                                  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
