Sunray Oil Co. v. Thompson
| Decision Date | 26 February 1936 |
| Docket Number | No. 501.,501. |
| Citation | 13 F. Supp. 867 |
| Parties | SUNRAY OIL CO. v. THOMPSON et al. |
| Court | U.S. District Court — Northern District of Texas |
Edward Howell, of Oklahoma City, Okl., Paul Taliaferro, of Tulsa, Okl., and Sanders & Scott, of Amarillo, Tex., for complainant.
William McCraw, Atty. Gen., and William Madden Hill, Asst. Atty. Gen., for respondents.
Before HUTCHESON, Circuit Judge, and ATWELL and McMILLAN, District Judges.
This is on motion to dismiss and on application for temporary injunction.
The Sunray Oil Company is a corporate citizen of the state of Oklahoma. It represents that it is engaged in the production of oil and gas in Moore county, Tex., where it operates a plant which cost it $100,000, and that it has a value in its oil and gas rights and interests in that county of more than $500,000. It complains of the Railroad Commission, the Attorney General, and the Governor of Texas, because of the alleged unconstitutionality of an act of the Forty-Fourth Legislature of the state of Texas, known as H.B. 782 (chapter 76 § 2) and H.B. No. 266 (chapter 120), which are article 6014 and article 6008 of Vernon's Annotated Civil Statutes. It complains that under this authority the defendant railway commissioners promulgated certain regulations effective in the latter part of 1935 under a misconception of the authority given, and that said regulations would destroy the complainant's property, because its wells produce gas and oil and water simultaneously, and that the ratio permitted by the law and the regulations thereunder make it impossible for the complainants to operate, because it cannot decrease either the oil, gas, or water without simultaneously decreasing the other two, and that such effort to decrease will result in a total loss of both oil and gas; that its situation is different from other gas-oil wells in the Panhandle area, in that its properties seem to be at the apex of a formation unlike that which surrounds and is found in the general body of the area; that, if it is denied the right to produce from its properties in a natural manner, both oil and gas will be wasted and totally lost to it; that, if the regulations made by the commission are permitted to be enforced against it, its wells will not only be lost to it, but its plant will likewise be rendered useless and of no value.
The respondents contend that the complainant appears without equity; that it has been engaged in the stripping business for several years, taking a small quantity of oil from a large quantity of gas, and "shooting" the gas into the air, and thus rendering it a total loss; that approximately 40,000,000 of cubic feet of gas per day are so wasted; that its wells should be reconditioned so that the flow of gas and oil could be kept within the legal limit; that one of the wells has an opening of approximately 300 feet; that the matter is still before the commission.
The complainant prays that the defendant be enjoined from making the statute and regulations applicable to its property. It also calls attention to the penalties of the law, and prays for protection from its arbitrary, unreasonable, and unconstitutional enforcement.
Testimony was submitted in the form of affidavits, which tend to show that really four wells are involved, each of which has a higher ratio than that permitted; the ratio being something over an hundred thousand cubic feet of gas to one barrel of oil. The complainant's witnesses support its contention that neither water, oil, nor gas can be cut off without destroying the wells, since the trinity is a simultaneous product, incapable of separation or diminution as to any one without a corresponding suppression of all; that the oil will be lost if the wells are shut down; that, if allowed to operate, approximately 400,000 barrels of oil will be recovered, but that such oil can not be saved or produced without the high quantity of gas; that hydrogen sulphide is present in such high percentage that the gas cannot be used for any commercial purpose.
The affidavits of the respondents claim that there would be no drainage of the complainant's wells, and classify them as gas wells that could be corrected as to a trinity of flow by remedial effort; that the physical condition of each well has a great deal to do with the present enormous loss of gas and the alleged inability to lower the amount of gas to the barrel of oil.
An affidavit was also introduced tending to show that the effect of this escaping gas was to injure trees and grass and to decrease rainfall and increase drouth; that approximately 43,000,000 cubic feet of gas escape from the complainant's stripping plant into the air every day, and that that has been going on for several years.
Complainant contends that the intention of the Legislature is not discoverable, since it provides that waste consists in the drowning with water any stratum capable of producing gas; that underground waste is prohibited, and yet it limits production of gas which, when applied to complainant, results in underground waste by drowning both gas and oil; that it provides that oil wells shall be produced with an efficient gas-oil ratio, but, when this is applied to its wells, it is inefficient; that it defines casinghead gas as any gas or vapor indigenous of an oil stratum and produced therefrom with oil, and that it may be used for any beneficial purpose, which includes the making of gasoline, but in other provisions restricts the production thereof and prohibits the use for the manufacture of gasoline, except when the residue is burned for carbon black. It prohibits the escape into the open air, from wells producing both oil and gas, of gas in excess of the amount necessary to efficiently operate the well, but in other...
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