Spaeth v. Corporation Commission , 597 P.2d 320 ( 1979 )

IRWIN, .Vice Chief Justice.

Appellants, Sarah M. Spaeth and various other mineral owners, filed an application with the Corporation Commission for a modification of a previous order creating 640 acre drilling and spacing units within the common source of supply to permit the drilling of an additional well to protect appellants from drainage and consequent prejudice of their correlative rights.¹ Union Oil Company, the well operator in the affected drilling and spacing unit, Ashland Oil Company, Inc., and Getty Oil Company, adjoining operators, intervened as contestants to the application. By Order No. 122,-300, Commission denied appellants’ requested modification, and they appealed.

Union first contends that appellants had no standing to request the modification. 52 O.S. 1971, § 87.1(a) authorizes the Commission to enter an order after hearing upon petition of any person owning an interest in minerals embraced within the common source of supply or the right to drill upon lands embraced within the common source of supply. Texas Oil and Gas Corporation v. Rein, Okl., 534 P.2d 1277 (1975). Also, 52 O.S. 1971, § 112, provides in part:

“Any person affected by any Legislative or administrative order of the Commission shall have the right at any time to apply to the Commission to repeal, amend, modify or supplement the same * * *»

Appellants not only owned an interest in the minerals involved but had been affected by the Commission’s order establishing the drilling unit in the common source of supply. We hold appellants had standing to seek the relief requested. Whether they are entitled to any relief is an entirely different matter.

The record discloses a common source of supply for natural gas in the Morrow formation, underlying part of Township 17, Range 11 West, Blaine County, Oklahoma. By Order No. 59,245, entered June 17,1965, the Commission created 640 acre drilling and spacing units for the Morrow underlying Sections 10 through 15 and 22 through 24 of Township 17. This order was entered on the strength of information obtained from a producing well drilled in Section 14. By Order No. 61,106, entered December 28, 1965, the Commission extended Order No. 59,245 to include Sections 1 through 5, 8, 9, 16, 17, 20, 21, and 25 through 29 of Township 17. Evidently, Order No. 61,106 was entered on the strength of information obtained from the well in Section 14 as there was no additional development in the area between the June and December order.

In 1966 and 1967 wells were drilled and completed in Sections 3, 4, 9 and 10. Appellants are mineral owners of acreage underlying Section 4. The well in Section 4 is, relatively speaking, a poor well. Testimony on behalf of appellants was that past production and potential future recovery from adjoining wells east, southeast and south of Section 4 was and would continue to be many times greater than in Section 4. Appellants’ expert believed that porosity factors are such in the common source of supply that these better producing wells have been and will continue to drain gas from under Section 4. That testimony was based on data resulting from the four wells drilled since the last order.

The Commission, in denying appellants’ application for modification, made the following findings:

“6. That the evidence introduced did not establish a substantial change of conditions of a substantial change of knowledge of conditions since Order No. 61,106 was entered. * * * The evidence fails to establish the violation of the correlative rights of the applicants or of the owners of the oil and gas rights in and under the unit in question * *

A spacing order which has become final may be modified only upon substantial evidence which shows a change in conditions, or a change in knowledge of conditions, arising since the last order. Phillips Petroleum Co. v. Corporation Commission, Okl., 461 P.2d 597 (1969). As in other Commission proceedings, the substantial evidence rule controls in appeals involving oil and gas conservation orders. French v. Champlin Exploration, Inc., Okl., 534 P.2d 1302 (1975). This Court had on numerous occasions repeated the definition of “substantial evidence”. See Central Oklahoma Freight Lines v. Corporation Commission, Okl, 484 P.2d 877 (1971).

Virtually all of the evidence before the Commission was presented by appellants. Based upon data obtained as a result of the wells in Sections 3, 4, 9 and 10, their expert testified that the wells in Sections 3, 9 and 10 were draining Section 4. He said that we now have information involving the reservoir that we did not have when the first orders were entered; and that the changes in knowledge and conditions are substantial changes. This expert was of the opinion that the well in Section 4 was not capable of protecting Section 4 from drainage from the wells in Sections 3, 9 and 10. In order to stop the drainage, he was of the opinion an additional well had to be drilled in Section 4. The expert’s opinion was supported by technical data. Appellees offered no expert testimony but did cross-examine appellants’ witness on all matters. Notwithstanding this lengthy questioning, appellants’ expert testimony remained consistent. We can only conclude there is no substantial evidence that will support Commission’s finding that the “evidence introduced did not establish a substantial change of conditions or a substantial change of knowledge of conditions” since the previous spacing order, and its finding that “the evidence fails to establish the violation of the correlative rights of the applicants or of the owners of the oil and gas rights in and under the unit in question.” Appellants are entitled to a reversal of the Commission's order.

Appellants suggest that under 52 O.S. 1971, § 112, this Court on appeal, “may itself make the order which the Commission should have made”. Section 112 was enacted in 1933 and at that time the Supreme Court had “jurisdiction to review, reverse, correct or annul any action of the Commission within the scope of its authority * See Oklahoma Constitution, 1931, § 13605. Section 13605 was amended in 1941, and Article 9, § 20 of the Oklahoma Constitution now provides that the Supreme Court “shall enter judgment, either affirming or reversing the order of the Commission appealed from.”

Order reversed.

LAVENDER, C. J., and WILLIAMS, HODGES, BARNES, SIMMS, HARGRAVE and OP ALA, JJ., concur. DOOLIN, J., concurs in part, and dissents in part.

1 . Appellants sought authority to drill an additional well on the drilling and spacing unit and did not seek two allowables, but only a single allowable.