Republic Natural Gas Co. v. State

• Decision Date: 18 February 1947
• Docket Number: Case Number: 32123
• Citation: 180 P.2d 1009,1947 OK 52,198 Okla. 350
• Parties: REPUBLIC NATURAL GAS CO. v. STATE
• Court: Oklahoma Supreme Court

1947 OK 52

180 P.2d 1009

198 Okla. 350

REPUBLIC NATURAL GAS CO. v. STATE

Case Number: 32123

Supreme Court of Oklahoma

Modified: March 25, 1947

Decided: February 18, 1947

Syllabus

¶0 1. OIL AND GAS - Act of 1913 providing for ratable taking of gas from common source of supply not repealed by Act of 1915.

S. L. 1913, ch. 198, sec. 3 (52 O. S. 1941 § 233), providing for the ratable taking of gas from a common reservoir or source of supply, is not in irreconcilable conflict with, or superseded by, the provisions of S. L. 1915, ch. 197 (52 O. S. 1941 §§ 236-247), prohibiting waste of natural gas, and was not repealed by the enactment of said 1915 Act.

2. SAME - Foreign corporation obtaining permission to do business within state and producing and transporting natural gas therein may not question constitutionality of existing statutes regulating such operations nor question validity of orders of Corporation Commission authorized by such statutes.

Where a foreign corporation obtains permission to do business within the State of Oklahoma, and pursuant to such permission enters the state and produces and transports natural gas therein, it may not successfully contend that a statute, relating to its operations, and applying alike to both domestic and foreign corporations, in full force and effect at the time it obtained permission to do business within the state is unconstitutional, and that an order of the Corporation Commission made pursuant to authority granted by such statute is void.

3. SAME - Order of Corporation Commission requiring producer and transporter of gas to take ratably from well of another producer in gas field held not arbitrary or beyond jurisdiction of commission.

Record examined, and held, that the order of the Corporation Commission requiring Republic Natural Gas Company to take ratably from a well of Peerless Oil & Gas Company producing from the same common source of supply, or to cease the production of gas from said common source of supply through its own wells, was not arbitrary or beyond the jurisdiction of the commission.

Appeal from Order of Corporation Commission of Oklahoma.

From order made in favor of the Peerless Oil & Gas Company, the Republic Natural Gas Company appeals. Affirmed.

Rainey, Flynn, Green & Anderson, of Oklahoma City, and Robert C. Foulston and George Siefkin, both of Wichita, Kan. (Ross Rizley, of Guymon, of counsel), for plaintiff in error.

Richardson, Shartel, Cochran & Pruet, of Oklahoma City, and Floyd Green, of Oklahoma City, Attorney for Corporation Commission, for defendants in error.

Earl Foster, of Oklahoma City, amicus curiae.

OSBORN, J.

¶1 This is an appeal by Republic Natural Gas Company from an order of the State Corporation Commission, entered on January 10, 1945, requiring Republic to take gas ratably from a well of Peerless Oil & Gas Company in the Hugoton gas field in Texas county. In this court on such appeal Republic assails the validity of the order, and of the statutes upon which it is based, upon various grounds hereinafter more fully stated.

¶2 Peerless, in this court, moves to dismiss the appeal on the ground that Republic, by making a tender for sale of gas produced from its leases in the Hugoton field, has recognized the validity of the statutes and the previous orders made by the commission governing the producing and taking of gas from the Hugoton field and is, therefore, estopped now to deny the right of the commission to make the present order, and for the further reason that no motion for a new trial was filed before the Corporation Commission within three days after the order involved in this appeal was entered.

¶3 We see nothing in the tender of gas made by Republic which estops or precludes it from asserting the invalidity of the order appealed from, or of the statute, if it may be so construed as to authorize such order. In the previous orders of the commission governing the production and taking of gas from the Hugoton field, the amount of gas to be produced from the wells in that field to supply the market demand was fixed and allocated with as much certainty as the commission was able to do so, but neither expressly nor by inference was any requirement made upon Republic to take gas from any wells except its own. Recognition of the commission's right to make such orders and the production and sale of its gas thereunder in no way recognizes the right of the commission to require it to take gas from the wells of the other producers.

¶4 Nor was the filing of a motion for new trial necessary to preserve to Republic the right of appeal. Holzbierlein v. State, 197 Okla. 509, 172 P.2d 1007.

¶5 The motion to dismiss is denied.

¶6 Proceeding now to consider the appeal on its merits, we briefly summarize the facts established by the evidence adduced before the commission, upon which its finding and order were predicated. From the evidence it appears that the Hugoton gas field, not yet fully defined, covers a territory some 150 miles in length and 50 miles in width, extending from the southern part of the State of Kansas into Oklahoma and Texas, and possibly into Colorado and New Mexico; that practically all of Texas county, Okla., is embraced within the area of the field, which produces enormous quantities of gas, far in excess of the market demand therefor; that at the time of the hearing before the commission some 100 wells had been drilled into said field in Oklahoma, and that numerous wells had been drilled into it in the southern part of Kansas; that Republic had drilled some 92 wells in the Kansas portion of the field and some 38 in the Oklahoma portion, and that additional wells were being drilled into the field in considerable numbers; that Republic, under contract with two pipe lines supplying gas for public consumption, one of which is within the State of Oklahoma, had constructed a pipe line gathering system of large size extending from its main outlet in the State of Kansas into Texas county, Okla., whereby a portion of the production from its wells was transported to its markets in Oklahoma and Kansas; that by its principal contract it was required to maintain an open flow of gas production of more than four times in excess of the daily needs of the purchaser, and that Republic had available a supply of gas largely in excess of such requirement. It further appeared that there was no connection through stock ownership or otherwise between Republic and the pipe line outlets purchasing its gas. Republic drilled its first wells in Texas county, Okla., in 1937, and has since that time been continuously engaged in the drilling of additional wells and in extending and enlarging its pipe line system to take care of the production from such wells. It has at no time held itself out as, or purported to be, a common purchaser or common carrier of gas, nor has it transported gas from any wells other than its own, except that under request of the Petroleum Administrator for War, it carried in its pipe lines, free of charge, gas from certain producing wells which the Petroleum Administrator required it to transport as a prerequisite to permitting it to drill additional wells of its own. It also transports the gas of its royalty owners under its leases, which require it to pay as royalty 1/8 of the proceeds of the sale of gas.

¶7 The well of Peerless is located in section 14, township 6 north, range 15 east, in the northern part of Texas county. Under previous orders of the commission only one well could be drilled upon each section. The Peerless well was completed as a producer on April 28, 1944, and produces gas in commercial quantities. It is almost surrounded by wells owned and operated by Republic which, according to the testimony of all the expert witnesses who testified on the subject, are draining from under the Peerless lease large quantities of gas which could be produced from it, and for which Peerless and its royalty owners would receive payment if such gas could be marketed by Peerless. For the gas so drained from under the Peerless lease by the surrounding wells Peerless and its royalty owners, of course, receive nothing, the revenue derived therefrom, which is not susceptible of definite ascertainment or apportionment, being received by Republic and the royalty owners upon whose lease its surrounding wells are located. From the evidence it appears that all of the gas production from the wells in the Hugoton field in Oklahoma is from the same common source of supply, and that to a certain extent the lease upon which the Peerless well is located is, therefore, drained by other wells in the field, but that such drainage is insignificant and inconsequential as compared to the drainage by the nearby wells of Republic, which are much closer to the Peerless well than any other wells in the field.

¶8 From the evidence it appears that the present needs of Republic do not require the full capacity of its pipe line gathering system, and that a line of said system eight inches in diameter crosses section 14, upon which the well of Peerless is located, a short distance from said well. It also appears that Republic does not take from its producing gas wells any gas in excess of its determined allowable, as fixed by the Corporation Commission.

¶9 The Corporation Commission, after a full hearing, found that Republic had drilled numerous wells in the Hugoton field in Oklahoma; that it had constructed pipe lines from these wells to its main pipe line, which main pipe line extended some 25 or 30 miles to a connection in Kansas, where it sold its gas to a common purchaser and common carrier of gas, and that it also sold a part of its gas to another common purchaser, the Cities Service Gas Company, at a point within the State of Oklahoma; that one of its gathering lines ran across the land upon which the Peerless well was drilled, and that Republic had several wells on leases adjoining the land on which the Peerless well was drilled, which were...