Railroad Commission v. Shell Oil Co.

• Decision Date: 30 September 1942
• Docket Number: No. 9243.,9243.
• Citation: 165 S.W.2d 502
• Parties: RAILROAD COMMISSION et al. v. SHELL OIL CO., Inc.
• Court: Texas Court of Appeals

165 S.W.2d 502

RAILROAD COMMISSION et al. v. SHELL OIL CO., Inc.

No. 9243.

Court of Civil Appeals of Texas. Austin.

September 30, 1942.

Rehearing Denied October 28, 1942.

Appeal from District Court, 126th District, Travis County; Roy C. Archer, Judge.

Suit by Shell Oil Company, Incorporated, against Railroad Commission of Texas and others to cancel certain oil drilling permits and to enjoin the production of oil from specified wells as an exception to spacing rule 37. From a judgment for plaintiff, defendants appeal.

Affirmed.

Gerald C. Mann, Atty. Gen., and Fagan Dickson, E. R. Simmons, Tom D. Rowell, Jr., and James D. Smullen, Asst. Attys. Gen., for appellant, Railroad Commission of Texas.

Wheeler & Wheeler, of Austin, for appellants John Wrather and Pat O'Brien.

R. H. Whilden, of Houston, and Greenwood, Moody & Robertson and J. B. Robertson, all of Austin, for appellee.

McCLENDON, Chief Justice.

Rule 37 case. The appeal is by the Commission and the permittees from a judgment cancelling permits to drill two wells on a strip of land 36.3 feet wide and 600 feet long in the western portion of the East Texas Oil Field in order to prevent confiscation and waste; and awarding injunctive relief. It was conceded that the permits could not be upheld on the confiscation theory; and that subject will not be further noted.

Upon the issue of waste the case is clearly ruled by the Trem Carr case (Railroad Com. v. Shell Oil Co., Tex.Sup., 161 S.W.2d 1022), and the subsequent decision of this court in the Letwin case (Letwin v. Gulf Oil Corp., 164 S.W.2d 234.) The permits were sought to be upheld upon a showing that, due to the water encroachment in this section of the field, these wells would recover about 6,400 barrels of oil (about 3,200 barrels each) that would not be recovered by the other wells in the area. It was shown, however, without controversy, that this condition was not peculiar to the tract in question, but prevailed throughout the eight times surrounding area as well as generally throughout the western portion of the field. The situation thus presented was analogous to that in the Trem Carr case, and on all fours with that in the Letwin case. We deem it unnecessary to detail the evidence; and refer to the Letwin opinion for our interpretation of the Trem Carr case as applied to the fact situation in the case at bar.

Appellants also sought to defeat the suit upon a plea of laches; the pertinent facts regarding which plea were: The well No. 1 permit was granted December 22, 1939, and a motion for new trial, seasonably filed, was overruled February 24, 1940. Meantime the well was drilled and brought in as a producer January 9, 1940. The well No. 2 permit was granted February 24, 1940, and motion for new trial overruled March 4, 1940. The well was brought in as a producer March 14, 1940. Shell filed a statutory appeal challenging both permits in the Federal Court March 8, 1940. June 3, 1940, the United States Supreme Court decided the Rowan & Nichols case, and on October 21, 1940, it altered its opinion and denied a rehearing. Railroad Comm. v. Rowan & N. O. Co., 310 U.S. 573, 60 S.Ct. 1021, 84 L.Ed. 1368; Id., 311 U.S. 614, 61 S.Ct. 66, 85 L. Ed. 390; Id., 311 U.S. 727, 61 S.Ct. 167, 85 L.Ed. 473. That case...