Okla. Natural Gas Corp. v. State

• Decision Date: 14 June 1932
• Docket Number: Case Number: 22061
• Citation: 161 Okla. 104,17 P.2d 488,1932 OK 463
• Parties: OKLAHOMA NATURAL GAS CORP. v. STATE et al.
• Court: Oklahoma Supreme Court

1932 OK 463

17 P.2d 488

161 Okla. 104

OKLAHOMA NATURAL GAS CORP. v. STATE et al.

Case Number: 22061

Supreme Court of Oklahoma

Decided: June 14, 1932

Syllabus

¶0 Gas--Gas Proration Order of Corporation Commission Sustained.

The order of the Corporation Commission made to enforce gas proration, complained of in this action, is affirmed.

Appeal by the Oklahoma Natural Gas Corporation from an order of the Corporation Commission of the State of Oklahoma. Order affirmed.

Allen, Underwood & Canterbury, for plaintiff in error.

James W. Finley, Hayes McCoy, R. E. Cullison, Johnson & Jones, and S. A. Horton, for defendants in error.

KORNEGAY, J.

¶1 This is an appeal from an order of the Corporation Commission, made concerning the taking of gas under the gas proration law of the state. The order of the Commission is as follows:

"Findings of Fact, Opinion and Order.

"On the 16th day of November, 1929, complainants Ed Gardner W. M. Dowell, A. A. Dowell, Tom McVey and Theodore Watson, filed their complaint with this Commission against respondents the Oklahoma Natural Gas Corporation and the Empire Gas & Fuel Company, in which the Commission is asked to make and enter an order requiring the Empire Gas & Fuel Company to connect its pipe line or lines with a certain gas well designated as Shannon No. 1, located in sec. 36, twp. 15 N., range 7 E. Creek county, Okla., and to take therefrom an amount of gas sufficient to equalize the takings from said well as compared with the gas taken from other wells with which the Empire Gas & Fuel Company's lines are connected in the same vicinity, and asking that the Oklahoma Natural Gas Corporation be ordered, directed, and required to permit the said Empire Gas & Fuel Company to connect its pipe line to said well for the purpose of equalizing the takings therefrom as compared with the taking from other wells offsetting same, to which the Empire Gas & Fuel Company's lines are now connected.

"The complaint sets forth that complainants are the owners of a one-eighth oil and gas royalty interest in and to 72 1/2 acres located in the NE 1/4 of the NE 1/4, and the NE 1/4 of the SE 1/4 of the NE 1/4 and the W 1/2 of the SE 1/4 of the SE 1/4 of the NE 1/4 and the SW 1/4 of the SE 1/4 of the SE 1/4 of the NE 1/4 and the E 1/2 of the W 1/2 of the SE 1/4 of the NE 1/4 and the E 1/2 of the W 1/2 of the W 1/2 of the SE 1/4 of the NE 1/4, all in sec. 36 twp. 15 N., range 7 E., Creek county, Okla., and that the Olean Petroleum Company, a corporation, is the owner and holder of an oil and gas mining lease covering said above-described premises and that said Olean Petroleum Company had, in the month of November, 1926, entered into a contract with the respondent Oklahoma Natural Gas Corporation by the terms of which the said Oklahoma Natural Gas Corporation was to purchase and remove from the lease above described, the natural gas then being produced and to be produced in the future on said lease from two gas wells which had been drilled and completed thereon--the wells being known and designated as Shannon No. 1 and Shannon No. 2; that Shannon Well No. 1 since its completion in the month of November, 1926, has had an open flow capacity of 65,000,000 cu. ft. of natural gas per day; that the Lima Oil & Gas Co. are the owners of an oil and gas lease covering the SW 1/4 of the SW 1/4 of sec. 30, twp. 15 N., range 8 E., Creek county, Okla., and that said company on or about the 1st day of November, 1926, drilled to completion two natural gas wells located in the SW corner of the lease described, the wells being commonly known and designated as Benjamin No. 2 and Benjamin No. 3; that the well known and designated as Benjamin No. 2 has an open flow of 15,204,000 cu. ft. of natural gas per day, and that the well known as Benjamin No. 3 has an open flow of 42,177,000 cu. ft. per day; that the Empire Gas & Fuel Company has, since the month of November, 1926, under the terms of a written contract entered into with the Lima Oil & Gas Co., purchased and removed from this lease the natural gas produced therefrom in quantities very largely in excess of the amount of gas which the Oklahoma Natural Gas Corporation was able and willing to purchase or take from the wells in which these complainants are interested as royalty owners, notwithstanding the fact that the well known as Shannon No. 1 in which said complainants are interested as royalty owners has an open flow capacity of gas in excess of the combined open flow of both the wells belonging to the Lima Oil & Gas Company to which said Empire Gas & Fuel Company has connected its lines; that since November 1, 1926, and up to and including September 30, 1929, the Oklahoma Natural Gas Corporation has purchased and removed from the wells owned by these complainants and in which they are interested as royalty owners, 1,177,151,000 cu. ft. of natural gas, while the Empire Gas & Fuel Company has purchased and removed from the offsetting wells belonging to the Lima Oil & Gas Company and described as Benjamin Well No. 2 and Benjamin Well No. 3, 3,416,072,000 cu. ft. of gas, or 2,238,921 000 cu. ft. of gas in excess of the amount which the Oklahoma Natural Gas Corporation has been able or willing to take from the well of these complainants or from the well in which they are interested as royalty owners; and that by reason of said unequal taking as between the Oklahoma Natural Gas Corporation and the Empire Gas & Fuel Company, complainants have been and are now sustaining great and irreparable damage and loss from the fact that the gas belonging to complainants owing to the inequitable and unequal taking as between two said common purchasers of gas, is being drained from beneath the premises of complainants and the wells in which they are interested and taken out from the wells offsetting those of complainants and to which the lines of the Empire Gas & Fuel Company are now connected and belonging to the Lima Oil & Gas Company. A plat was attached to the complaint showing the location of the wells and their relative position in the common pool under consideration.

"It is then charged that the Empire Gas & Fuel Company and the Lima Oil & Gas Company, as well as the fee and royalty owners, are securing an unfair proportion of the gas in said field in violation of sec. 7923, C. O. S. 1921, in that respondents Oklahoma Natural Gas Corporation and the Empire Gas & Fuel Company, common purchasers of gas from such common source of supply, are not purchasing natural gas from each producer in said pool ratably in proportion of the natural flow of the gas wells owned by producers in said field, as required by said section 7923, C. O. S. 1921.

"To this complaint both the Oklahoma Natural Gas Corporation and the Empire Gas & Fuel Company filed responses; the Empire Gas & Fuel Company waiving the issuance of process or the serving of notices prescribed by law, and entering its appearance specially for the purpose of objecting to the jurisdiction and power of the Commission to grant to complainants the relief prayed for, for a number of reasons, the particular ones being as follows, to wit:

"1. That sections 7923 and 7924, C. O. S. 1921, do not purport to confer jurisdiction or power on the Commission to require parties to break contracts for the sale and purchase of natural gas and the delivery thereof between contracting parties.

"2. On the ground that complainants had not shown that sec. 7923, C. O. S. 1921, has been violated nor that respondent Empire Gas & Fuel Company has taken more gas from the gas wells to which it is connected than the proportion of the natural flow of the wells to which it is connected as compared with the natural flow to the common source of supply, and that respondent has not at any time taken more of the open flow than it is permitted to take under the laws of the state of Oklahoma and the rules of this Commission, nor more than may be marketed without waste from said source of supply and generally, that the language of sec. 7924 does not require respondent to purchase ratably from those from whom it has not contracted to take gas, and that a requirement such as is contemplated by complainants herein would be in violation of subdivision 1 of sec. 10 of art. 1 of the Constitution of the United States which provides that: 'No state shall * * * pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts, or grant any title of nobility.'

"3. That respondent Empire Gas & Fuel Company is a producer and purchaser of natural gas in several states transporting same by means of large pipe lines connected into one unified system through which it transports gas into many and through the states of Texas, Oklahoma, Kansas and Missouri, and is engaged in the sale of large quantities of natural gas at wholesale in the different states in one commingled and unseparable mass from the initial points of production to the ultimate point of delivery, the actual volume of which amounts to from two hundred million to three hundred million cubic feet, and that said business is commerce among the several states as used in clause 3 of sec. 8 of art. 1 of the Constitution of the United States of America and is of national and not local concern, subject only to regulation by the Constitution of the United States of America, and that complainants are seeking to have the Commission to attempt to regulate interstate commerce which it has no authority to do.

"The response of the Oklahoma Natural Gas Corporation raises substantially the same question and objects to the jurisdiction of the Commission and to the authority of the Commission to grant the relief prayed for. In addition it alleges that it is a public service corporation engaged in the production, transmission and distribution of natural gas in the various cities and towns of the state of Oklahoma and that it has undertaken the public duty of supplying gas to the citizens and residents, both domestic and

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