Nature of the Case
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Facts
D promulgated Order No. 17920 establishing a limited permissible producing gas-oil ratio of 2,000 cubic feet per barrel of oil in the West Edmond Hunton pool. D did this under the authority of Okla. Stat. tit. 53, § 86 (1941), as amended by 1945 Okla. Laws 156, § 3, provides that D shall have authority and is charged with the duty of preventing the inefficient or wasteful utilization of gas in the operation of oil wells producing from a common source of supply, of preventing the production of gas in such quantities or in such manner as unreasonably to reduce reservoir pressure or unreasonably to diminish the quantity of oil or gas that might be recovered from a common source of supply, and of preventing the escape of gas from oil wells into the air in excess of the amount necessary in the efficient drilling, completion or operation thereof. P petitioned D to amend the order by fixing a gas-oil ratio of 5,000 cubic feet per barrel of oil. A hearing was held in which considerable evidence was taken for and against the application. D entered an order denying the application. P appealed. For a period of three years prior to P's filing, D had fixed flat allowables for the West Edmond Hunton pool, and at the time of the hearing, the daily per well allowable was 150 barrels. The effect of the two separate orders was that each well was limited to a maximum daily production of 300,000 cubic feet of gas or 150 barrels of oil, whichever was produced first. D wanted a maximum allowable per well of 750,000 cubic feet of gas or 150 barrels of oil, whichever was produced first. There were 571 oil-producing wells in the pool. Eight wells produced with a gas-oil ratio in excess of 5000-to-1; 13 wells in excess of 4000-to-1; 48 wells in excess of 3000-to-1; and 128 wells in excess of 2000-to-1. The average gas-oil ratio for the entire pool at the time of the hearing was 1895 cubic feet per barrel of oil. Thirty-five percent of the oil wells in the pool were penalized by D's order. P had 27 or 28 producing wells, 13 of which were high gas-oil ratio wells. The penalty to an applicant for not being able to produce the full amount authorized by the flat allowable order amounted to $30,000 per month. P's wells were high on the structure and therefore had a high gas-oil ratio since gas migrates up structure. Approximately 142,000,000 cubic feet of gas was produced daily from the field, one-half of which was being vented into the air. If the petition had been granted an additional 34,000,000 cubic feet of gas would have been vented into the air, also only one and one-half percent of the wells in the entire pool would have been restricted in the production of gas. P claimed the 2000-to-1 ratio did such violence to P's correlative rights as to amount to a confiscation of property without due process of law. Three petroleum engineers testified that a greater ultimate recovery of oil could be had if the gas-oil ratio remained at 2000-to-1. P's expert witness testified that reservoir energy dissipated in one place will dissipate the energy for the entire field. Two and a half months after the denial of the petition, D entered an order establishing a gas-oil ratio of 3072-to-1, based on the average gas-oil ratio for the entire pool. This took into account the gas in solution with the oil, which was 908 cubic feet of gas to each barrel of oil. The record does not show whether the gas in solution was taken into consideration in computing the average of 1895-to-1 mentioned above. It was established by evidence that the gas-oil ratio of the pool will increase as the resources of the pool are depleted. The average ratio for the entire pool was approximately 1000-to-1 shortly after it was brought in in 1943. P appealed.
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