trial, Forest took the position that in 1957 the plugging of oil and gas wells required by Oklahoma statutes did not have for its purpose the facilitation of any future waterflooding operation; and testimony was elicited from at least one of the men who handled Forest’s plugging operations that this work was never undertaken or performed for that purpose. Forest did concede, however, that it was its duty to comply with the United States Secretary of the Interior’s well-plugging regulations and requirements, administered by officials of the Osage Indian Agency.

The jury was relieved of consideration of the aforementioned 46 wells Salmon had replugged as a precautionary measure, when the trial court sustained, as to them, the demurrer which Forest interposed at the close of Salmon’s evidence.

Thereafter, in his fourth instruction to the jury, the trial judge defined the “plugging” of a well drilled for oil as “closing” its wellbore “in such a way or manner as to prevent the migration of oil, gas, salt water, or other substance, from one stratum into another.” In his fifth instruction, the judge told the jury that the prevention of oil and gas from escaping the stratum in which they were found is one of the purposes of regulations requiring well plugging. By his Instruction No. 7, the court told the jury that:

“An improperly or insufficiently plugged and abandoned oil well is a nuisance and anyone affected thereby has a right to do whatever is necessary to abate the nuisance and is entitled to recover all of his reasonable expenditures in so doing from the party who improperly and insufficiently plugged and abandoned the well.”

In his Instruction No. 10, the court stated that the aforementioned Rules and Reg *912 ulations of the United States Secretary of the Interior [administered through the Osage Indian Agency] pertaining to the plugging of the wells involved had the force and effect of law; and, in his Instruction No. 11, the judge stated that Forest was required to comply with them, as well as with any written or oral instructions given it, or its plugger, by the Osage Indian Agency. The Rules and Regulations referred to were set forth in the trial court’s Instruction No. 9 as follows:

“A. Lessee shall plug and fill all dry or abandoned wells on the leased lands in the manner required, and where any such well penetrates an oil or gas bearing formation it shall be thoroughly cleaned to the bottom of the hole before being plugged or filled, and shall then be filled with mud-laden fluid of a consistency approved by the Inspector, from the bottom to the top thereof, before any casing is removed from the well, or in lieu of the use of such mud-fluid, each oil and gas bearing formation shall be adequately protected by cement or approved plugs or by both such plugs and cement, and the well filled in above and below such cement or plugs with material approved by the Inspector.
“B.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Jarvis Drilling, Inc. v. Midwest Oil Producing Co.
626 N.E.2d 821 (Indiana Court of Appeals, 1993)
Gannon v. Mobil Oil Company
573 F.2d 1158 (Tenth Circuit, 1978)
Gannon v. Mobil Oil Co.
573 F.2d 1158 (Tenth Circuit, 1978)

Cite This Page — Counsel Stack

Bluebook (online)
1974 OK 51, 536 P.2d 909, 52 Oil & Gas Rep. 413, 1974 Okla. LEXIS 306, Counsel Stack Legal Research, https://law.counselstack.com/opinion/salmon-corporation-v-forest-oil-corporation-okla-1974.