Union Oil Company of California and Amoco Production Company appeal from Corporation Commission Order No. 128054 as corrected by Order No. 128263, wherein Herman George Kaiser, the appellee, was authorized to drill a well in the center of SW/4 of the SW/4 of Section 2, ION, 9W, in Caddo County, Oklahoma, as an additional well to test the Morrow and Springer formation. The order fixes a penalty of 50% for the additional well and sets an allowable for the amended unit based on the greater open-flow potential of either the previously drilled on-pattern well or the anticipated well authorized by the order, in any case not to exceed 2.45 million cubic feet of gas per day (MMCFD).
Herman George Kaiser filed two applications pertaining to drilling authorization for this well in the SW/4 of the SW/4 of Section 2. One application requested authorization for an off-pattern well and the remaining application requested permission to drill an additional well in the unit.
The two applications were referred to a trial examiner for a hearing and report. A portion of the testimony from the hearing is abstracted here. Mr. Neff testified at the hearing for the applicant-appellee that a well drilled to the center of the SW/4 of Section 2 in 1974 in the Britt, produced a show of gas and 80 barrels of salt water. This witness stated the proposed location is desired to test the Britt sand. On cross-examination, Mr. Neff stated that at least 10 and as much as 80 feet of shale separates the Britt and Boatwright and both zones are considered part of the Springer formation. At this point in the testimony, after Mr. Neff had stated that the portion of the Boatwright which overlaps the Britt is invaded with water, the applicant’s attorney stipulated that the only portion of the Springer to be tested by the proposed well is the Britt. Mr. Neff stated that Section 2 probably had Britt underlying one-half of its acreage and no present well in the Section was capable of producing from the Britt, but there were currently four wells outside the Section producing from the Britt zone.
The second witness was Mr. Waller. He stated in his testimony that at present there exists no well in Section 2 which could drain the Britt zone. It was his opinion that the requested well is not required to prevent waste since no potential production would be lost in its absence. However, he stated the well is required to protect the correlative rights of the parties inasmuch as there exist four offset wells producing from the Britt on the northwest, west and southwest. This witness stated as production from the Britt continues, the requested well will become uneconomic because reserves from the Britt are being diminished. At the time of the hearing, the total reserves in place under Section 2 were approximately half of the amount originally found under the 300 acres of Britt underlying it. Mr. Waller noted the proposed well would pay out in less than four months at a cost of over $600,000.
In the report, the examiner recommended granting the application with an allowable for the proposed well to be assessed a 50% penalty. The unit allowable was to be set from the highest open-flow potential of either the proposed well or the previous test of the existing Kaiser-Gilbert well. The recommendation allowed the total unit production to be produced from either well as long as the pattern well (Kaiser-Gilbert) produced no more than 2.45 MMCFD; all parties excepted to the examiner’s report. The Commission’s finding and order generally follows the trial examiner’s recommendation, stating that the applicant has drilled a well in the pattern location of the NW/4 of Section 2 which is producing in the Boat-wright zone of the Springer formation and that it is necessary that the applicant be allowed to drill in the SW/4 of the SW/4 to test the Britt zone of the Springer. The reason for the need of the exception is found to be the fact that there are wells producing from the Springer Britt zone in offsetting Sections 3,10 and 11, operated by Amoco and Texas Pacific and unless the exception is granted, the Britt zone of the Springer under the applicant’s land will be drained by the offsets. The order finds that for the protection of correlative rights and prevention of waste, in addition to encouraging the development of the area and the greatest ultimate recovery, the application should be granted. The order authorizes the additional well, assigns a single lease allowable based upon the highest open-flow potential of the two wells, not to exceed 2.45 MMCFD.
Appellant’s advance as their first proposition of error the allegation that the Com
“The Commission shall have jurisdiction upon the filing of a proper application therefor, and upon notice given as provided in subsection (a) above, to decrease the size of the well spacing units or to permit additional wells to be drilled within the established units, upon proper proof at such hearing that such modification or extension of the order establishing drilling or spacing units will prevent or assist in preventing the various types of wastes prohibited by statute, or any of said wastes, or will protect or assist in protecting the correlative rights of persons interested in said common source of supply, * * [Emphasis added]
Clearly, the quoted portion of the statute allows the Commission to authorize the drilling of an additional well within a drilling or spacing unit upon proof that the additional well or modification of the previous order will assist in preventing waste or the protection of correlative rights of persons interested in the common source of supply. In the order here questioned, the Commission found
inter alia
that the granting of a permit to drill the additional well would assist in protecting the correlative rights of the parties. The inquiry then becomes one of whether the order is supported by substantial evidence.
French v. Champlin Exploration, Inc.,
Okl.,
Secondly, the appellants contend the Commission had no jurisdiction to enter the order appealed from because the evidence indicates that these two portions of the Springer, being the Britt and Boat-wright, are separate common sources of supply in Section 2. Admittedly, the record does uphold the factual conclusion contained in the proposition. In Section 2, the Britt and Boatwright are separate sources of supply. They are separated by 10 to 80
The appellants request us to hold the only relief that could properly be granted where the facts show that there are two common sources covered in a single unit is vacation of the order and reclassification of the two sources in separate orders, relying upon
Marlin Oil Corp. v. Corp. Commission,
Okl.,
Additionally, the appellants contend that the order entered in this cause constitutes a collateral attack on the Commission’s prior order inasmuch as there is no proof or change of condition in the formation or knowledge thereof. Title
“3. * * * That it is the testimony of applicant that it is necessary to drill a well in the center of the SW/4 of the SW/4 of Section 2 — 10N9W Caddo County, Oklahoma, to test the Britt zone of the Springer formation and that the wells drilled by Amoco Production Co. in Sections 3 and 10, and by Texas Pacific in Section 11, all produce from the Britt zone; that if a well is not drilled in the center of the SW/4 of the SW/4 of said Section 2, the Britt zone of the Springer formation will be drained by the offsetting wells.”
The appellants also urge this Court to hold the Commission erred in fixing an allowable which ignores the conceded fact that the two sources of supply are a matter of fact separate, stating that H. F. Wilcox Oil & Gas Co. v. Walker, supra, held that the Commission is not vested with the authority to deal with two common sources as a single unit when it sets an allowable. As previously stated in this opinion, the Commission correctly treated the Springer as a common source under the facts in this case. As long as Order No. 121645, which found the Springer to be a single common source, is in effect, the Commission is authorized to honor that order, 52 O.S.1971 § 111, and treat the source of supply as a single common source when fixing an allowable.
Finally, the appellants submit that the allowable fixed for the proposed well is clearly excessive and not sustained by the evidence. An order of the Corporation Commission will be affirmed if supported by substantial evidence and the law.
Barnes v. Transok Pipeline Company,
Okl.,
AFFIRMED.
