Nunez v. Wainoco Oil & Gas Co.
| Decision Date | 20 May 1986 |
| Docket Number | No. 85-C-2307,85-C-2307 |
| Parties | Adam G. NUNEZ v. WAINOCO OIL & GAS COMPANY, Tidewater Realty, Inc., Tidewater Barges, Inc., Wilshire Oil & Gas Company of Texas, Southern Cross Limited of Colorado, C.D.C. Producing Company, Williams Exploration Company, Southport Exploration, Inc., the John W. Mecom Company, T. Keith Marks, Donald F. Todd, Cynthia Todd Hendon, Ronald E. Martin, Guy V. Land, Remuda Corporation, Lawrence Barker, Jr., H.T. Freeman, Trustee, Joe Ramos, Trustee, William W. Wilson, Trustee, A.K. Mittelstaedt, Trustee, Robert E. Miller, Irving Pollack, John C. Kinard, Dan W. Williams, Andrew R. Fish, Harry Dernick, Dernick Resources, Inc., Marinex Petroleum Company, Roger and Company, Wynn & Associates, Exchange Oil & Gas Corporation, Leon County Development Company, Inc. and Cameron Development Company, Inc., 488 So.2d 955 |
| Court | Louisiana Supreme Court |
Robert T. Jorden, Kerry M. Massari, Lawrence P. Simon, Jr., Martha Q. Thomas, Liskow & Lewis, Lafayette, John M. McCollam, Gordon, Arata, McCollam, Stuart & Duplantes, New Orleans, Edmund McCollam, McMahon & McCollam, Houma, for defendant-applicant.
Adam Nunez, Sulphur, for plaintiff-respondent.
We granted writs to determine whether the intrusion of a well bore (several inches in diameter) into the earth, at a point two miles beneath the surface, constitutes a trespass on the surface owner's property, where that property is included in a drilling unit created by the Commissioner of Conservation. Further, if a protected interest is involved, we are asked to consider whether La.Rev.Stat.Ann. Sec. 30:1 et seq () supercedes the surface owner's right to absolute control of the subsurface as apparently envisioned by La.Civ.Code Ann. art. 490.
FACTS:
On July 8, 1980, R.T. Sutton, the Commissioner of Conservation at that time, signed Order Nos. 1095 and 1016-B-2 to establish rules and regulations in the creation of three drilling and production units for the Lower Abbeville A Sand, Reservoir A, in the West Cameron Block 10 Field and Ocean View Beach Field, Cameron, Louisiana. 1 These orders followed a public hearing during which the geology of the area was discussed with regard to varying proposals for the creation of units as well as the optimum location for drilling wells within the units. 2 At the hearing, it was established that the highest structural position within Sand Unit F, and therefore the optimum position for location of the well which would be drilled within Sand Unit F, was in the western portion of the 350 acre unit and included the area of a small unleased tract owned by plaintiff, Adam Nunez. Although Wainoco Oil Company, which had begun exploring the Lower Abbeville A sand in 1977, had leased several tracts within Sand Unit F, the company had not acquired a lease on the Nunez tract. In declining to lease his land, Adam Nunez had opted to bear personally the financial risk of paying his share of drilling in return for the right to recover 100% of the production attributable to his tract's participation in the unit, rather than just a fractional royalty interest.
On August 25, 1980, Wainoco filed an application with the Office of Conservation to drill the R.R. Stone No. 1 well within the surface boundaries of the recently created unit. The permit was granted on September 23, 1980. Although Wainoco proposed to drill on the Stone tract on which they possessed a lease, the company contacted all owners in Sand Unit F prior to commencing operations to offer insurance coverage for the drilling and to submit an authority for expenditure setting forth the anticipated cost of drilling. All owners, including plaintiff Adam Nunez, agreed to advance proportionate shares of the costs for the Stone well.
Neither the application nor the permit, however, specified that drilling was limited to the unitized sands. In fact, both stated that any zone or reservoir to a depth of 14,000 feet was a possible target. And the greatest depth at which Lower Abbeville A Sand, Reservoir A had been defined by the Department of Conservation was at 12,130 feet. 3 The well permitted on September 23 then was one that could be drilled deeper than the Lower Abbeville A Sand had been defined thus far. The permit did specify, however, that the well was subject to Department of Conservation Order Nos. 29-B, 29-E, and 1016-B-2. Order Nos. 29-B and E are statewide rather than unit orders, which outline pertinent drilling regulations and specific well spacing. 4 Order No. 1016-B-2, mentioned at the outset of the opinion, created Sand Unit F in the Lower Abbeville A sand, and its rules and regulations would be applicable to the well drilled by Wainoco if it produced from the Lower Abbeville A Sand. Generally, a state-wide order is directed toward the prevention of physical waste through the conduct of proper drilling practices, while the field or unit order is more concerned with the prevention of underground waste and maximum recovery of hydrocarbons. H. Daggett, Mineral Rights in Louisiana 487 (1949).
The location of the Stone well, according to the original permit, was in accordance with the optimum position for the Sand Unit F well as determined by the pre-unitization public hearing. 5 The actual location of the well, also considered an optimum location, was one foot farther north and 22 feet to the west of the permitted site, which placed it approximately 20 feet from a boundary of the Nunez tract. (It should be noted that the proximity of either site to Nunez property would have violated Order No. 29-E and prevented production should a unit not have been created.) Allegedly, the movement of the well was prompted by the proximity of the Boudreaux residence. 6 The drilling permit was not amended, however, until February 11, 1982 to reflect the well's actual location. 7
Drilling at the altered site had reached 10,000 feet by November 4 or 5, 1980. A directional survey, performed only in response to plaintiff's lawsuit, indicated that the well bore had entered Nunez property at that point and time; that it crossed back into Stone property before re-entering the Nunez tract on November 8 or 9 at 11,000 feet; and that it was ultimately bottomed 4 or 5 feet onto Nunez property although the intrusion may have persisted vertically for almost 750 feet, between depths of 11,000 feet and 11,730 feet. According to the directional survey, then, the deviation from the well's surface location to the bottom hole was significantly less than five degrees. A well bore that has less than a five degree deviation from the vertical is by definition a straight hole under the provisions of Order No. 29-B, a statewide order made specifically applicable to defendant's September 23, 1980 drilling permit.
Before the well could be completed and production begun, it was necessary that it be designated the unit well for Sand Unit F, which as noted earlier had been created on July 8, 1980 by Order Nos. 1095 and 1016-B-2. Consequently, after determining that the well could be produced from the unitized sand, Wainoco applied to the Department of Conservation to amend the well name from R.R. Stone to L ABB A RA SUF, Stone No. 1. An amended permit was issued on December 8, and on December 23, 1980, the well was completed. It thereupon began producing as the unit well for Sand Unit F. 8
PROCEDURE:
On August 21, 1981, Adam Nunez filed suit in the 38th Judicial District Court, Parish of Cameron against Wainoco Oil Company and other owners within Sand Unit F. He alleged that the Stone No. 1 well was bottomed in his property, and that same constituted a trespass. He sought an injunction ordering Wainoco to remove the well bore. The suit was dismissed on the ground that it was a collateral attack upon an order of the Commissioner of Conservation. The lawsuit was thereupon filed in the 19th Judicial District Court, East Baton Rouge Parish, and the Commissioner of Conservation and other owners of working interests in Sand Unit F were added as defendants.
Plaintiff moved for summary judgment on the issue of his right to an injunction, and the defendants filed a cross-motion for summary judgment asking that plaintiff's suit be dismissed if the court upheld the Commissioner's authority and duty to designate the unit well. The trial judge denied plaintiff's motion; he granted the motion for summary judgment on behalf of the Commissioner of Conservation and dismissed the Commissioner as a defendant; and he granted partial summary judgment in favor of the other defendants, affirming the Commissioner's refusal to order removal of the well and the right of the other defendants to continue to operate the well.
On appeal, the First Circuit affirmed the motion for summary judgment granted in favor of the Commissioner of Conservation, which dismissed him from the suit. The court concluded that "the commissioner was within his authority to issue the unitization order and to designate a unit well thereon." However, with regard to the other defendants, the First Circuit ruled that the Commissioner's order did not and could not authorize drilling on or under unleased property without the consent of the landowner. Thus, the Court of Appeal panel held that "[i]f in drilling this well, the unit operator enters onto or drills under property in or out of the unit without permission from the owner of the land, the operator has committed a trespass." Accordingly, the case was remanded to the trial court for a determination of whether a trespass took place and, if so, whether the trespass was in good or bad faith. Citing case law, the court reasoned that any bad faith trespasser would be compelled to remove the encroachment and to pay damages.
A subsurface trespass is defined as
The bottoming of a well on...
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