Court Opinion

ID: 9771204
Source: CourtListenerOpinion
Date Created: 2023-08-29 16:36:46.375514+00
Date Added: 2024-06-11T15:38:13.299273
License: Public Domain

CORNELIUS, Chief Justice,
concurring.
I concur in the majority opinion and judgment, but I write separately to state why I also believe the jury’s finding that Arkla was negligent is against the great weight and preponderance of the evidence. Consequently, even if a rendition were not required, I would reverse the judgment and remand the cause for a new trial.
There is a recognized cause of action for negligent or reckless destruction of adjacent oil and gas reserves. Elliff v. Texon Drilling Co., 146 Tex. 576, 210 S.W.2d 558 (1948); 1 Eugene Kuntz, A TReatise on the Law of Oil and Gas §§ 4.5, 4.6 (1987). But to succeed in it, the plaintiff must do more than prove that production from an adjoining operator’s well depleted reserves or pressure in the plaintiffs land. He must prove that the production was either in violation of Railroad Commission rules designed to prevent waste or that the manner of drilling or production was negligent or reckless. Elliff v. Texon Drilling Co., supra.
Appellees here pleaded only that the depletion of pressure in the Upper Pettit zone “came about from unreported and, illegal production ” in that Arkla produced gas from its Cromer 2-C well “without first obtaining proper approval from the Texas Railroad *120Commission as required by existing State-unde Bules 11 and 15.” They further alleged specifically that, because Arkla did not follow Railroad Commission rules, “the production from the Upper Pettit Sand through the Cromer #2-C well was illegal production.” They also added a conclusory allegation that Arkla’s “negligent and illegal conduct” created waste, but there is no evidence that Arkla did anything negligent except allegedly violating Railroad Commission rules, and the jury found that Arkla did nothing illegal.
Appellees produced only one witness of their own, James Smith, a petroleum engineer. Smith gave no direct evidence that Arkla had drained, or produced its Cromer 2-C well from, the Upper Pettit formation. Essentially, his testimony amounted to assumptions on his part that, because of the unusually high productivity of the Cromer 2-C well and the fairly equal pressure levels existing in the Upper Pettit and Lower Pettit formations more than forty years after the Cromer well was drilled, there must have been “communication,” as he called it, between the Upper Pettit and the Lower Pettit; in other words, he assumed that the Cromer 2-C well produced some from the Upper Pettit zone when it was permitted to produce only from the Lower Pettit and the Travis Peak zones. Smith’s opinions were pure speculation, however, and they were absolutely refuted by the findings of the Railroad Commission, which were admitted into evidence as facts, and by the expert testimony of Arkla’s witnesses, Robertson and Gaston.
The Railroad Commission findings and conclusions of law established, among other things, that: all of the fourteen BCF produced from the Cromer 2-C well was produced from the Lower Pettit zone, (Finding of Fact No. 3); Arkla tested the Upper Pettit in the Cromer 2-C well, but it was too tight to produce, so Arkla cased and cemented it off and that there is a good bond between the Upper Pettit and the Lower Pettit, and the Upper Pettit in the Cromer 2-C well has never been perforated, (Finding of Fact No. 4); there were thirty-four BCF of reserves in the Lower Pettit and thirty BCF have been produced from that zone, (Finding of Fact No. 5); tests of appellees’ Hall well do not indicate drainage of the Upper Pettit by production from the Cromer 2-C well, (Finding of Fact No. 8); the Upper Pettit in the Cromer 2-C well has not been produced through the same string of casing as the Lower Pettit at that location, and the Upper Pettit is not capable of commercial production at that location, (Finding of Fact No. 9); the Cromer 2-C well was properly completed at all times in the Travis Peak and Lower Pettit, (Finding of Fact No. 10); and the Cromer 2-C well has not been operated in violation of Railroad Commission rules, (Conclusions of Law No. 2 and 3).
Smith’s conclusion that Arkla was negligent and had committed waste was based wholly on his assumption that Arkla had produced or drained the Upper Pettit without permission. There was neither allegation nor evidence that the Cromer 2-C well was either drilled or operated in a negligent manner. In fact, Smith admitted in his testimony that the only negligent or improper thing he contended Arkla had done was to produce or allow drainage from the Upper Pettit in its Cromer 2-C well.
Smith speculated that Arkla had “blown” the gas cap in the Upper Pettit, which caused a loss of pressure. But “blowing the gas cap” is simply producing or draining the gas from the reservoir, and the undisputed direct evidence from the Railroad Commission and from Arkla’s witnesses shows there was no production or drainage from the Upper Pettit at that location. Contrary to the statement in the dissenting opinion, there was no evidence of any act or omission by Arkla that would constitute “poor conservation practices,” except Smith’s unsupported assumption that Arkla had produced or drained the Upper Pettit.
Smith asserted that Arkla did not cement the Upper Pettit until it completed its Cromer 2-C well. That is no evidence of negligence. There is no reason or need to cement off a formation until it or another formation has been perforated, and the Cromer 2-C well was not perforated until it was completed.
Smith’s assumptions, based on cryptic comments in some correspondence and records, that Arkla knew of alleged “communi*121cation” between the Upper Pettit and Lower Pettit sands is refuted by the direct evidence from the Railroad Commission and by testimony from Arkla’s two expert witnesses, Robertson and Gaston.
As the Railroad Commission’s fact findings show specifically that Arkla did not violate any rule or drain or produce the Upper Pettit at all, and that evidence is directly corroborated by Arkla’s expert testimony, a finding that Arkla was negligent is against the great weight and preponderance of the evidence.
There is another reason why the judgment cannot stand. Even if Arkla had produced from the Upper Pettit, under the rule of capture it had the absolute right to do so unless it violated the Railroad Commission’s rules or its manner of production was negligent or reckless and resulted in drainage to adjacent owners.
In Elliff v. Texon Drilling Co., supra, a case on which appellees rely, the Supreme Court explained the rule of capture:
It must be conceded that under the law of capture there is no liability for reasonable and legitimate drainage from the common pool. The landowner is privileged to sink as many wells as he desires upon his tract of land and extract therefrom and appropriate all the oil and gas that he may produce, so long as he operates within the spirit and purpose of conservation statutes and orders of the Railroad Commission.
(Emphasis added.) See also Halbouty v. Texas Railroad Commission, 163 Tex. 417, 367 S.W.2d 364, cert. denied, 371 U.S. 888, 83 S.Ct. 185, 9 L.Ed.2d 122 (1962); Brown v. Humble Oil & Refining Co., 126 Tex. 296, 83 S.W.2d 935 (1935); Stephens County v. Mid-Kansas Oil & Gas Co., 113 Tex. 160, 254 S.W. 290 (1923); 55 TEX.JuR.3d Oil and Gas § 13, at 39-41 (1987); 1 W.L. SUMMERS, The Law of Oil and Gas § 63 (1954); 1 Eugene Kuntz, A Treatise on the Law of Oil and Gas § 4.2, at 115-18 (1987).
An owner may also produce and appropriate the hydrocarbons underlying his land, even though by doing so he reduces the pressure from the strata underlying his neighbor’s land, so long as he does not do so in a negligent, reckless, or illegal manner. United Carbon Co. v. Campbellsville Gas Co., 230 Ky. 275, 18 S.W.2d 1110 (1929); 1 Eugene Kuntz, A Treatise on the Law of Oil and Gas § 4.2, at 117 (1987); see also Houston & T.C. Ry. Co. v. East, 98 Tex. 146, 81 S.W. 279 (1904). Unless it violates some statute or rule, an owner’s production from his own property does not constitute waste of a common stratum, even though the resulting drainage lessens the profits or value of adjoining property. See Tanner v. Olds, 29 Cal.2d 110, 173 P.2d 6, 167 A.L.R. 1219 (1946).
Appellees argue that the rule of capture does not apply here because it applies only when there is production from a common pool. The correctness of that statement depends on the definition of common pool. Common pool does not mean a formation from which more than one party is producing; it simply means a formation or reservoir that lies under more than one tract. The rule of capture applies when separate tracts are above a common source of supply. Halbouty v. Texas Railroad Commission, supra; 1 Eugene Kuntz, A Treatise on the Law of Oil and Gas § 4.3, at 119 (1987). It is not required that there be production from both tracts; if it were, an operator could never produce from a formation unless another was already producing from it. It is undisputed that the Upper Pettit formation extends under both tracts of land involved in this case.
Since Arkla had an absolute right to produce from the Upper Pettit unless it violated Railroad Commission rules or was negligent, and since the overwhelming evidence shows that it did nothing illegal or negligent, the jury’s finding of negligence is against the great weight and preponderance of the evidence.