Stack v. Harris

242 So. 2d 857, 38 Oil & Gas Rep. 1, 1970 Miss. LEXIS 1391
Mississippi Supreme Court·Decided December 7, 1970·No. No. 46002·Published·Cited by 1 cases

Opinion

JONES, Justice.

This case, involving the drilling of an oil well as an exception from the general spacing rules, presents a question as to whether Section 6132-21 (c), Mississippi Code 1942 Annotated (Supp.1968) renders the drilling of a well as an exception, absolutely and totally immune from the provisions of general rule No. 14 adopted by the State Oil and Gas Board insofar as allowa-bles are concerned. The judge of the Circuit Court of Hinds County, Mississippi, held that it did. We disagree and reverse.

Section 6132-21 (c), Mississippi Code of 1942 Annotated (Supp.1968) reads as follows :

Each well permitted to be drilled upon any drilling unit shall be drilled in accordance with the rules and regulations promulgated by the board and in accordance with a spacing pattern fixed by the board for the pool in which the well is located with such exceptions as may be reasonably necessary where it is shown, after notice and upon hearing, that the unit is partly outside the pool or, for some other reason, a well otherwise located on the unit would be nonproductive, or topographical conditions are such as to make the drilling at such location unduly burdensome. Whenever an exception is granted, the board shall take such action as will offset any advantage [858] .which the person securing the exception may have over other producers by reason of the drilling of the well as an exception, but no well drilled and completed as an exception to prescribed footage limitations for the reason that a portion of the drilling unit upon which such well is located is partly outside the pool or productive horizon shall be allocated a reduced daily production allowable whenever it shall be demonstrated to the satisfaction of the board that the productive acreage underlying such drilling unit is equal to, or more than, the reasonable minimum amount of productive acreage which would underlie such drilling unit under the minimum conditions which would permit the drilling of a well thereon so located as to comply with all applicable footage limitations; * * *

It is not denied that the well was drilled as an exception and complied with the above statute except that part which says, “Each well permitted to be drilled upon any drilling unit shall be drilled in accordance with the rules and regulations promulgated by the board * *

Rule 14 of the General Rules affecting the entire state is applicable to this well, there being no special rules for this particular field. Rule 14 reads, insofar as affects this issue, as follows:

(b) No well shall cross drilling unit lines unless permit is obtained from the Board after notice and hearing.
(c) Intentional deviations of short distances necessary to straighten the hole, sidetrack, junk, or correct other mechanical difficulties may be accomplished without the issuance of a permit, but the operator shall immediately notify the Board by letter or telegram of the fact thereof.
(d) Except as set forth in paragraphs (c) and (e) hereof, no well may be directionally deviated from its normal course unless authorization so to do is first obtained from the Board after notice and hearing.
(e) In the event an operator in good faith commences and proceeds with the drilling of a straight well and thereafter, for reasons acceptable to the operator, desires to directionally deviate the well, he may do so at his own risk, first notifying the Board by letter or telegram of the fact thereof. On completion of such well as a producer, the operator must immediately apply for a permit from the Board on notice and hearing for approval of such intentional deviation. Pending such approval or disapproval, the Board may assign a temporary allowable only to such well.
(f) In cases of directionally deviated drilling the Board shall have the right to assess appropriate allowable penalties to prevent undue drainage from offset properties and to adjust possible inequities caused by the directional drilling.

We need not detail the manner in which J. W. Harris, appellee, acquired the right to drill the exception well. He secured a permit from the Oil and Gas Board, employed drillers and proceeded to drill. The Smackover Sands at this point were approximately 12,600 feet to 12,800 feet below the surface. When the well had been drilled to about 10,000 feet, it was found to have drifted (or deviated) a considerable distance to the northeast. This was toward a dry hole which had been drilled in the approximate center of the forty from which the exception was carved and in which the exception well is located.

At this point, the operator, with the assistance of a drilling firm which specialized in directional drilling, changed the direction of the well, turning it approximately 180 degrees. The well then ran in a southwesterly direction practically to the point of intersection of the three drilling units upon which appellants had wells.

The permit authorized the drilling of said exception well at a point 300 feet north of [859] the south line and 300 feet east of the west line of the forty upon which it was drilled, to-wit: the northwest quarter of northwest quarter, section 26, township 10 north, range 6 west, Wayne County. Stack and Chisholm operating as the Brandon Company had 3 producing wells, one located in the northeast quarter of northeast quarter of section 27, township 10 north, range 6 west; one in the southeast quarter of northeast quarter of said section 27 and one in the southwest quarter of northwest quarter of section 26. The operator had complied with the rules and regulations by giving notice of the fact that he was intentionally deviating the well. At one time when the bottom of the hole was located, it was in the northeast quarter of northeast quarter of section 27, being the unit where the Brandon well 27-1 was situated. Upon ascertaining this fact, the pipe was pulled and the hole plugged. The specialized directional drilling firm was rehired and redrilled the well to the east bottoming it at a point approximately 31 feet from the east line of the northeast quarter of northeast quarter and near the north lines of the two other quarter-quarter sections here-inbefore mentioned. It was practically at the junction of the four drilling units and close to the line of each of the 3 Brandon well units.

All of the wells were pumpers. Harris, the operator of the exception well, made application to the State Oil and Gas Board to approve the well as drilled with the intentional deviations and with the bottom of the hole situated as described above.

Rule 35 of the General Rules places the allowables on a depth basis. At a depth of 12,000 feet the allowables were 400 barrels daily.

The Oil and Gas Board approved the well as completed, but, provided that, because of the intentional deviations and the location of the bottom of the well, the exception well should have an allowable of only 150 barrels per day.

From this order, Harris appealed to the Circuit Court of Hinds County and secured from the circuit judge a supersedeas making bond as required by the circuit judge. On the hearing before the circuit court, the judge held that Code Section 6132-21 (c) was controlling as to the allowable and that the Oil and Gas Board exceeded its authority in applying Rule 14 and reducing the allowable from 400 barrels to 150 barrels because of the intentional deviation and bottoming of the well where it was.

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Stack v. Harris, 242 So. 2d 857, 38 Oil & Gas Rep. 1, 1970 Miss. LEXIS 1391 (Mich. 1970).

242 So. 2d 857 (Stack v. Harris) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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258 So. 2d 767 (Mississippi Supreme Court, 1971)