Union Texas Petroleum, a Division of Allied Chemical Corp. v. Corporation Commission

PETROLEUM, A DIVI UNION TEXAS CHEMICAL CORPO ALLIED

SION OF Compa RATION; Champlin Petroleum

ny; Company; Amer Richfield Atlantic Corporation; Eason Oil Com

ada Hess Company; Singer-

pany; Harper Oil Operating Company,

Fleischaker Oil Company;

Inc.; Natural Gas Oklahoma Associates; Gungoll

Henry L. O. H. Gungoll;

Ward; Petrole E. Woods Carl Corpo Corporation;

um Natural Odessa Company;

ration; Oil Mack Oil Okmar Corpo Ladd Petroleum

ration, Appellants, OF CORPORATION COMMISSION OKLAHOMA, Harvey OF STATE Dierksen, al., Appellees. et W. 53181.

No. of Oklahoma.

Supreme Court 21, 1981.

July March 1982.

Rehearing Denied March 1982.

As Corrected March

Dissenting Opinion Gaberino, Huffman,

John A. Jr. of Ar- Kihle, Tulsa, rington, & Scheurich Okla- homa Natural Gas Co. Brown, Lockhart,

Gordon F. Brown & City, Oklahoma for Henry Gungoll H. Asso- ciates, Corp., Wood Petroleum Odessa Natu- Co., Ward, Corp., ral Mack L. Okmar Oil 0. Corp., Corp. Oil Ladd Petroleum and Carl Gungoll. E. Watson, Jr., Books,

H. B. Richard K. City, Oklahoma for Tenneco Oil Co. and Union Oil Co. of Cal.

Harvey Cody, Atty., Conservation Okla- Com’n, Corp. homa Jan Eric Cartwright, Gen., Atty. City, Corp. Oklahoma for Com’n State Okl. Walker, Corbyn by Walker & Barth B. Walker, City, Harvey for Oklahoma W. Dierksen, et al.

HARGRAVE, Justice. appeal This is an from Order No. 148243 of the Corporation State January of Oklahoma dated 1979. That eighty-eight vacated 640-acre drilling units, spacing and established 160-acre drilling units. One hundred joined eleven applicants application order, produced ap- this and in that plication they alleged prior that orders of the Corporation would dem- onstrate Mississippian that formation single constituted a common source of sup- ply region covered the application prior clearly and that orders demon- Crowe, C. Harold Thweatt of Dunlevy, strated that there had been substantial Thweatt, Swinford, Burdick, Johnson & change knowledge of conditions or of condi- City, Petroleum, Oklahoma for Union Texas tions as to that supply, common source of A Div. Corp., of Allied Chemical and that in order to waste prevent Champlin Petroleum Co. protect correlative rights, Holt, Jr., Dallas, Tex., Duncan W. knowledge required of conditions Atlantic Richfield Co. previously existing Wyn Baker, Tulsa, Dee for Amerada units be vacated and that Hess Corp. units be established which cre- Emery Robert J. of Lytle, Soule & Em- ated 160-acre units for ery, Oklahoma City, for Eason Mississippian. Oil Co. Monnet,

Russell Thompson Hayes, F. Mississippian formation underlying Bullis, Edwards, Thompson & Oklahoma application the area covered is a City, for Harper Singer-Flei- Oil Co. and producer which produces increasing Co., schaker Operating Oil Inc. proportionate amounts of oil as to total application be portion Argument dismissed. along the southeastern production application. hearing prior of the area covered was heard on the mer southeasterly portion its and the motion was denied by dismiss past a number of July the Commission’s order granted applications drilled on the basis of properly This failure to serve Union and by virtue of on an increased basis allegedly Tenneco resulted in a violation of appli- the oil there had. regulations own rules the Commission’s knowl- sought cants establish right process, to due appellants’ and of edge underlying the land en- conditions arising under line cases out Mul compassed and that Co., lane v. Central Hanover Bank & Trust of conditions estab- 306, 70 94 L.Ed. 339 U.S. S.Ct. Mississippian lished that 640-acre (1950). incapable draining were the entire form- Petroleum, Appellants Union Texas a di- ation area. Corporation, of Allied Chemical vision The to appellants application resisted the Champlin Company, Petroleum Atlantic and spacing vacate the 640-aere units estab- Corpora- Company, Richfield Amerada Hess units, and drilling spacing lish 160-acre tion, Harper Company, Eason Oil Com- Oil alleging there been no substantial had pany, Singer-Fleisehaker Operating Oil change applica- in and thus the conditions Inc., Oklahoma Natural Gas Company, on previ- tion a attack constituted collateral Associates, Gungoll H. Company, Henry L. Corporation ous order of the Commission. Ward, Gungoll, Carl E. Woods Petroleum Additionally, alleged the that the appellants Corporation, Corporation, Odessa Natural Mississippian throughout formation this Company, Corporation, Okmar Oil Mack Oil is, part, productive area in of oil well as raise Corporation, Ladd four and Petroleum and gas proper proceed upon the method to in disposition error for their propositions of that an by condition was order First, is substantial that no appeal. drilling increasing density the of the showing conditions or units, noting 640-acre previously existing conditions which would au- of proof the spacing respacing that and on of to va- Corporation the Commission thorize change of is his- contrary condition the drilling prior spacing and cate its 640-acre policy torical of the which has Commission point the unit order. second been to than density increase rather vacate destroy the Commission decision the units and reestablish on the basis smaller spacing units and drilling and 640-acre acreage. Appellants Company Tenneco Oil units is ar- thereupon 160-acre establish and Company argue Union Oil California thé vested violates bitrary act which in their appeal subject that the order must gas leases held of the oil and the owners be by vacated because it entered rights of the vested and reg- Commission outside point in this Included royalty owners. pursuit ular The basis of authority. its is no evidence to assertion that there is the proposition such a is that the June choice from Commission’s support application appellee, which is per- among statutory remedies two original application producing order drilling or va- mitting increased based, appeal which this failed drilling units and of the established cation appellants list the Tenneco and Union then drilling of smaller creation sought owning interests in the area point The third made place. in their appellants de-spaced, and that those two fails to is that order appellants these proceedings. had received notice some 640-acre notice, include lack and Ten- Despite this Union supply, source of units in the same common special appearance neco made a before rights of thereby violating the correlative hearing prior to the on Commission point made jurisdiction owners. The fourth objecting to the appli- appellants requesting appeal by on basis and these Commission cants did not comply the rules of the and it was then concluded that one well that proper response expected could be to effectively drain the these failures Commission should gas recoverable and the condensate from been to dismiss the those 640-acre units. These two initial motion made prior commencement of the Mississippian, orders cover the a common hearing. supply, although source of the orders treated the as separate areas from each orders of the Commis- other. At time of sion issuance of amended the order now appeal orders, these two it start with could not have establishing an order been reasonably units for foreseen that both oil Mississip- pian gas would condensate common be found the areas. source There has of supply within 40 square mile been a area in in conditions Major and Garfield Counties dated June and knowledge of conditions in the Mis- date, 1962. As of that two wells had sissippian to the hydrocarbon Lime as sat- completed area. That order uration, oil, gas condensate. finds one well adequately drains 640 acres. There has also been substantial change A year later, and a the Corporation half in knowledge relating of conditions to the in its found Order No. 53477 effective radius drainage of the well sunk R8W, T22N, Sec. comprising a 640- Lime Mississippian and of the at- acre unit, was in fact formation, tributes of particularly such oil productive, further found that three porosity, saturation, permeability, water additional wells necessary were to drain hydrocarbon saturation, pay thickness that unit. permitted by Those wells were and lithography. the order and were found necessary to ef- The also found that section, drainage date, fect and to had been change a substantial in the order- only two of the three authorized wells have ly development of the area necessary drilled, been the latter of those having two granting exceptions of numerous to well been drilled in 1978. A later order found density size, and drilling spacing and unit the Mississippian in this area to be a combi- irrespective of pattern contemplated nation oil gas Corpora- and reservoir. The the issuances of Orders No. 49133 and tion Commission’s Order No. 50337 estab- 50337. The Commission then determined lished drilling 640-acre and spacing units the development of the Mississippian for the Mississippian as and gas conden- Lime in this area in respect viewed to the sate common source of supply for a nine production already of wells drilled in con- square mile area in Garfield County, located junction drilling with the and one mile from the area covered by Order required wells which will be in the future appealed The order now from estab- demonstrates that a more orderly adminis- lishes as one common source of supply the tration of the is necessary area to assure area as covered in Order No. 49133 and that those reasonably required wells to pre- Order No. findings 50337. The of the Cor- vent waste protect and the correlative poration incorporated in the rights can or will be drilled. The Commis- now-appealed No. Order 148243 set forth sion’s conclusions delineate the following: the following: applicants When The evidence previous Order and of No. 49133 was protestants only comparable issued wells is point two had been drilled within the When conditions area. Order and of condi- No. 50337 issued, tions in Mississippian one well had Lime been drilled when the within orders, two covered area. No. 49133 and Six hundred were and forty drilling acre and issued. Similarly, compa- units evidence is were first established because the rable when from standpoint Missis- viewed sippian was indicated to be and of the now known conditions and knowl- condensate common sources of supply, edge However, of conditions. despite causing the Mississippian derived both formation to be comparable knowledge from drained, development op- effectively efficiently in result- and current historical depletion and inefficient ing unnecessary differ to the parties erations the two gas energy pressure utilization of for equitable basis most reasonable The supply. source order fur- common orderly Protestants development. future be ther states that correlative cannot exceptions granted have been numerous 640- protected by the continuation of thus to Orders 49133 and as amended. Mississippian The within the acre units. exceptions density relate to Those drilling area required allega- size variation of established, and that proof there had been a tions necessary on each 160-acre unit well conditions efficiently portion drain effectively knowledge of conditions formation. The order allocated to it. the reservoir However, contend there has they now vacating previous Order concluded then of conditions or knowl- amended as to the 49133 and 50337 as No. edge respect of conditions with 6,700 6,300 feet to feet Mississippian 640-acre units. surface as to 640-acre below the continues, noting protestants order or- those units established reme- urged statutory the appropriate established 160-acre The order then ders. (of statutorily provided) the two is to dy then order units. develop area on an increased further given has been Piecemeal relief noted: of an density upon application basis by increasing prior times premises Company and Union may terest be in conflict Tenneco Oil the propose prevention with the ends waste or correl- Company Oil of California Further, appeal here rights protection. ative on must be vacated judgment on because, hearing there is transcript recites substantial evidence to show as reveals, there has is now neither been and a to dismiss the motion conditions, pro knowledge conditions and notice of parties received these point out arising development they from the historical ceeding. Additionally, 29, production and filed June by the area covered notice mailing affidavit of to at all application. recited in the or- no was sent indicates notice address Mississippian improper der is that the Lime is far less and was sent to Union conducive to and state appellants effective efficient drain- Tenneco. These for parties age by upon one well on a 640-acre than it pleadings unit and service of notice must be thought contemplated right was to be when owning participate and were of the Oklahoma 8(d)(3)1 Orders 49133 and 50337 issued in 1962. Rule made under Practice. The 640-acre found be Rules of unit was not Commission from, “(d) Special of the Service land increase or decrease the size Cases: or or for increased and unit, shall within the decreased of wells (3) Applications for Amendment of Conserva- regular upon by applicant mail be served any subsequent tion Orders. At time right participate person having each prior plugging commencement be An affidavit shall the unit. upon abandonment of a well spacing a stating application, prior hearing unit, filed the names and in lieu of service under subsection persons so rule, of the (b) addresses hearing applica- of this notice of of an served, pursu- vacate, alter, and that has been mailed modify notice tion to or amend an order added) (Emphasis unit; creating ant to this rule.” to delete requirements having reference to the the last cited rule so violates Failure to do right subject to due which the statute deals.” Mul- appellants’ and does violence to 315, Hanover Mullane v. Central lane at 339 at 70 S.Ct. at 657. The process under U.S. Trust, Bomford v. supra, Bank & Soco made in Hanover that no- point central Co., (Okl.1968). Mobil 440 P.2d 713 ny reasonably import Oil tice must be calculated to contend that Appellants actual of the suit. in the valid exer restricted Appellant Company Oil Union to follow its statutory authority cise of its it never served California states was rules, further administrative mailing confirm mail. The affidavits may correctly act outside Tenneco allegation. Appellant Oil rules, citing of those H. F. Wilcox Oil & Gas improp it Company states service was State, 89,19 (1933), Co. v. P.2d 347 er in that “the notice sent to Tenneco was F.T.C., Company Pacific Molasses allega There is improperly addressed.” (5th 1966). Appellants

356 F.2d 386 Cir. briefs, lengthy record of this tion in the or admittedly pertinent authority cite in Mul- any prej which indicates there was appeal, lane, Bomford, supra, supra. Although resulting improper from the address udice familiar, the footings of the Mullane deci Tenneco’s, notice. The record indicates sion abstractly are both fundamental and mailing made. If the incor service immediately indispensable to the resolution give rect in failure to no address resulted error here offered. This action in been raised. The Mullane, volves the tice that fact should have holding roots of the Tenneco, appellant, alleged and the has not basis which it rests. In Mul ne, 656-657, 313, la at 339 proceedings U.S. before the Commission that the S.Ct. Supreme Court although improper noted that address resulted in failure to im contro versy has at times raged meaning style about notice. A mere in formal part defect process clause, due it affords at least or nomenclature will not invalidate service deprivation limitation requiring that a process unless it resulted in actually fail life, liberty adjudication property notice, give ure to as can be discerned from preceded by opportunity notice and the the excerpts from Mullane which demon a hearing appropriate to the nature of the inquiry steps strate the is centered on what action. The requisite of due fundamental notice, necessary actual impart process of law is the to be opportunity process. not formalistic ritual service of Ordean, 385, heard. Grannis v. 234 U.S. appellant Here has offered (1914). S.Ct. 58 L.Ed. 1363 jurisdictional error mailing of notice to The opportunity to be heard is worthless Tenneco at an incorrect address. The rec without requir notification of the occasion publication ord discloses notice in Oklahoma it, ing so that may affected individual County and the two counties in which the choose for himself appear whether or located, mailing land is as well as a of Mullane, default. In supra, the court notice to mailing Tenneco. Tenneco’s ad looked to steps necessary to assure that dress utilized here was the notice “Cuidad Build is reasonably calculated under all the ing.” Whether this address is correct or not apprise circumstances to parties interested of is not a matter by of disclosed the record on pendency the action and afford appeal. them an this attempt No was made to opportunity present objec their dem tions, stating onstrate the given that the notice must erroneous nature of the ad be such during as is dress reasonably calculated to the motion to dismiss when convey the required jurisdictional timely information in a man error was offered. Such ner so as to allow parties appear record,— interested to make evidence woudl dehors the their appearance. The common thread of therefore the record does not demonstrate opinion is reasonableness. “The criteri the order here appealed is void for on is not the possibility inju of conceivable acquire jurisdiction per failure to over the ry, but just and reasonable character of of son Tenneco.

659 appellants fits the rationale Union Texas Pe The error offered within troleum, Petroleum, 590, Champlin Atlantic City, v. Oklahoma 179 Okl. of Vinson Richfield, Hess, Oil, Harper Amerada Eason failure to (1937), 933 wherein the 66 P.2d Oil, al., et their of proposition direct first there petition of the and notice copies mail the merits against proceeding, error of the appear do not on offered as reversible error without au arguing Commission was af- judgment the record. The the face of thority previous to amend its order inas failure, alleged re- firmatively negated evidence no substan much as the disclosed answering all or citing that defendants change of conditions. This contention tial with summons appearing have served upon prohibition contained based In reference personally by publication. or against 111 attacks O.S.1971 collateral § cause, Court of the the second aspect to this the Corporation a final order of Com is obtain- that where service holds syllabus statute, and the cases mission. Under recites publication judgment ed it, of such as Oil Co. v. arising out Wood not void judgment proper, service Commission, 534, 239 205 Okl. face, consequently an attack on on its (1950), and Petroleum Phillips P.2d 1021 Co. to mail a on the basis of failure judgment Commission, v. Corporation 461 P.2d 597 notice copy petition publication of the (Okl.1969), an for an order of made provisions can under the constitutes attack modification a collateral predecessor § O.S.1971 where prior on the order that modification Kinard, George Third. is not based judgment (1921), the Court P. 503 stated change or knowl showing conditions legal for want of is not void sense edge arising of conditions since the last want jurisdiction, invalidity unless its Phillips Company, supra, order. Petroleum of the appear on the face jurisdiction change illustrates the fact that the of condi record; where the merely is voidable it change in knowledge tions or of conditions failure to objection is raised because of necessary support order of modifica process. serve speaks knowledge tion or conditions not obtain at prior which did the time the at its proceeding questioned Here the was considered, order and not to evidence on “that the ground outset Tenneco conditions conditions wrong notice was sent address.” have been at brought which could forward However, no evidence extrinsic fact of the hearing prior time impart address the correct or failure but were not considered at that time. arising notice from the listed was address offered, and thus the Corpora- order of the supra, approval cites Phillips, unchallenged by tion Commission stands p. Rev. “Modification Order Okl.Law proof or offer of the fact neces- extrinsic Supply” Pertaining to a Common Source sary invalidity. to demonstrate its 133, where pp. at 132 and the author “Logically are three article states: California, As to Union Oil of how possible. kinds of condition ever, holding of the recent ease of Cra is charac- type of conditions first Commission, vens v. 613 P.2d physical terized an actual 442, (Okl.1980), is controlling. The record of the reservoir occasioned behaviour entity contains no notice of a to this mailing is a depletion. Second development record and thus the demonstrates the Com de- gained the information from change in attempted proceed against mission to Un which depletion experience velopment jurisdiction ion’s interest absence original that conclusions demonstrates According over of that person entity. to the applied incorrect as reached were is, attempt adjudicate reservoir, order’s ly, type to and the third studied essence, of Union Oil of is ineffec used to technology California a tive, reservoir, new nullity purports and a as it to bear exploit bringing insofar rights.” its interests. of waste and concepts affect correlative unnecessary pat- to drill wells on a closer recognize in their brief in appellants As the alleged justi- tern.” chief, of condition a order of the prior of a a modification fy a substantial contends that appellee The in this action was Corporation Commission is estab- knowledge of conditions change in has been obtained that new in this evidence by primary lished both well would Mississippian gas in this area a prior actions reference cause appellants a unit. not drain 640-acre by the Corporation Commission taken in the substantial evidence there is no contend example An from themselves. appellants and that the Commis- finding this sustain from testi- this cause is taken testimony in application on have denied the sion should expert F., as an qualified Mr. mony of

that basis. Finding No. 5 He states objection. without under Har also note that appellants previous Corporation Commission’s 387, (Okl. P.2d per Hayes, v. applica- Oil Co. generally opinion, in his Commis 1967), Corporation and Meredith particular all the units in through ble sion, 828, (Okl.1961), a P.2d Finding No. 5 recites: case. ap order of the 1 well is Wuerflein No. applicants’ “That to all wells in the common source of plies depleted applicants’ 80 to 90% now well supply whether or not an individual drilling of Mis- in the infield experience oil or a well. turns out to be an existing spacing units sissippian wells known contend that it has been Appellants devel- previously were in the area which period of time that for a considerable well has demonstrat- drilling one oped by in the area covered Mississippian formation in each initial wells ed that after now has the orders under consideration unit were substan- gas produc as well as capable of oil well in said tially depleted, the is intended to demon tion. This contention encountered ini- unit in knowl strate there has been pressures hole tial shut-in bottom obtaining prior conditions since the edge of compara- volumes which were production orders, defeating the modification here thus hole with the initial shut-in bottom ble granted. This known fact is not determina production volumes pressure and presented, tive here issues in each unit.” the first wells drilled inability revolve around the of the 640-acre that, testified in his This same witness single adequately unit to be drained 7 and 8 of the expert opinion, Paragraphs experience light well in of the additional apply would findings in that same order with the character formation units in- each of since the through drilling purview of the action cluded within last were issued. This additional orders the record Quoting here from appealed. Phillips experience recognized was Petro Paragraphs 7 and 8 provisions where the Commission, supra, leum Co. v. are recited into the record: ground upon as a viable which to base a has concluded that the infield “Applicant prior Corporation motion Com modify penetrated drilled on each unit inquiry mission order. Thus the remains: Mississippian common supported by portion Is the order of modification being ade- supply that a well in this source well and locality Mississippian formation the initial quately drained order ini in the Mis- would not drain 640 acres? The the reservoir conditions units, 49133, tially establishing formation common source sissippian completed issued after two wells had been the lands described supply underlying Finding in a mile No. 4 40-square area. to be com- caption hereof are believed from that order reads: the conditions respects in all parable units on which encountered in the

“. .. drain the adequately One well will drilling has taken Mississippian infield condensate said forma- area, reasonable so that it is place tion it is underlying acres and The that the Wuerflein Unit No. 1 Commission’s order here conclude adequately completely well will not and from then appealed following states the Mississip- gas drain the recoverable reviewing history after of the two or- pian formation.” ders: “It appears that the Wuerflein unit well orders, parent 1. The two 49133 and adequately completely will not drain 50337 were issued strength of a gas Mississippian the recoverable drilling experiences total of three well unit, underlying formation and that a showing gas gas condensate field. second well on said formation will recover hydrocar- additional gas and associated 2. At the time of issuance it could not produced bons that will not be from ex- reasonably have foreseen the mixed charac- isting wells.” ter of the common source or the numerous exceptions density both to finding a similar The record also indicates prevent unit size Finding necessary No. 140576 wherein No. 8 waste Order in that order states: protect rights. correlative testimony “That was that it is eco- There has been a change substantial nomically feasible to drill a third well on knowledge of conditions and characteris- unit, this and that a third well formation, tics of hydrocarbon such as will recover additional oil and saturation, mix, oil effective drain- would not otherwise be recovered ex- radius, age and formation characteristics isting wells.” permeability, such as water saturation and Mr. expert opinion F. testified that in his pay effective thickness. he would reach the same conclusion in con- 4. There has been a substantial sideration each and all of orderly development of the areas on application units covered contemplated considered than was at the appeal. original time the orders were issued. included in report Commission’s Or- part conditions, der # 148243 contains the better 5. The legal pages single-space typing nine con- them, now prevalent pertaining taining history of modifications of the production formation and current well as orders, two 49133 and 54890. This base production require orderly future a more history demonstrates that order 49133 has development than that had under the 640- many at times included twice as section exception proce- acre unit and therefrom presently purview. units as are under its dure. Twenty-five of these sections have been The conclusions made authorized wells and of these a appealed in the order Commission included altogether have been percentage protestants appli- here note that original Many excluded from the order. proposed in their solutions cants differ more these orders exclude sections from reviewed than in equitable production to future sub- the order and establish smaller units or past present stantive differences as to allow additional wells on the basis that the Mississippian. known conditions unit is unable to drain or on the basis that times, past protes- conclusions state that in there is a exceptions by way oil or in the tants have obtained knowledge of the mechanics of the formation. unit size and increased variations in allegations density orders on the basis report The Commission’s shows that order protestants now change of condition but originally on formed contending that there has been no previously nine sections on the basis of one justifying a modification order. of condition drilled that order was ex- well. Thereafter protes- that the The Commission concluded tended and some sections then included development to have further tants desire spaced were deleted later and in 80-acre basis oil. increased 662 support the factual for order under when he determines of a unit an owner

by IX, 20, Oklahoma Constitu be taken. The Article Section such action should that tion, an violation of either leaving that decision unless asserted Commission concluded is owners, principles under the or federal constitutional individual unit state an Anderson-Prichard Oil circumstances, indirect dele- to be reviewed. amounts Com’n, 205 prevention Corp. Corporation Okl. gation duty to of of its oversee However, allega (1951). an 241 363 rights. P.2d protection of correlative waste of those constitutional tion of violation concluded that Additionally the Commission sup by of an order not principles issuance conducive to drain- is less Mississippian in does not ported by substantial evidence contemplat- age by 640-acre than of evi independent review voke an were issued. parent when the orders ed v. Corporation Commis dence. Cameron experienced now depletion pressure sion, (Okl.1966). P.2d 414 266 unit, resulting in will not drain a 640-acre energy in the utilization of inefficient a has wide dis The Commission which will cause substantial common source statutory its performance cretion in the of oil, quantities condensate not to of duties, may its and this not substitute Court a 640-acre unit. by be recovered continued determina judgment upon disputed factual that 160-acre The Commission concluded is tions for that of the Commission but reasonably drain the required units are to a of substantial restricted determination effectively efficiently, not- reservoir un evidentiary for the order issued support of withstanding recognized existence Appli authority of the statutes. re: der may be avail- alternate forms of relief that Company, 376 P.2d cation of Continental Oil the substantial evidence upon able based (Okl.1962). Searching record sub 330 submitted. ap supporting the order stantial evidence comparison not entail a of pealed evidence from does The Commission heard determine that which controversy, parties’ various evidence to of both sides only most but evidence validity convincing of statistical research methods and considered to supportive therefrom conclusions drawn analyses, and conflicting. implies quality whether it closely The determine were contested evi inducing no evi- a conviction proof there is appellants’ contention basis of facts change condition dence furnished a substantial dence of substantial reasonably could be of modification from which the issue which to base an order Pe history of v. Pan American reference to the resolved. Chenoweth by is refuted (Okl.1963). Corp., orders relative to the area troleum 382 P.2d Commission’s units, additionally has been parent by covered Substantial scintilla; something made more than condition outlined as allegations of something of and of possessing of the contest- substance proceedings earlier some consequence with it a fit carrying allegations ants Those relevant herein. conviction, but remains such gave the a factual ness to induce condition fairly may men differ modify orders and that reasonable basis which to point establishing the case. A deter Referring appellants’ grant exceptions. evidentiary support roughly thirty- # note that mination Exhibit we require weighing the evidence but does not four sections have been allowed parent supportive by the a measurement wells in the area covered the criterion of determine whether points have been deleted fifty orders and sections Okla. gener- substantiality present. Central for reasons which from those orders Com’n, Corporation Freight in knowl- Lines v. support showing of ally (Okl.1971). P.2d of the formation. edge of characteristics facts here supportive made A review of objection An to an order or compels the conclusion present does not initi evidence. supported by substantial ate in this Court as der is independent inquiry an disruption Previous Commission orders necessitated exercise granted have deletions and increased densi- police power prevention of waste. ty appellants orders to some of the on the It would be unusual to encounter a party basis of of conditions disagreeable to such a statement. changes and these ap- been made on Commission’s conclusion that past density proximately acreage comprising half applications by owners in the unit have not the area by parent covered the two orders uniformly source, developed the common and this order. and have not been carried out with dis- patch, negates allegation that both stat- Appellants object to the order here issued utory remedies are equally suited to the on the additional basis that facts, and substantial supports support evidence to the Commis- choice of alternatives made the Commis- sion’s action of ordering deletion of the sion. large opposed ordering units as increased density drilling on established units. Appellants Such additionally contend the Com- an allegation of error is insufficient to dis- mission’s respacing order these sections as turb the Commission’s order on the basis of 160-acre units must be reversed virtue of statutory authority and the evidence dis- respace Commission’s failure to the en- closed in Factually, the record. the record tire common source. As the dem- exhibits contains indicia that periods onstrate, for extended the order here appealed covers the time, Commission orders allowing orders, parent center of the two while the wells on the basis of inability to recover parent orders extend southwest and north known reserves have not been carried out. appealed. the order Prior orders have Known inability product pro- to recover parent stated both orders cover the tect correlative rights after a demonstrated same common source. change in knowledge of conditions has not early As as the motion to dis by past remedied the area orders to miss the requested Commission was pro density,

increase O.S.Supp. under 52 piecemeal basis, ceed on a one section at a d, 1978 87.1 the alternative remedy § hearing merits, time. At the on the granted here is decreasing the size of the appellants objected also to consideration of well portion units. That of the last men- large such a area in one proceeding. This tioned statute reads: done both reference to the burden The Commission shall have jurisdiction parties laid on the by entertainment of a upon the filing proper application of a modification on a 92-section therefor, given provid- notice as area, by objection to testimony on the above, ed in (a) subsection to decrease the expert basis that evidence should be limited size of the permit units or to impact engi from which the additional wells to be drilled within the neering gathered. Appellants data was ac units, established upon proper proof at tively requested the Commission to consider such hearing that such modification or request piecemeal modification on a ba extension of the establishing drill- sis, but now seek reversal of the order on ing or spacing prevent units will or assist ground that the one proceeding did not in preventing the types various of wastes encompass the entire common source. Giv prohibited statute, any of said below, position en this taken in the hearings wastes, protect or will protect- or assist in it is inappropriate to now allow reversal of ing rights the correlative persons inter- grounds the Commission’s order on ested said common source .. . directly conflict with parties’ position

Appellants cite Corp. Grison Oil v. below. Parties to an appeal action on Commission, 186 Okl. 99 not permitted to secure a reversal of a (1940), P.2d supportive 134 as propo judgment upon they error which have invit private sition that rights in, should be inter acquiesced ed and or to assume an incon fered with possible as little as where such position sistent from that taken in the trial

664 California, interests of Oil of Valley Line Co. v. Union Pipe Cimarron

court. (1938); Holmes, adjudi- 78 403 it attempts P.2d reversed as insofar Merritt, 332 Co. P.2d Service Oil cate the of Union Oil of California. Cities early Morrison v. (Okl.1958). As PART; IN AFFIRMED IN REVERSED (1930), Krouch, P. Okl. PART. as firmly was considered principle related Morrison, the first Court established. WILLIAMS, LAVENDER, DOOLIN and rule “It is well-settled Syllabus reads: OPALA, JJ., concur. suit, having- proceeded in party to a that a lost, and theory will upon IRWIN, J., J., the trial court BARNES, V. C. and C. court, appeal to this permitted, upon SIMMS, JJ., not be and dissent. HODGES to reverse a theory and seek his Justice, BARNES, dissenting. Vice Chief theory.” The rule upon case a different upon in this and Upon rehearing cause pur- very heart of emanates from the opinion promulgated reconsideration of the In Breene v. appeal. an pose served 21, (52 (Vol. 52- July herein on 1981 OBJ 186, Crawford, (1935), 53 244 P.2d 175 Okl. 30) 1857), hereby change my I No. vote will not a defendant be the Court held that respectfully from and must “dis- “concur” defense on ground his of allowed shift sent”. present in order to another defense appeal upon nor relied trial presented Majority’s My departure first from the theory To a traverse in court. allow such of pertains conclusion standard re- very appellate at level thwarts the basis view to be used in this case. purpose of an appellate process. of the 20, IX, Article Oklahoma Consti- Section present opportunity an for appeal not to tution, provisions makes two relative novo, to review the correct- a trial de but duty power considering and of this Court in argu- rulings upon of the made ness appeals Corporation orders of the from parties court. The ments of the trial appeals orders of the Commission. In action, their case for de- having presented Commission, review the “the court a certain theo- fense to trial Supreme shall not extend further Court per- not be thereby are bound and will ry, than to determine whether the Commission theory of the case mitted to authority, has regularly pursued its and appeal. also: Knox v. Eason Oil See and of findings whether the conclusions Co., 627,126 (1942); P.2d 247 190 Okl. Louis are sustained the law and Unger Corp., Berkman Metals 190 Co. v. However, evidence.” those 101, (1942); Okl. 121 P.2d 606 Foster v. involving an violation appeals “asserted 276, Higginbotham, 186 Okl. 97 P.2d 63 either any right parties” under Williams, 449, (1939); Secrest v. 185 Okl. 94 Constitution, or “the State Federal Court (1939); Ryan, P.2d 252 v. 185 Okl. Cadwell independent judg- shall its own exercise 158, (1939); Fidelity 90 P.2d 887 U. S. & ment the law as to both and facts.” Shull, Guaranty v. ex 169 Co. State rel. independent review the evidence is Such (1934); v. Okla. 36 P.2d 47 Ward Conti- out Appellant points invoked if “in P.2d Corp., nental Ins. 169 Okla. 36 47 specific respect what his constitutional Johnson, Cope (1933); v. 251 P. if the rights been violated” and consti- (1926). 985 Appel- tutional are “clear-cut”.1 violations Corporation “that each of the 540-acre The order of the lants contend supported by is determined to be substan- units had been devel- and Mississippi competent oped tial evidence and is therefore Formation affirmed; wells, part that no thereof is of one or more and provided existing equi- destroys valid as it and insofar affects of the Commission Commission, County Irrigation & Water Co. Texas Re- Cameron v. 414 Association, (Okl. 1966); (Okl.1977). Union and Southern Gas sources P.2d 266 P.2d pods pockets. ties of owners oil royalty both or It is known that there oil owners of the leasehold estate is a A transition zone. transition zone is an property private takes their use produce area where the wells both free oil violation of 23 of Article II of Section gas. Everything free north Constitution of State of Oklahoma predominantly pro- transition zone will be deprives of their due property them without gas, everything ductive south there- II, process of law in violation Article be predominantly productive will of oil 7, of the Constitution of the Section State gas. Appellants Appellees agree Oklahoma, and in violation the Four- effectively one will not drain the teenth Amendment to the Constitution Operators acres the oil area. the United as- States America.” Such applied oil area had for and serted constitutional violations could not granted permission to drill a number “clear-cut”, “specific” more and there- of additional wells in the spac- fore this must Court exercise its own inde- ing lying “leg”. within oil as to pendent judgment this' case the law basis of the application for additional wells and facts. Whether the order appealed was that the oil underlying reservoir some catego- from falls within the first or second drilling of the and units could not ry, sup- to be valid it must lawful be and properly be without developed drilling the ported by competent substantial evidence.2 of additional A applica- wells. number of It is my opinion using that either the stan- tions for increased within some of dard of of independent review the evidence the units in south- the evidence, or the of standard substantial it is portion ern of the formation were on file at clear, later, as be will discussed that the application the time the in this cause was order in question is invalid and should not filed, hearings postponed but were will stand. not be heard until this case is decided. Secondly, disagree I the Majority’s with The Commission’sOrder No. 148243de- holding that there was substantial evidence spacing eighty-eight the 640-acre units and support the on the conclusion that wells the Majority’s conclusion that such order each of the eighty-eight 640-acre units cov- supported by substantial are evidence by application ered the draining were not proposition based on the that new knowl- the units. This is the claimed “new knowl- edge which has obtained demonstrates edge” of upon condition which Mississippi any that none of the wells on of the application and the Com- eighty-eight the governmental sections cov- mission The depend. by case cited the Ma- ered the drain by effectively order will the jority, Phillips Petroleum v. Corporation Co. upon units. This is based the conclusion Commission, (Okl.1969), 461 P.2d 597 states: testimony Appellees’ and calculations of ex-

“... Because pert substituted substantive Appellees’experts witnesses. calculat- rights actually property gas vest in the own- ed of in place volumetric estimates orders, ers by the compared pressure force such the Okla- these de- estimates Supreme homa Court has laid down gas place. the cline curve in From estimates rule modifying comparison, experts that a order will be con- at the arrived their prohibitive demned as a collateral attack percentage estimate of the 640-acre unless ‘a being condition’ units were that drained unit has intervened between the dates of the well.

existing superseding orders.” pressure A curve will indicate decline The Mississippi evidence reflects that the gas produced how much will be from a well, Lime underlying particular Formation area cover- not thick- but will show the ed heterogeneous is a shape ness or reservoir which from southeasterly reservoir. The portion of the will gas produced. be In a fractured reservoir, Formation, area covered oil application contains such Mississippi as the Commission, Corp. (1951). 2. Anderson-Prichard Oil 241 P.2d 363 Therefore, Appellees’ position that distance to considerable gas may travel not the reservoir the unit wells would drain the well and therefore reach units, comparison depends upon may underlie the which may or not is locat- imperfect which the well calculation with units of an volumetric ed, predic- not uniform in may may decline curve pressure the reliable hand, tions, other a volumetric thickness. On the substantial evi- supported not assump- makes the gas place estimate fail. dence should that the entire tion addition, reflects testimony well is located is under- which the predomi- are five units equal productive formation lain with penetrated which nantly area have been produce ability thickness and by more than Mississippi Formation way, wellbore. Put another exposed reflects that one wellbore. same num- assumption an is made well on the data from the second obtained particular found in a pay ber of feet (less recovery five these units throughout 640-acre unit. will be found well; no well has found the second second Every engineer specifically who testified virgin pressure which indicative that assumption point testified that such occurred) that the drainage has shows exist- validity has no Mississippi Formation ing gas draining the units. impossible it to make a valid and that remaining more place volumetric estimate them the oil than one well on are in area. The conclusions of Mississippi Formation. no contention that one Appellants make existing wells were Appellees’ experts effectively well would drain 640 acres draining 640-acre units were based area, opera- oil where the oil area. In the on the fact that their volumetric estimates permission to drill for given tors had been gas place in beneath the wells, the wells were additional unit not was units showed more the reason for draining the oil and was than gas under the units indicated the to drill wells. applications the additional unit pressure decline curve the wells. The fact unit within the that a 640-acre experts by Appellees’ made statements effectively predominantly oil area cannot be wells, area, gas that none of the unit prove well that a drained one does upon the draining depends is unit cor- the gas portion well on of the reservoir will the estimates, rectness of the volumetric unit. not drain the 640-acre impossible that it is establishes H., Moreover, Mr. Appellants’ expert, a volumetric calculation of to make valid gas/oil showing in this area.3 Mississippi prepared Formation an exhibit Appellants I in testimony A. think the manner it was is Mr. H. which used 3. The for the primarily concerning a useful but use of volumetric estimates is erroneous. It’s device verify pressure as follows: what it did was you analysis that it was—if ex- cumulative you “Q. Did estimates on use volumetric amine results of that and the results of Mississippi Lime wells? studies, pressure you will see cumulative IA. haven’t used volumetric estimate very good there is correlation between the since the convince approach. I it once mid-1960sand tried two. And there should be because what it’s doing logical myself that it not a analyzing performance of the entering requires well to But it an Why date. Q. you do find that be the case? assumption pay logs net in quality as to the amount of A. The of the that are available area, drainage quality identify and the well in order calculate of the information to porosity you you pay, if and water saturation and net feet of don’t know net can’t pay unacceptable drainage area. reserve estimates. calculate Q. any validity your opinion you saying Q. Is there at in So all information you might provided in the results that obtain from that’s the results are invalid and Mississippi volumetric estimates Lime? invalid? A. No. Q. A. Yes.” you opinion Do an about Mr. Ben- have drainage computer ton’s calculation of the area? police which power destroys from cise of production the cumulative ratios of interest as of within the area of the units of the owners of the oil and rights vested numbers were cal- January 1978. These production leases held and the gas pro- the cumulative by taking culated owners under rights royalty vested of the the cumulative oil dividing by duction the unit well is locat- upon the tracts area all of the In the northern production. ed, who have shared 75,000 ratio in excess gas/oil wells had a in the 640- well with other owners the unit “any well which 1. Mr. H. testified that agree I years. fifteen acre units for about ra- gas/oil cumulative produced has with a based on case contentions Appellant’s 75,000 1 has to be high as as tio to date the record evi- law, authority, and statutory anybody’s definition.” called a dence. testified that in four He further part: in 87.1(d) provides Section was an additional well units where there jurisdic- had shown no three of the four wells shall “The Commission applica- additional reserves would recovered filing proper of a tion well, a result of the additional as therefor, given notice tion to be mar- appeared and these three wells above, (a) to de- provided Subsection uneconomic. ginally possibly economic or units of the well crease the size predomi- northern He concluded that in the wells to be drilled permit or to would drain 640 nantly gas area one well units, upon proper within the established acres. modifica- hearing that such proof at such establishing independent I re- order submit that either tion or extension or a review of the view of the evidence or prevent will or conclusion that supportive compels facts types the various preventing assist that one there is no substantial evidence said any or by statute prohibited waste the reservoir will gas portion well in the wastes, protect- or assist protect will unit, and therefore not drain inter- persons ing the correlative condi- there is no sup- source common ested in said ” knowledge of tions. Without added) (Emphasis ply .... evi- by substantial supported conditions empowered is thus The Commission dence, is defective Commission’s of a evidence is substantial where there and cannot stand. condi- knowledge of conditions or change of that there is no Thirdly, having decided size of the exist- change the to either tions change of condi- substantial evidence of a permit or to units drilling ing area, I can- predominantly gas tions in the existing in wells drilling the conclusion agree Majority’s not with the where such action in the oil area that the of conditions protect waste necessary prevent to is opposed as to increased de-spacing warrants the stat- fact that rights. The correlative one parties agree All that density drilling. of reme- a choice ute the Commission gives unit in the well will not drain a 640-acre Legislature by the recognition dies shows Therefore, there is predominantly oil area. remedy proper the in some instances that change of condi- substantial evidence of a other instances and in spacing, a in then question tion in such area and existing intensification statutory which deciding one of becomes Having remedy. proper units is the change of condi- dealing with this remedy remedies, it is incumbent given a choice of evidence. supported by substantial tion is remedy to use the upon the Commission that the Commission’s Appellants argue protect waste prevent will best supported by de-spacing is not choice of Producing & In Denver rights. correlative permits choice substantial evidence as such 177,184 State, P.2d Refining v.Co. rights. correlative protect waste and fails to “In strik- that: (1947), we stated 961 at 964 is un- such choice They argue further that of natu- conservation between ing exer- a balance unreasonable constitutional as it is an drilled; to be but permit additional wells correlative protection ral resources geolog- secondary economic, engineering and must latter reservoir rights, the for- determinants as exercise of ical are the actual a reasonable factors yield to In operator chooses to drill. to whether an mer.” oil response arguments from necessary to order Is the Commission’s acreage operators who coveted some re- record evidence prevent waste? The units, in re- the 640-acre included in from 640- in that flects plea of some mineral owners sponse to the units results to 160-acre acre units too proceeding at development that wells unnecessary many pace, slow ap- gas area covered predominantly with- up the 640-acre units elected to break economic waste.4 It plication, causing thus that waste any out price that the is common left units were would if occur gone from present from the 1960s to has intact. MCF, per two dollars twenty cents about per feet at two dollars and a billion cubic protect correla- necessary Is the order $350,000.00, pay costing for a well MCF will that order rights? my opinion It is tive but if the well is it is still economic waste protect correla- necessary to is not testified unnecessary. Appellees’ experts rights, destroys and violates tive but rapid develop- more that there would be Harris, the author Howard H. same. Mr. however, the fact de-spacing; ment under Corpora- “Modification an article entitled drilling if may be faster that there Pertaining to Orders tion Commission for up grabs are thrown does not leases May, dated Supply”, Common Source fact, prove Appellees’ experts, waste. Law Review Oklahoma Vol. would be difference testified 130: page at states recovery hydrocarbons whether owner has the “3. individual Each years are now or wells drilled ten right: predominantly Admittedly, now. oil its “A. nature of To the basic area, are necessary additional wells con- have its interests maintained oil; however, produce the record remain persons other tractual being applied indicates such are undisturbed, except abrogation insofar drilled to orders of the pursuant to effect accom- absolutely necessary in- permitting objective; plishment of the conservation density in the units. The Commis- creased [Emphasis ...” added] operators sion cannot assume re- concluding units are ground to leave oil and that smaller going However, rights, produce. protect is economical to if quired correlative estab- for increased fact that the operator apply ignored fails to den- Commission deprived sity, royalty owner is not without reme- 160-acre units lishment of leases, held dy. royalty right existing A has the to re- which were owner owners of quest drilling.5 op- production If the of and award- property, intensification of their erator, top had grants permis- parties after the who taken the Commission ed them to not the expectation sion to drill an well does drill leases in one, such an order. royalty may proceed might persuaded the owner the be to enter lease unit have been in exist- District Court in an action for cancel- The 640-acre and, develop early but for the lation for failure to manner ence since the 1960s orders, addition, of owners of the prudent operator. In there is the owner or guarantee rapid development more the land minerals under Most have received through de-spacing. would occur de- unit well is located would Because density royalty and increased orders of from the well. 100% the Commission, Commission, Spaeth Corporation Ward v. 5. 597 P.2d See 470 (Okl.1970). (Okl.1979). P.2d 993 “ process’ ‘Due a dual orders, significance, has has of such owner pertains procedure as it to and substan- proceeds with the other royalty shared it procedure law. As to means ‘no- tive If the mineral owners in the 640-acre unit. to be opportunity tice and an heard stands, owner of the Commission such order adapted orderly proceeding in an defend they will now own 100% or owners find that compe- case to the nature of the before to royalty partially of the attributable tent, impartial having jurisdic- tribunal well, stripped unit and have been depleted tion of cause.... substantive of production any participation of law, process may be characterized due may wells that be any additional well or reasonableness, of and as such a standard governmental section that for- drilled the exercise of the it is a limitation comprised That merly the 640-acre unit. ” police power.’ under royalty who have shared their parties that it was no There substantial statutory compulsion of the unit should exercise of necessary or a reasonable right of to share in the deprived any be the size of power to decrease police any additional wells that pre- order to might acreage be unit is a drilled in the and, so, waste, termi- by doing thereby vent inequity violation of their vest- gross and a of rights lessees vested leasehold nate rights. Thus, ed is no there owners in their royalty of certain rights pro- evidence that to necessary the order ordering instead of just production, of share but, fact, correlative the or- rights, tect The action of density. increased violates rights. der those invalid arbitrary, was therefore Indeed, unnecessarily entered in violation of Section unconstitutional Appellants’ takes the property for the bene- II Article of the Constitution 23 of fit of others and is an unreasonable exten- of deprives them of Oklahoma State police prevention sion of the power in of law process due property without their waste violates the thereby II, constitution- of Article Section violation Appellants. al In Oklahoma Nat- Oklahoma the State Constitution Amendment Co., ural Co. v. Fourteenth Gas Choctaw Gas in violation the United States (1951), 236 P.2d we stated that: to the Constitution America. “Although private rights yield to Majori- police they Further,

exercise of with the power, agree are not to I cannot it totally when states ty annihilated inter- conclusion thereby, Opinion’s support the Com- to is substantial evidence greater fered with to a extent than rea- remedy de-space mission’s choice of sonably necessary, taking into considera- by own- applications “past density because real object accomplished.” tion the to be uniformly devel- ers in the Also, v. Phillips in Cabot Co. Pe- Carbon source, and have not been the common oped Co., (Okl.1975), troleum 287 P.2d we is no There dispatch.” carried out with page stated at 679 that: con- support evidence in record power “The Commission’s clusion. regulate taking from the reservoir past respect With to the conclusion prevent protect waste and correlative not resulted density applications have rights, price even fixing produc- the common source development uniform taken, necessary accomplish tion so if applica- noted that supply, it should be purposes, these conservation does not ex- on a are submitted tions to increase overturning private tend to contracts basis, consequence obvious unit-by-unit the accomplish- not where for such necessary not same is there is the of which that ment.” Obviously, of wells on each unit. number State, 235,115 before, In v. P.2d only Skinner area one gas in the as stated of (1941), page portion 115 this Court the oil required, P.2d at well is while on up may required. said: to wells the area four under- supply predominantly contains oil past the that With conclusion respect pre- carried or areas and contains lying not been area density applications is devoid of different dispatch, gas underlying with record a dominantly out conclusion, except areas; this support that provided evidence to or further area Harper Hayes, 431 P.2d for the case or in oil area predominantly units and, fact, in in that (Okl.1964), approximately uniform shall be of areas a conclusion. case contradicts such clearly pre- and and units shape, size instance, one, except where an every be of area or areas shall gas dominantly an additional authorizing order was entered shape, and uniform size approximately well, Harper in Only a drilled. well was or gas area the units except that per- had the entered an and nonuniform size be of may areas in mitting drilling of wells a additional adjoin the units shape they when unit, the permitted 640-acre where number areas; ...” area oil or wells, at the time of the hear- additional re- Appellees that The record discloses ing case, in had not drilled. This smaller establish quested was in 26-22N-8W. The initial Section portion a and units in drilling well, well drilled in said section was an oil supply. subject source of common permission Harper obtained drill during units occurred of various Dismissals three wells in the unit on the more re- Relief proceeding. the course of theory more wells would that three oil re- clearly con- Appellees was quested gas sult. well was a The additional second 87.1(a) of Section trary provisions well. additional wells authorized The two was supply source of all unless the common appeared were not because it that drilled involved, a combination or unless these also be wells therefore would units units and oil reservoir when necessary drain the would not be unit. appealed The order separately defined. Further, application in Appellees their did units and separate gas de-spaced, did not establish request 26 be Section part separate that it is oil units. although the evidence reflects common course of supply. same hearing appeal, on Throughout Thus, instance of failure drill sole position. alternative Appellants urged an occurred in applied additional wells for remedy in this urged proper They that the application covered 640-acre unit not Ad- well authorization. case was additional in this cause. is an alternative ditional well authorization Appel- agreement Fourthly, I am respacing provided for Section position hearings lants’ both in the 87.1(a) as follows: appeal Appellee’s below and in this “... the Commission Provided defective application de-spacing for be- may of an addition- authorize de-space cause it the entire com- failed to drill- any spacing al well or position mon supply. Appellants’ source of ing any por- or portion units or or upon O.S.Supp. in this based regard was establish, thereof, may tions re-estab- or pertinent 87.1(a), provides § lish, or well reform part that the Commission: ” added) (Emphasis units.... “had to establish well power Thus, well permits statute specified approx- drilling units than all of the units authorization less shape imately covering size and uniform supply, requires all a common source of but perspec- or any supply, common source of in- supply to be common source oil supply, tive or common source respacing. volved in Oklahoma; ... within the State in its establish, reestablish, Majority Opinion mistaken or reform may Appellants urged unit-by- of differ- contention that

ent unit consideration of shapes sizes and when the Commis- sion source as well as for purposes de-spacing, determines that common purposes where the primary well authorization term expired, has but (increased density). Because this mistak- not terminate as to Union’s lessee interest en assumption, Majority states that: because the lease was within the former “It is to now allow inappropriate reversal of producing 640-acre disruptive unit? These grounds Commission’s order on which consequences yet are another why reason directly parties’ conflict with the position the Commission’s order cannot stand and below.” Although never re- Appellants should be reversed. quested de-spacing, it their was contention de-spacing undertaken, if it would I am authorized to state that Justice encompass have to the entire common join HODGES Justice me in SIMMS source of supply. Appellants What did re- this dissent. quest was increased of neces- sity would on a unit-by-unit basis.

Since 52 O.S.Supp.1978, 87.1(a), re- §

quires all of supply the common source

be involved de-spacing, the Commission’s defective,

order is and the order’s failure

deal with entire sup- common source of

ply another reason for its reversal by this

Court. Lastly, although I disagree do not with WILKINSON, Melvin T. the Majority’s holding that the Commission Petitioner/Claimant, personal jurisdiction lacked over Union Oil California, I disagree the conse- quential Majority results reached McGEHEE, Respondent, R.H. when they part conclude Corporation Commission’s order “is valid in- Risk, Carrier. Insurance Own sofar as it affects the rights interests California, of Union ofOil and is reversed No. 56851. adjudicate insofar as it attempts Supreme Court Oklahoma. rights of Union Oil of California.” The result of Majority Opinion to effec- 18, 1982. May tively change each 640-acre Rehearing unit in which Union has an Denial of interest As Corrected on into four 160-acre Sept.

as to every except one the 640-acre units consequences

Union. The effects and are

chaotic, leaving undetermined and uncer-

tain the parties liabilities against Union,

in each such 160-acre

whose interest is still fixed on the basis of

640-acre unit. Even if Union’s interest minimus,

de consequences the same.

For if example, overriding Union owns

royalty only interest one covering non-pro-

ducing unit, 160-acre the lessee on does

whose leasehold former 640-acre unit

well was located still have to continue to

account of a to Union the basis 640-acre If

unit? Union owns a covering lease unit, non-producing

one how it can lessor-royalty

terminate as owners notes owner in the unit. The then units but the Com- upon the 640-acre pre- the interest the Commission establish- concludes here mission correla- protection vention of waste and relief, the proper ment of 160-acre units Commission, rights requires tive that other relief notwithstanding the fact instance, delegate the responsibility available based on requests for initiation increased den- herein. drilling to whose in- sity subjective owners

Case Details

Case Name: Union Texas Petroleum, a Division of Allied Chemical Corp. v. Corporation Commission

Court Name: Supreme Court of Oklahoma

Date Published: Mar 9, 1982

Citation: 651 P.2d 652

Docket Number: 53181

Court Abbreviation: Okla.