Railroad Commission of Tex. v. Manziel
| Decision Date | 17 October 1962 |
| Docket Number | No. A-8779,A-8779 |
| Citation | 93 A.L.R.2d 432,361 S.W.2d 560 |
| Parties | RAILROAD COMMISSION OF TEXAS et al., Appellants, v. Dorothy N. MANZIEL et al., Appellees. |
| Court | Texas Supreme Court |
Hart & Hart, Austin, Will Wilson Atty. Gen., Austin, Linward Shivers and H. Grady Chandler, Assts. Atty. Gen., John E. Taylor, Marshall, for appellants.
Powell, Rauhut, McGinnis, Reavley & Lochridge, Austin, Chilcoate & Clark, Tyler, for appellees.
This direct appeal is the result of a suit filed by the appellees, Dorothy N. Manziel et al. in the 126th District Court of Travis County, Texas, to set aside and cancel an order of the Railroad Commission of December 12, 1960, permitting the appellants, the Whelan Brothers, to drill and inject water in their Eldridge #11 well located at an irregular spacing on the Whelan Brothers-Vickie Lynn unit 206 feet south of the boundary of the Manziel Estate-Mathis lease in the Vickie Lynn Field, Marion County, Texas. The Railroad Commission was the original defendant in this action; the Whelan Brothers intervened and aligned themselves in defense of the Railroad Commission's order. For convenience the parties will hereinafter be referred to as the Whelans, the Manziels and the Commission.
In addition to alleging irregularities in connection with the Whelans' application for the permit, the Manziels attacked the Commission's order on the grounds that it would cause waste, that it would result in the confiscation of the Manziels' property, that the permit was not necessary to protect the correlative rights of the Whelans', and that the order was in violation of the Commission's own rules.
After trial, the District Court entered a judgment cancelling the order allowing the Whelans to inject water at the irregular location, enjoining its enforcement and enjoining the Whelans from injecting water in their Eldridge #11 well under said order. The judgment of the District Court has been brought to this court for review under Art. 1738a, Vernon's Texas Civil Statutes, and Rule 499-a, Texas Rules of Civil Procedure.
The Vickie Lynn Field was discovered in February, 1956, and field rules were established by the Commission, effective August 20, 1956. The rules provide for 80-acre production units with the wells to be located on that unit 660 feet from lease lines. A well located 660 feet and more from lease lines is referred to as being at a regular location while a well located at a less distance is said to be at an irregular location. All the wells in the field were drilled according to this plan except the Manziel-Mathis lease and the well located thereon is spaced 330 feet north of the adjoining Whelan unit.
At the time of the trial, the Vickie Lynn Field was divided into three separate and distinct areas. The Whelans' property is referred to as the Whelan Brothers-Vickie Lynn Unit, and includes about 900 productive acres on which 11 producing wells have been drilled. The Manziels are the only other operators in the field and they control two units, the largest of which is referred to as the Manziel Estate-Whelan lease; it comprises about 1,135 producing acres and has 10 wells. The other unit is made up of three leases sometimes collectively referred to as the Hollandsworth leases (separately known as the Mathis, the Combs, and the Coleman leases), which were not acquired by the Manziels until 1960. The Mathis lease contains 40.36 acres, with one well; and the Combs and Coleman leases each include 80 acres, with one well on each lease. For a better understanding of the relative size and location of each of the units involved, a plat drawn from Exhibit 'A' is attached on opposite page.
The field has not been unitized as a whole, but the Whelans have unitized all of the properties of which they are lessees; however, no unitization agreement has been made between the Whelans and the Manziels. The Manziels have not unitized all of the properties under their control, and the situation in the Vickie Lynn Field is further complicated by the fact that the Manziels have a waterflood program on their Whelan lease, and have no such program on their Hollandsworth leases.
The Vickie Lynn Field is in a solution gas drive reservoir, and it is estimated that between 816 barrels to 824 barrels of oil per acre foot were originally in place beneath the field. As production was carried out, the resultant displacement and the failure to maintain adequate pressure has caused the original pressure to drop from 2650 pounds per square inch to the point where it is now of an average of 371 pounds per square inch. The present low pressure in the reservoir means that the remaining oil is 'dead,' and from the record it appears that the best means of recovery thereof is by the secondary method of waterflooding.
The Hollandsworth leases of the Manziels are located in the northwestern part of the field, and the result of the production from these leases and the effect of the existing water injection programs on the Manziel estate-Whelan lease and on the Whelan Brothers-Vickie Lynn Unit is to push the oil in a northwesterly direction to the Hollandsworth leases. The purpose of the Whelans Eldridge #11 well is to increase reservoir pressure and to minimize the amount of oil which is pushed from their unit, across lease lines, to the Hollands-worth leases, and particularly the Manziel Estate-Mathis lease. Of the Hollandsworth leases, the Manziel Estate-Mathis lease is in the closest proximity to the operations of the Eldridge #11 well of the Whelans, and if the operations can be held valid in relation to the Mathis lease they are valid as to the rest. It is the Whelans' contention that in a situation such as exists in this field their waterflood program must have the dual purpose of efficient recovery of oil from producing wells on their property and the prevention, so far as is possible, of the loss of oil from beneath their lease due to the pushing or drainage of oil to other properties.
If all the oil here in question were located under one tract, it is established that the most recovery from the entire field would be through a plan of peripheral flooding around the edges to the field, thus sweeping the oil from the south and southwest down-structure to the north and northwest. In regard to the Whelan Brothers-Vickie Lynn Unit it was shown that the flooding pattern was planned so recovery of an estimated 930,000 barrels of oil from under that lease could be made. The plan was not set up out of a consideration of what pattern would result in the most recovery from the entire field; but rather a plan was used that would result in the most recovery from that one lease.
Water injected into an oil reservoir generally spreads out radially from the injection well bore, and it is impossible to restrict the advance of the water to lease lines. For example, water injected into the Manziel Estate #8 well has already crossed the boundary of the Whelans' unit and as more water is injected further encroachment will take place until finally the Whelans' Craver well is drowned out. It is just such an encroachment upon the Mathis lease by water injected in the Whelans' unit that the Manziels seek to prevent.
Regardless of whether the Eldridge #11 well is located at a regular or irregular location any water injection program on the Whelans' unit will cause oil to be pushed from their unit to the Hollandsworth leases. However, it is estimated that four times as much of the oil presently beneath the Whelans' lease will be pushed to the Hollandsworth leases if the injection well is located 660 feet from the lease line as opposed to a 206-foot location. On the other hand, the Manziels-Mathis well would have an estimated life of 32 months if the Eldridge #11 well is placed at a regular location 660 feet from lease lines while if the irregular spacing is used the life of the well would be reduced to 3 1/2 to 8 months depending on the rate of production and injection of the respective wells.
During the primary stage of the field, the Mathis lease enjoyed a great drainage advantage as is shown by the following production figures:
PRIMARY RECOVERY
----------------
% of Oil in
Place Before % of Total
Acres Production Production Field Recovery Wells
-------- ------------- ------------ -------------- -----
Mathis 40.36 44,034 bbls. 1.8%- 2.4% 5.8% 1
Remainder
of Field 2,195.00 709,006 bbls. 97.6%-98.8% 94.2% 23
Now, however, the field is in a secondary recovery stage, and with the location of the Eldridge #11 well at a 206-foot location these additional figures are relevant:
SECONDARY RECOVERY
------------------
Estimated
% of Total
Estimated Secondary # of Injection
Acres Production Recovery Wells
-------- ---------- ---------- ---------------
Mathis 40.36 9,202 .83% 0
Remainder of Field 2,195.00 1,090,798 99.17% 4
The Commission takes the position that it must have the authority to grant the location of water injection wells to prevent drainage and to protect correlative rights in order to encourage operators to initiate secondary recovery programs. The Commission contends that there would be no incentive to engage in this method of increasing the recovery of oil unless the operator is allowed to use effective methods his property. his proerty.
The Manziels concede that the Whelans have the right to protect their leases from drainage,...
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