Untitled Texas Attorney General Opinion ( 1949 )

NEYGENERAL
OFTEXAS
April 28, 1949
Hon. William J. Xurray, Jr.
Chairman, Railroad Comnlsslon
Austin, Texas
Opfnion Ro. V-816
Re: The effect ef filing a
plug and abandwent re-
port on a Rule 37 permit.
Dear Sir:
Your letter of March 21, 1949, concerns a
Rending application to clean cut, redrill, and pro-
duce a well. The accompanyin file Indicates that
under date of December 20, 19 97, 8 notice of lnten-
tion to drill a Number 2 well on a .49 acre tract
was submitted to the Railroad Commlsslon. It was
shorn et the hearing en January lb, 1938, that the
well was desired as a staggered offset to a well e&I
another tract. An exception to Rule 37 and a permit
to drill was granted by order of January 25, 1938,
speclfyirig the location. No protest or attack on
the order Is shown in the file.
An application to plug dated May 21 1941,
rec~eived by the Commission in Austin on Hay 26, 1941,
states that drilling was cemmenoed October 21, 1938,
and completed November 3, 1938; that the total depth
was 3,561 feet; and that the well wee net producing,
The deputy ,aupervlsor of the district, underdate of
May 22, 1941, noted on the appllcatlan, “OR, 18 la c k a
cement.”
The plugging record, received by the Cer-
mission In Austin June 3, 1941 recites that the
well was plugged on May 22, lghl; that it was filled
with mud-laden fluid, accerdlng to the regulation6
of the Commission; that 22 sacks of cement were used
in plugging; that the well wes not shot”that 2,463
feet of casing, was pulled ; and that the well was not
producing when plugged. It appears from testimony
Hon. Will,$an J, Murray, Jr. - Page 2 -V-816
that the pumping equipment, the derrick founda-
tion and the surface pipe were left at the looa-
Mon. The plugging was voluntary and not under
orders of the Commission.
An appllcatlon to drill twe feet over from
the original location In the name of the original
permittee, dated August 9, 1946, was heard August 23,
1946. The notice stated tbat:
“This location 18 to take the
place of old we11 No. 2, which was
plugged and abandened due to mechan-
ical trouble, ”
The position was taken at the hearlq that the original
well was plugged in error and that a good well could be
drilled 0 The appllcatien was refused September 11,1946,
apparently because the lo: 1 well was considered to be
properly placed and wonld drain the tract.
An application dated April 25, 1947, to “re-
drill, clean out and prsdqcc well We. 2 e . o which
was voluntarily plugged eq acaount ef mechanical ceq-
dition and which wa6’ a good preducileg well” was received
in Austin en April 29, 1947. T&e Ce~lsslon flrlt treat-
ed the application as an applicatlop fer rehearing and
refused to set it fbr hearing. Under date of Auuyst 7,
1947, apparently under advice of this Office, notice ef
a hearing an August 18 was given, stating:
the locatton being re-
questid &‘follows: 25 feat northwest
of Well Ho. 1, and 25 feet southeast
of the northwest line, ?a be drilled
to 3700 feet, TQls Is a request tt re-
drill, clean Out, and prqduce well He.2 *
which was veluntarlly ply&Bed en ac-
ceunt of mechanloal ctnd+tlon.*
The location spec;ified iq one foot closer to
the nurthwest property line than the location sptcl-
ffed In the original permit. The depth proposed is.
the same as orlgln4lly applied for but is 140 feet
greater than the total depth ahewn en the plugging rt-
card,
A memtra dum by the applicant’s attorney sub-
mitted en August 1i , 1947, takes the pssltlon that the
Hon. William J. Murray, Jr. - Page 3-V-816
applicant still has rights under the original per-
mit and should be permitted to go back In the aamt
hole and put the well on production.
A letter of protest dated August 22, 1947
states that the applicant Is producing through Ifs
Re. 1 well lore 011 than the amount eriginally In
place and has a net drainage advantage; that the
tract Is already twenty times more densely drilled
than the fiel~d average; that the appHuat+sn would
double the density; and that old well lo. 2 has been
formally and flnally plugged and lbandontd.
The application rtfustd en October 21,
was
stating
1947, ene C6minlssientr that after ceafereatt
with members of this Office, ha had concluded that
the application must be treated as one te drill a
new well, the original permit having been oanoelltd
by the voluntary filing of the plugging and abanden-
me& report.
Anether application by the 6ame party was
filed Hevember 26, 1948, “to drill, clean out and
preduae well Re. 2 D . D which was valuntarlly plugged
on account of rechsnical oendltltn and which was a good
producer." The lecatien applied for is again one foot
closer te the northwest line than the original Me. 2
permit distance. This applicatien was treated as a
'm&Ion for rehearing and wau erdertd granted en Recer-
ber 22, 1948, and sat te be heard January 17, 1949.
It further appears frem the Ccnninlssion~B
files that a permit fer a Ma.3 well on a subdlvlslen
of the erlglnal tract was granted on December 6,
1940, "to prevent confiscatlen of property and te
prevent physical waste," The lib. 2 well hsd not bttn
plugged at this time.
Your letter requests tuc tplnien en the
tollewing question, whleh we qtlttt:
"Is the Rule 37 permit erigl-
nally granted . 0 . (fer the) IO. 2
well still a valid permit in spite
of the fact that the well was subse-
quently pluggod and abandentd and are
they (the applicant) tntitlod to re-
drill and preduce this well under the
original permit?”
Hon. William J, Murray, Jr, - Page 4 - V-816
You refer ua to the recent case of Humble Oil k
Refining Co. v, Cook, 215 S.W,2d 383 (Tex,Civ.App.
1948, error ref .n.r,e,) D
The Cook case was an attack on a permit
granted in January, 1947 to the fee owner to “re-
drill and put back on production” an old well which
had been voluntarily plugged in December, 1941, by
the assignee of a former lessee, An “Application
to Plug and Well Record” and a “Plugging Record” had
been filed with the Commission, Cook purchased the
property in August, 1946, after ascertaining that
the lease had terminated and that the permit and
right to produce the old well had not been challenged.
The Court of Civil Appeals held that the
Cook tract was a subdivision and was not entitled to
the original (1937) permit as an exception to prevent
confiscation, but that Rumble could not now attack it.
Humble argued that the 1947 permit to “re-
drill and put back on production’* should be teeted by
the rules governing original permits, that since the
original well had been abandoned, the permit therefor
mu8t have terminated, The appellees, in a brief signed
by a member of this Office, answered that the Commission
could not in 1947 have reviewed the granting of the
original permit, but could only hear and determine
51) the phyafcal atatua of the well; (2) the proposed
rework!’ operations; and (3% the degrees of deviation
from the vertical of the proposed redrilling; all 80
that the CommissfonPs records might reflect what was
proposed to be done with the well so that the Com-
mlsafon could control the %eworklb operations, and so
that, when completed, the Commission could place the
well “back on production” by assigning it an allow-
able, The following statement is quoted from the ap-
pelleess brief:
“We believe this ease must be
affirmed on this ground: It is ad-
mitted that the well went off pro-
duction purely because of~‘mechanica1
defects, When it went off, it was a
legal well, so held and regarded by
all 0 A mechanical defect does not
change a legal well into an illegal
one o The Railroad Commfasi6n has un-
limited power to permit mechanical de-
fects to be remedied, and whatever
.
Hon. Wllllaa J. Huurray, Jr, ‘WPage 5 - V-816
those defect8 may be IA Aature or
scope or coots 18 the conaern of the
‘operator. The~order wa6 broad enough
to permft any repa$rs necessary to be
made a8 long as the same, or practl-
tally the same, hole was used. We
perceive that such repalre are ulnually
made by an operator, even without an
order, aAd certainly without opening
up the question of the validity of the
original order made,nlne years prevlous-
lY.
The Court of Civil Appeals affirmed the trial
court judgment, refusing to Invalidate Cook’s permit.
IA its opinion, the Court aaid:
“A ‘permit of the Railroad Con-
mleelo~ to drill a tent well for 011
or gas, on Its face, grants thin per-
mission and nothing more. Strictly
speak1 It might be aald that when
the welt
Y fs drilled, the office of‘the
permit is terminated and the permit “et-
hau8t.ea.n We know that this Is not the
full nature of an gppllcatlon to drill 1
well nor the extent of the rights con-
ferred by a penalt to drill. A8 a neces8a-
p9 consequence such permit carries with It
the right, in the event of production, to
operate th’e well and to produce the 011
or gas under the tile6 aAd regulations of
the RalSroad Commisalon, The life of such
permit and the privileges eonterred by It
are not limited by any law or rule of the
Commls8lon,-
“Ttxts``record dsea not skew that the
rights and privilege6 granted by the wig-
ins1 permft have been aetually,or factu-
ally termlp&e&-am&we hwa,-found no le-
gal basis for holding that they have ex-
‘;;;$ a6 a matter of law. (215 S.V.2d at
0
“Abandonment Is principally a matter
of lnteptlan whfetimuet be established by
HOA, William J. Murray, Jr. - Page 6 - V-816
clear and satisfactory evidence. DDO
An Intention to abandon Involves an
Intention not to return and reoccupy
the property. D DO
"Measured by these standalrds
the evfdence does not conclusively
show an abandonment. At most an Issue
of fact was raised which under the lm-
plied findings of the Commlsslon and
trial court have been resolved against
appellant G These findings are support-
ed by substantial evidence," (215 S.W.
26 at 387).
In Respondent*8 reply to Humble's application,
It was argued that writ of error should not be granted
because the order of the Commlsslon granting the srlglnal
permit necessarily found that there was no Illegal sub-
division, and such order was not now open to attack..
The Supreme Court refused the application
with the notltion, "Refu?ed. lo Reversible Error,"
thereby indiCatiAg (Rule 483, Tex. Rules Clv. Proc.)
that "* * d the Supreme Coupt Is not satisfied that the
opinion of the Court of Civil Appeals.1~ all respects has
correctly declared the law but Is of the opinion that the
application presents no error which requires reversal. c) . O*
IA Humble's Motion for Rehearing of the applica-
tion for writ of error, It was argued that the Court of:
Civil Appeals had gone beyond the stipulation of the
parties (quoted 215 S,U.Zd at 384) and the record on the
Issue of whether the old permit was still In effect af-
ter the well was abandoned.
Even if the Court of Civil Appeal8 opinion IA
the Cook case be taken as deciding that a Rule 37 permit
Is still ~valld as a matter of law In spite of the fact
that the well is subsequently.plugged and abandoned,some
doubt Is east on such decision by the disposition of the
application by the Supreme Court and by the alternative
theory for denial of the writ suggested by Respondents.
Toe, Humble strongly urged that any declslon as to the
original permit was outside the record.
We deem it beet, fn view of the foregoing, to
construe the Cook case as deciding that an order of the
Commlsslen granting a permit "to redrfll and put back
.
Hon. Ullllan J. Xurray, Jr. - Page 7 -V-816
en praduotlen" a plugged and abandoned well xl11
net be eet aside If there lr substantial erldenoe
te nuppert a finding ef fret that the lrlglaal per-
mit had net been ab8ndened. So oensldered, the
Ceok case Is autherlty fer the Cemmlsrien te deter-
mine, regawthe present appllcatien, the i88uer
of abmdonment and fea8lbllltJ ef redrilling the
well, Ass ~rellmlnary, It met neoemarlly be de-
cided that the iA8tant applioatlen is, In fact, an
application ta rrdrlll the remr permit ana 18 aet
fer a new well.
As a corollary, It Is our eplnlon that an
ipder of the Conuniasien refusing ruoh a permlt weuld
be 8ustalAed If there is Pubstaatlal evidence te rup-
port a finding that the original penrit had been aban-
doned, er that It wa8 not iea8lble to redrill the
well and put It back on productka.
Since the Instant applloatlon require8 the
aeterminetlon ef factual 18sye8, we cannet ~888 ea
it rrr a matter l$ law. Ye de petit cut, hewover, the
marlced~ rlmllarlty between the Instant oa8e aad the
Cook case. Determlaatlon ei the faactual lsrue8 hece-
In iheuld be made la the light it the legal te8t.8 laid
down therein.
An aBpplcat1on "to drill, clean
out, aad preduce" a well drilled under
an uri$ttacked permit granted as an ex-
ceptlan to Rule 37 may be graated al-
though the tract war a& originally en-
titled to an exceptlea and although the
well wa8 plugged aad reported eight
year8 ago, if the Railroad Comlsrlen
finds from 8ubSt8at$al evldeace that
the Wlginal permit ha6 net been aban-
Hon. William J. Murray, JP. - Page 8 - V-816
doned ~aqd-T%at ti ~wiezr8~ble ate
redrlll'the well and put it back
on productfun,
Ben Ii, Rice, III
Amistant
BIiR:bt