Masonite Corp. v. State Oil and Gas Bd.
| Decision Date | 26 October 1970 |
| Docket Number | No. 45890,45890 |
| Citation | 240 So.2d 446 |
| Court | Mississippi Supreme Court |
| Parties | MASONITE CORPORATION v. STATE OIL & GAS BOARD of Mississippi, Earl R. Wilson and Hilton L. Ladner. |
Peterson & Harper, Jackson, for appellant.
Brunini, Everett, Grantham & Quin, E. L. Brunini, Jr., John M. Grower, Jackson, for appellee.
This is an appeal by Masonite Corporation from a judgment of the Circuit Court of Clarke County affirming an order of the State Oil & Gas Board granting appellees, Earl R. Wilson and Hilton L. Ladner, a permit to drill a well as an exception with full allowable in the Harmony Oil Field located in Clarke County. We affirm.
On July 14, 1969, appellees Wilson and Ladner filed their application for a permit to drill a well as an exception to the special filed rules of the Harmony Field. The application requested that the location be fixed at a point 300 feet from the west line and 200 feet from the south line of the south half of the northwest quarter of Section 21, Township 2 North, Range 15 East, on the unit designated as Benson-Kramer Unit 21-5. After due notice the State Oil & Gas Board, hereinafter referred to as Board, held a hearing on the application. Appellant Masonite Corporation and others appeared and objected to the granting of a full allowable for the well. None of the objectors contended there, and Masonite does not contend here, that the applicants were not entitled to drill the well as an exception.
The first factual question developed before the Board was the number of acres of this unit that were underlain by hydrocarbons. Wilbut Knight, an expert geologist, testified on behalf of applicants and it was his opinion that there was a minimum of 12.05 acres of this unit underlain by hydrocarbons, which would contribute to and was capable of delivering oil to the proposed well bore. Tom McGlothlin, an expert consulting geologist, testified on behalf of the objectors and it was his opinion that no more than three or four acres of this unit were underlain by hydrocarbons. He further thought that if the well were drilled at the proposed location it would not produce. A study of the testimony of these two expert witnesses reveals that their difference of opinion grew out of their opinion as to the location of the permeability barrier. A dry hole was drilled on the east half of this unit and there are producing wells on the units to the south and west of the unit in question. Both experts were of the opinion that the permeability barrier is located at some point on this unit.
The Board determined from the evidence that there were more than 11.5 acres of this unit underlain with hydrocarbons and granted appellees a permit to drill a well at the proposed location with a full allowable for the unit as provided by the provisions of Section 6132-21, Mississippi Code 1942 Annotated (Supp.1968).
Appellant contends tht the circuit court erred in failing to hold (1) that the order of the Board was arbitrary and capricious and is contrary to public policy and is in contravention of the laws of the State of Mississippi ans the rules and regulations of the State Oil & Gas Board, and against the weight of the evidence; (2) that the order is arbitrary and capricious in granting a full allowable on the oil and gas produced, contravenes, and is in violation of the declared policy of the state as set forth in the conservation statute in that the order failed to protect the co-equal and correlative rights of the owners in the Harmony Field and fails to prevent waste as the term is defined in Section 6132-08(k), Mississippi Code 1942 Annotated (1952); (3) that the order is arbitrary and capricious and is in violation of the Constitution of the United States and the State of Mississippi.
We find no merit in the first two contentions made by appellant. It is unnecessary to belabor the point made by appellant that the order of the Board is against the great weight of the evidence. Suffice it to say that the standard in this state for judicial review of the order of the State Oil & Gas Board is well settled. In Superior Oil Co. v. State Oil & Gas Board, 220 So.2d 602 (Miss.1969), we restated the rule first announced in California Co. v. State Oil & Gas Board, 200 Miss. 824, 27 So.2d 542 (1946), and it is as follows:
The standard for judicial review of orders of the State Oil and Gas Board is whether the order is supported by substantial evidence, is arbitrary or capricious, beyond the power of the Board to make, or violates some constitutional right of the complaining party. (200 Miss. at 842, 27 So.2d at 546).
There is no doubt that there is substantial evidence to support the finding of the Board on this issue.
The order of the Board allowing the full allowable is not arbitrary and capricious and not in contravention of public policy of this state. The legislature provided by the provisions of Section 6132-21(c), in part, as follows:
(c) 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 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; provided, however, that each well drilled and completed as an exception to prescribed footage limitations for the reason that a portion of such drilling unit is partly outside the pool or productive horizon shall be allocated a reduced daily production allowable whenever it cannot be demonstrated to the satisfaction of the board that the productive acreage underlying such drilling unit is equal to, or more than, the 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. Such reduced allowable shall be allocated in proportion to the relationship which the productive acreage, as determined by the board, bears to 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 footage limitations applicable to such drilling unit. (Emphasis added).
Appellees demonstrated to the satisfaction of the Board (1) that an exception was reasonably necessary to obtain production, and (2) sufficient acreage was underlain by hydrocarbons to permit the full allowable as required by the foregoing statute. The Board was prohibited by the statute from allocating a reduced daily production. The Board is a creature of the legislature and it has no powers other than those delegated to it by the legislature. It must follow the mandate of the legislature and it had no choice after having found that appellees had demonstrated...
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