Dodds v. Ward

• Decision Date: 02 August 1966
• Docket Number: No. 41460,41460
• Citation: 418 P.2d 629
• Parties: Newell DODDS, Plaintiff in Error, v. L. O. WARD, Defendant in Error.
• Court: Oklahoma Supreme Court

Page 629

418 P.2d 629

1966 OK 153

Newell DODDS, Plaintiff in Error, v. L. O. WARD, Defendant in Error.

No. 41460.

Supreme Court of Oklahoma.

Aug. 2, 1966.

Rehearing Denied Sept. 27, 1966.

Syllabus by the Court

1. Allowables established by the Corporation Commission need not be exclusively on a 'per well' basis with no other factors considered.

2. 'Correlative rights' is a convenient term for indicating that each owner of land in common source of supply of oil and gas has legal privileges as against other owners of land therein to take oil and gas therefrom by lawful operations conducted on his own land, limited however, by duties to other owners not to injure source of supply and not to take an undue share of oil and gas.

3. By due process of law is meant an orderly proceeding adapted to the nature of the case, before tribunal having jurisdiction, which proceeds upon notice, with opportunity to be heard, with full power to grant relief.

4. Order of Corporation Commission will be affirmed if sustained by law and substantial evidence.

Appeal from the Corporation Commission, State of Oklahoma.

Application of L. O. Ward to the Corporation Commission of Oklahoma for an increased allowable for its No. 1 Beasley well. From the order of the Commission granting the application, Newell Dodds appeals. Affirmed.

Charles G. Huddleston, of Otjen, Carter, Huddleston & Otjen, Enid, for plaintiff in error.

Ferrill H. Rogers, Oklahoma City, for Corporation Commission.

Brown, Verity & Brown, Oklahoma City, for defendant in error.

HALLEY, Chief Justice.

This is an appeal by Newell Dodds from an Order of the Corporation Commission entered after proceedings were initiated there by L. O. Ward for the purpose of obtaining an increased allowable for the No. 1 Beasley well located in the NE/4 of the SW/4 of Section 28, Township 23 North, Range 6 West, I.M., Garfield County, Oklahoma. The parties will be referred to herein by the use of their respective names. Dodds is the owner of an undivided 20 acre mineral interest under the entire SW/4, and before these proceedings were commenced, Ward obtained an agreement from all the other owners of royalty under the SW quarter, except Dodds, not to demand the drilling of another well on the quarter section (which was subject to an 80 acre drilling and spacing order) in the event that Ward should be successful in obtaining an increased allowable for the No. 1 Beasley well.

Pertinent portions of the findings and order of the Commission are as follows:

1. That this is an Application of L. O. Ward for an allowable to be produced from the No. 1 Beasley well located in the NE/4 of the SW/4 of Section 28, Township 23 North, Range 6 West, Garfield County, Oklahoma, from the Mississippi Lime formation.

2. That by Order No. 57076 80-acre drilling and spacing units have been established in this area for the production of oil and gas from the Mississippi Lime, and the SW/4 of Section 28 constitutes two of said units; that by Order No. 56283 the No. 1 Beasley is the permitted well for the unit on which it is located, and it is the testimony in this cause that the entire SW/4 of Section 28 is underlain by productive Mississippi Lime; that one well will drain the recoverable oil therefrom, and the No. 1 Beasley is capable of producing in excess of two allowables.

3. That in the interest of securing the greatest ultimate recovery of oil from the pool, the prevention of waste, and the protection of correlative rights, this application should be granted, effective as of November 4, 1964.

The Commission then granted Ward an allowable from the Mississippi Lime for the No. 1 Beasley well at the rate of 180% Of the current allowable for wells in the pool so long as there is only one well completed in the formation in the SW/4 of Section 28, and Ward was further permitted to produce said well on such basis from and after November 4, 1964, and to produce any underage that may have accumulated to said well on such basis from the date of November 4, 1964.

Dodds appeared in opposition to Ward's application before the Commission, and now appeals from the Commission's Order, presenting five propositions.

The first is to the effect that the order is in violation of the statutes of Oklahoma limiting the spacing of oil wells to eighty acres. In support thereof, he refers to 52 O.S. 1961, § 87.1(c) which provides:

'The Commission shall not establish well spacing units of more than 80 acres in size covering common sources of supply of oil the top of which lies less than 9,990 feet and more than 5,000 feet below the surface as determined by the original or discovery well in said common source of supply.'

He argues that since the depth of the well concerned herein was shown to be 6,668 feet, that it is brought squarely within the statutory limitation.

We cannot agree. By the terms of the Commission's Order No. 56283, the No. 1 Beasley is a 'permitted' well, and as such an exception, the Commission may follow the provisions of 52 O.S. 1961, § 87.1(b), the last sentence of which is as follows:

'Whenever such an exception is granted, the Commission shall adjust the allowable production for said spacing unit and take such other action as may be necessary to protect the rights of interested parties.'

The exception granted by the Commission to the No. 1 Beasley well is not questioned by Dodds, and is in accord with the general practice of the Commission, having been granted, as is pointed out by the evidence, by the proximity of the land in question to the city of Enid in an area built up, to an extent, by substantial homes. Since the No. 1 Beasley well was an 'excepted' well as outlined above, the Commission was authorized by the last sentence of Sec. 87.1(b) quoted above, to 'adjust the allowable production' for the spacing unit in which it is located.

Dodds, for his second proposition, asserts that his correlative rights have been violated, that this constitutes a violation of due process, contravenes Article I, Section 10 of the Constitution of the United States, the Fourteenth Amendment of the Constitution of the United States, and Article II, Sections 2, 7, 15 and 23 of the Constitution of the State of Oklahoma.

As stated in the case of Kingwood Oil Company v. Corporation Commission, Okl., 396 P.2d 1008, the term 'correlative rights' has been defined as follows:

'The term 'correlative rights' has been defined as a convenient method of 'indicating that each owner of land in a common source of supply of oil and gas has legal privileges as against other owners of land therein to take oil and gas...