Opinion ID: 2622768
Heading Depth: 1
Heading Rank: 7

Heading: Is Use of Wellhead Reporting Supported by Substantial Evidence/Lawful/Arbitrary/Capricious

Text: [ถ 30] The supporting structure for this argument is BP's contention that it was not possible to ascertain with certainty exactly from where the oil production at issue here was originating, even though it did have the capacity to accurately measure production from each well at issue in this case. Therefore, it was necessary for BP to use some measurement method other than wellhead production. The supporting structure for this argument quickly collapses, however, because BP was unable to offer a measurement method that was more sound than that of measuring the production at the wellhead. Even though wellhead production was not completely accurate, it was considerably more accurate than any alternative method and the record supports a conclusion that BP knew that was the case, or at least it should have known that was the case. BP further contends that when all of the statutes and constitutional provisions that it deems pertinent to this discussion are read together, it clearly shows a lack of legislative intent to focus on the physical location of the wellhead. Rather, BP continued, the focus should be on the value of the gross product which is valued after the production process is completed. [Underscoring in the original.] We conclude that Wyo. Stat. Ann. ง 39-2-201(e) (Michie 1977 and 1985) always contemplated that reporting of oil production should be done at the wellhead, and any other construction of those statutes is speculation. The enactment of Wyo. Stat. Ann ง 39-2-213 (Michie 1990) did not constitute a change, but only a restatement of what general practice had always been contemplated, the practice that was generally in place, and the practice that should generally continue. Any other construction of that statute would be purely speculative. We deem those statutes to be unambiguous but if we were to engage in speculation, we would conclude that the legislature intended to clarify what it had always intended so as to eliminate problems such as those with which we deal here today. [ถ 31] Moreover, BP's argument in this regard is weakened by the fact that some of its reports to the WOGCC were based on wellhead production, not on its 66/34 split theory. It appears to be correct that methods other than wellhead production may be approved by the DOR, but we agree with DOR that substantial evidence supports the SBOE's determination that no such other method was approved by DOR, and no other method was generally recognized in the industry during this time frame. We also agree with DOR's contention, which both the district court and the SBOE adopted, that the only correct method for reporting production, under the circumstances of this case, was by well location. That conclusion is supported by substantial evidence as set out above and is consonant with the governing statutes. Furthermore, we agree with the district court that the SBOE's decision in this regard was not arbitrary or capricious.