                IN THE SUPREME COURT, STATE OF WYOMING

                                    2013 WY 32

                                                    OCTOBER TERM, A.D. 2012

                                                           March 15, 2013

EXXON MOBIL CORPORATION,

Appellant
(Petitioner),

v.
                                               S-12-0140
WYOMING OIL AND GAS
CONSERVATION COMMISSION and
DENBURY ONSHORE, LLC,

Appellees
(Respondents).


                   Appeal from the District Court of Natrona County
                      The Honorable W. Thomas Sullins, Judge


Representing Appellant:
      Walter F. Eggers, III, P.C., and Patrick R. Day, P.C., of Holland & Hart LLP,
      Cheyenne, Wyoming. Argument by Mr. Eggers, III.

Representing Appellee Wyoming Oil and Gas Conservation Commission:
      No appearance.

Representing Appellee Denbury Onshore, LLC:
      John A. Masterson and Alaina M. Stedillie of Rothgerber Johnson & Lyons LLP,
      Casper, Wyoming. Argument by Mr. Masterson.


Before KITE, C.J., and HILL, VOIGT, BURKE, and DAVIS, JJ.
NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third.
Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building,
Cheyenne, Wyoming 82002, of any typographical or other formal errors so that correction may be
made before final publication in the permanent volume.
DAVIS, Justice.

[¶1] The Wyoming Oil and Gas Conservation Commission approved Cimarex Energy
Company’s plan to reinject waste carbon dioxide and hydrogen sulfide into a producing
natural gas formation in southwest Wyoming, over the objection of Appellant Exxon
Mobil Corporation. Exxon unsuccessfully sought to overturn the Commission’s decision
in the District Court for the Seventh Judicial District, and now appeals the district court’s
order affirming that decision to this Court.1

[¶2] The parties present a number of issues in their comprehensive briefs, but review of
the complete record and oral argument allow us to distill the issues which we must decide
down to two, which we restate below. As to the second issue, we will affirm. As to the
first, we reverse and remand to the district court with directions that this case be
remanded to the Commission for the purpose of making appropriate findings.

                                               ISSUES

[¶3] 1.       Did the Commission provide adequate findings of fact as to whether
Cimarex’s plan to reinject carbon dioxide and hydrogen sulfide would result in waste of
natural gas and improperly interfere with Exxon’s correlative rights?

        2.    Should the Commission have granted Exxon’s petition for a rehearing due
to Denbury Onshore’s acquisition of Cimarex’s interests in the production unit where the
proposed injection well would be located and its announcement of a plan to eventually
sell carbon dioxide produced on that unit?

                                               FACTS

[¶4] Cimarex and Exxon hold mineral interests which permit them to produce gas on
the Moxa Arch, a large anticline located in the Green River basin of southwest Wyoming.
Since 1986, Exxon has produced natural gas from the Madison strata underlying its Lake
Ridge and Fogarty Creek units, which are to the south of Cimarex’s much smaller Riley
Ridge unit. The Madison strata, which are 15,880 feet to 16,778 feet below wellhead in
this field, consist primarily of porous and permeable dolomite and limestone and have
historically yielded Exxon an average gas stream composed of 21% methane, 7.4%
nitrogen, 0.6% helium, 66% carbon dioxide, and 5% hydrogen sulfide.



1
  Wold Oil Properties, Inc., intervened in the proceedings before the Commission and supported
Cimarex’s application. Subsequently, Appellee Denbury Onshore, L.L.C., acquired the interests of
Cimarex and Wold and was substituted as the proper respondent party in the proceedings before the
district court. For the sake of simplicity and continuity we will refer to those interests as having been
represented by Cimarex.


                                                    1
[¶5] The “methane cut” or percentage of methane in the gas stream available to
Cimarex is four to five percent lower than that available to Exxon because Exxon’s Lake
Ridge and Fogarty Creek units sit atop the crest of the Moxa Arch while Cimarex’s Riley
Ridge unit is located on the downslope of the anticline. This geologic feature and the
effect of gravity cause higher concentrations of heavier carbon dioxide under Riley Ridge
than are found under the higher Exxon Lake Ridge and Fogarty units, where lighter
methane gas has been more concentrated.

[¶6] Riley Ridge methane has been siphoned up the anticline to Exxon’s wells as a
result of a pressure gradient created by twenty-five years of production by Exxon and no
production by the leaseholders of Riley Ridge. Due to Exxon’s production, bottom-of-
the-well pressure throughout the Madison strata has been reduced by three to fifteen
percent of its original level, with the greatest decreases on the crest of the Moxa Arch.

[¶7] While Exxon produced and processed methane gas at its Shute Creek sour gas
plant some forty miles to the south of the units discussed above, Cimarex’s predecessors
and eventual partners in interest, including Wold Oil Properties, had to acquire and
consolidate numerous Riley Ridge working and overriding royalty interests over time in
order to own interests sufficient to make production on that unit economically viable.
Once the required acquisition and consolidation were achieved, the Riley Ridge interests
had to find a way to transport and process any methane and carbon dioxide they might
produce. They tried to negotiate with Exxon to have the Riley Ridge gas processed and
moved through Exxon’s system, but Exxon rejected those proposals, responding that it
had more than enough of its own gas to process, and that it saw no advantage to working
with the Riley Ridge owners.

[¶8] Cimarex eventually developed a plan to remove the final obstacle to production.
The plan involved building an innovative gas processing plant on the Riley Ridge unit
and reinjecting the separated carbon dioxide and hydrogen sulfide into the Madison
formation until a market which would allow it to sell stored carbon dioxide for use in
enhanced oil recovery operations developed. In 2010, Cimarex applied to the
Commission for a permit to use its Riley Ridge No. 20-14 well, which was located near
the new processing facility, to reinject those “waste” gases back into the Madison
formation at a point close to the southern boundary of the Riley Ridge unit.

[¶9] Exxon objected to the Cimarex plan, claiming that it would cause waste and
compromise Exxon’s correlative rights. “Correlative rights” means “the opportunity
afforded the owner of each property in a pool to produce, as far as it is reasonably
practicable to do so without waste, his just and equitable share of the oil or gas, or both,
in the pool.” Wyo. Stat. Ann. § 30-5-101(a)(ix) (LexisNexis 2011). A pool is “an
underground reservoir containing a common accumulation of oil or gas, or both.” § 30-5-
101(a)(iii). There is no dispute that the gas described above lies in a pool as the statute
defines that term. Waste is defined as pertinent to this case as follows:


                                              2
              (i) The term “waste” means and includes:

                    (A) Physical waste, as that term is generally
              understood in the oil and gas industry;

                    (B) The inefficient, excessive or improper use, or the
              unnecessary dissipation of, reservoir energy;

                     (C) The inefficient storing of oil or gas;

                     (D) The locating, drilling, equipping, operating, or
              producing of any oil or gas well in a manner that causes, or
              tends to cause, reduction in the quantity of oil or gas
              ultimately recoverable from a pool under prudent and proper
              operations, or that causes or tends to cause unnecessary or
              excessive surface loss or destruction of oil or gas;

                     (E) The production of oil or gas in excess of (I)
              transportation or storage facilities; (II) the amount reasonably
              required to be produced in the proper drilling, completing, or
              testing of the well from which it is produced, or oil or gas
              otherwise usefully utilized: except gas produced from an oil
              well pending the time when with reasonable diligence the gas
              can be sold or otherwise usefully utilized on terms and
              conditions that are just and reasonable;

                     (F) Underground or aboveground waste in the
              production or storage of oil, gas, or condensate, however
              caused, and whether or not defined in other subdivisions
              hereof;

                                          .   .   .

§ 30-5-101(a)(i). Waste of oil and gas is statutorily prohibited, and the Commission is
charged with preventing waste and protecting correlative rights. § 30-5-102; § 30-5-
104(d)(iv).

[¶10] Exxon did not object to Cimarex reinjecting carbon dioxide and hydrogen sulfide
into the Madison strata in general, but only to its plan to inject them at the No. 20-14 well
into a particular stratum of that formation. Exxon contended that the injected carbon
dioxide plume would dilute the concentration of valuable methane gas it was currently
producing from its Lake Ridge and Fogarty Creek wells. In other words, the methane


                                              3
would be diluted by hydrogen sulfide and carbon dioxide, requiring the processing of
more gas to produce the same net quantity of methane that it was currently producing.

[¶11] At a contested case hearing before the Commission, Cimarex introduced evidence
that its plan would reduce but not eliminate Exxon’s draining of gas from under Riley
Ridge, and that it would also reduce the drop in reservoir pressure which would result
from Exxon’s methane production. It contended that as reservoir pressure dropped
without reinjection, operators would be required to expend more energy to produce and
process methane and transport it to gas plants. It claimed that reinjection of carbon
dioxide would reduce pressure depletion in the pool to one-quarter of what it would be
without reinjection and therefore delay the date on which operators would have to use
other gases for compression in order to maintain their production by a factor of four.

[¶12] Cimarex’s experts testified that the current rate of pressure reduction would
eventually cause all operators to abandon their wells while hydrocarbon-bearing gas
remained in the reservoir. Reinjecting the carbon dioxide, however, would delay that
process and push hydrocarbon-bearing gas toward producing wells, so that when the
reservoir reached abandonment pressure only carbon dioxide would remain between
Cimarex’s leaseholds and those belonging to Exxon.

[¶13] Exxon’s experts agreed that maintaining reservoir pressure would enhance
methane production in most cases, and that Cimarex’s reinjection of carbon dioxide
would help maintain pressure in the Madison formation. They also agreed that the
injected carbon dioxide would force methane-bearing gas up the anticline toward
Exxon’s holdings and that it would also cause it to move “downdip” toward Cimarex’s
wells. The injected plume would almost entirely displace the hydrocarbon-bearing gas,
pushing the latter to producing wells and mixing with it – or diluting it – only gradually
at the leading edges of the plume.

[¶14] However, Exxon also introduced evidence that Cimarex’s plans would affect long-
term production from Exxon’s Lake Ridge and Fogarty Creek wells. That evidence
primarily addressed a computerized simulation which divided the Madison formation into
forty-one discrete strata and projected how Cimarex’s injected carbon dioxide plume
would spread over time if it was injected into “Layer 25,” the most permeable and
therefore the most productive of those forty-one layers. 2 Exxon’s experts contended that
the plume in Layer 25 would eventually reach its wells, gradually reduce the methane
content of the gas it was producing, and ultimately force it to shut in wells due to the
increased costs of production while producible hydrocarbons remained in the ground.

[¶15] Even though injected carbon dioxide would move most quickly in Layer 25 due to
its comparatively high permeability, Exxon’s model predicted that only three wells would

2
    Layer 25 is ten to fifty times more permeable than the surrounding strata.


                                                        4
be affected by that plume within ten years of Cimarex’s proposed injection into that
layer. Two of those belonged to Cimarex and one belonged to Exxon. After fifty years,
the projected lifespan of Cimarex’s Riley Ridge gas plant, eight additional producing
wells would be affected. One of those belonged to Cimarex and seven to Exxon, but four
of the seven were projected to suffer only minor dilution from the plume created by
injection.

[¶16] Exxon asserted that it would have to progressively shut in the four wells that
would be most quickly and seriously affected by the diluting effects of the Layer 25
plume, that it would stop producing from the first well once the percentage of methane
started to rapidly drop off or reached unacceptable levels, and that it would first increase
production from the remaining three. However, it would then lose that production as the
injected carbon dioxide reached those wells.

[¶17] From the testimony of Exxon’s experts and the exhibits it presented to the
Commission, it appears that it anticipated closing its Lake Ridge No. 5-32 well as early
as seven to twelve years after Cimarex began injecting the carbon dioxide into Layer 25.
While this is less clear, Exxon seems to have contended that a similar fate would befall
its Fogarty Creek No. 22-01 well approximately eight years later, when the percentage of
methane drawn from that well began a precipitous twenty-year decline. Little can be
discerned with certainty about the Fogarty Creek No. 23-12 and Lake Ridge No. 8-11
wells, but Exxon’s exhibits suggest that it would not have to shut them in – if at all – until
approximately forty-five years after Cimarex began reinjecting carbon dioxide into Layer
25.

[¶18] Those exhibits, when viewed in light of the testimony of Exxon’s experts, also
suggest that Exxon might shut in those four wells once the concentration of methane
drawn from them began a steep decline but had been diluted only to somewhere between
eighteen and twenty percent. Exxon’s model also showed that the gas currently
underlying Riley Ridge contained sixteen to twenty percent methane.

[¶19] Cimarex exposed a number of weaknesses in Exxon’s model. The model did not
account for fractures or faults which could provide an avenue of vertical migration of any
carbon dioxide injected into Layer 25 into surrounding strata, thereby slowing the
progress of the injected plume toward Exxon’s wells. Cimarex also pointed out that
Exxon’s calculations regarding the methane-diluting effect of the plume created by
reinjection rested on the questionable assumption that the current concentrations of
methane throughout the crest of the Moxa Arch were the same as they had been some
twenty-four years earlier, prior to any production in that area.

[¶20] Exxon’s model also rested on the incorrect assumption that Cimarex would begin
reinjecting carbon dioxide at twice the rate called for in its published plans. Furthermore,
the model failed to account for the fact that carbon dioxide is heavier than – and would


                                               5
therefore tend to sink downdip of – the methane and helium bearing gas that both parties
would be producing. Nothing in the record indicated whether Exxon’s model accounted
for the likelihood that Cimarex’s gas production might include the later removal and sale
of some of the reinjected carbon dioxide. If Cimarex sold some of the carbon dioxide it
had reinjected or planned to reinject, the size of the plume would be reduced, as would
the degree of dilution of methane by carbon dioxide.

[¶21] Notwithstanding what Cimarex viewed as serious defects in Exxon’s model, it
advised the Commission that due to the model’s implications it would likely refrain from
injecting any waste gas into Layer 25. The Commission generally ruled in Cimarex’s
favor and granted its request to turn its Riley Ridge No. 20-14 well into a waste injection
well, provided that it did not inject carbon dioxide into Layer 25. This decision allowed
injection into other strata above Layer 25. Exxon contends that this decision had the
improper purpose of allowing Cimarex to obtain more production at its expense because
Exxon had a long history of producing gas from the pool.

[¶22] Shortly thereafter, Exxon petitioned the Commission for a rehearing, relying in
part on news that Denbury Onshore had acquired Cimarex’s rights in Riley Ridge, and
that Denbury had announced plans to sell some of the carbon dioxide it was allowed to
reinject at some point in the future. The Commission denied that petition. Exxon then
sought to overturn the Commission’s rulings permitting the waste disposal well and
denying the request for rehearing in a petition for review to the district court. The district
court affirmed the Commission’s orders.

                               STANDARD OF REVIEW

[¶23] When this Court reviews agency decisions which arise from contested case
hearings, we ordinarily are able to confine our inquiry to the question of whether the
agency’s findings of fact are supported by substantial evidence. However, we may also
inquire into whether the agency’s actions were arbitrary and capricious. Wilson Advisory
Comm. v. Bd. of Cnty. Comm’rs, Teton Cnty., 2012 WY 163, ¶ 18, 292 P.3d 855, 861
(Wyo. 2012). We resort to the latter “safety net” standard when challenged agency action
cannot be easily categorized or easily fit to any of the other review standards set out in
Wyoming’s Administrative Procedures Act. Newman v. State ex rel. Wyo. Workers’
Safety & Comp. Div., 2002 WY 91, ¶ 23, 49 P.3d 163, 172 (Wyo. 2002). Among such
actions is an agency’s alleged failure to provide sufficient findings of fact. Dale v. S & S
Builders, LLC, 2008 WY 84, ¶ 23, 188 P.3d 554, 561 (Wyo. 2008).

[¶24] When an agency’s procedural rules permit it to rehear contested cases, we review
its disposition of motions for rehearing under the abuse of discretion standard. Louisiana
Land & Exploration Co. v. Wyo. Oil & Gas Conservation Comm’n, 809 P.2d 775, 781
(Wyo. 1991).



                                               6
                                    DISCUSSION

The Commission’s Findings

[¶25] When it passed the Oil and Gas Conservation Act, the Wyoming Legislature
created a comprehensive regulatory program intended to prevent the waste of Wyoming’s
oil and gas resources while also protecting the correlative rights of property owners. It
charged the Commission with accomplishing those goals. Union Pacific Res. Co. v.
Texaco, Inc., 882 P.2d 212, 223 (Wyo. 1994).

[¶26] The Commission is required “to make findings of basic facts upon all of the
material issues in the proceeding and upon which its ultimate findings of fact or
conclusions are based.” Larsen v. Oil & Gas Conservation Comm’n, 569 P.2d 87, 90-91
(Wyo. 1977) (quoting Pam Am. Petroleum Corp. v. Wyo. Oil & Gas Conservation
Comm’n, 446 P.2d 550, 555 (Wyo. 1968) (emphasis omitted); see also Wyo. Stat. Ann. §
16-3-110 (LexisNexis 2011) (a final decision in a contested case must contain findings of
fact which, if set out in statutory language, are accompanied by an explicit statement of
the underlying facts supporting those findings). That requirement is critical to
meaningful judicial review because courts are ill-equipped to evaluate whether decisions
are supported by substantial evidence and otherwise reasonable without appropriate
findings. Larsen, 569 P.2d at 91. As this Court explained many years ago:

                     To aid a reviewing court in the performance of such a
             function and other limited functions assigned to it by § 14(c)
             of the Administrative Procedure Act, Ch. 108, S.L of
             Wyoming, 1965 (§ 9-276.32(c), W.S. 1957, 1967 Cum.
             Supp.), and particularly with reference to technical factual
             issues which must be resolved, § 10 of such Act (§ 9-276.28,
             supra) wisely requires an agency in a contested case to
             include in its final decision “findings of fact and conclusions
             of law separately stated.” Such requirement imposes upon an
             agency the duty to make findings of basic facts upon all of the
             material issues in the proceeding and upon which its ultimate
             findings of fact or conclusions are based. Unless that is done
             there is no rational basis for judicial review. Colorado-
             Wyoming Gas Co. v. Federal Power Commission, 324 U.S.
             626, 65 S.Ct. 850, 89 L.Ed. 1235 [(1945)]; California Motor
             Transport Co. v. Public Utilities Commission, 59 Cal.2d 270,
             28 Cal.Rptr. 868, 379 P.2d 324, 326, 327 [(1963)]; Cities
             Service Gas Company v. State Corporation Commission, 201
             K a n . 2 2 3 , 4 4 0 P . 2 d 6 6 0 , 6 7 1 [(1968)]; 2 Davis,
             Administrative Law Treatise, § 16.01, p. 436 (1958).



                                            7
                     To illustrate, one of the duties charged to courts, on
              review of agency action, is to ascertain whether or not such
              findings of fact are supported by substantial evidence. To
              afford the court an opportunity informatively and intelligently
              to discharge that function it must first be known what
              underlying evidentiary facts the agency relied upon for a
              finding or conclusion of ultimate facts. Findings of those
              basic facts will not be implied from ultimate findings. Fallon
              v. Wyoming State Board of Medical Examiners, Wyo., 441
              P.2d 322, 327 [(1968)], rehearing denied 443 P.2d 135. As
              clearly pointed out in California Motor Transport Co. v.
              Public Utilities Commission, supra, 379 P.2d at 327, if that
              were not true there could be no assurance that an agency has
              made a “reasoned analysis” of all the material evidence. The
              duty so imposed serves a further purpose. Ultimate facts can
              only “be reached by a process of legal reasoning based on the
              legal significance to be afforded primary evidentiary facts,”
              Braun v. Ribicoff, 3 Cir., 292 F.2d 354, 357 [(1961)]; and it is
              the duty of the reviewing court to satisfy itself that an agency
              determination has been reached “upon consideration of the
              whole record or such portion thereof as may be cited by any
              party,” as required by § 8(a) of the Act (§ 9-276.26(a), supra)
              on “a reasonable basis in law.” Braun v. Ribicoff, supra. In
              other words, orderly review requires that the primary basic
              facts must be settled before it can be determined that ultimate
              facts found by an agency conform to law. Failure of an
              agency to meet its responsibilities in the premises makes its
              determination susceptible to the charge that the order entered
              is contrary to law.

Pan Am. Petroleum Corp., 46 P.2d at 555. The statements in the above quote are
particularly true when a court must review an agency’s evaluation of extremely complex
technical information utilizing highly specialized expertise, as this Court must do in this
case. It cannot simply launch itself rudderless into a foggy sea of petroleum geology and
production methods.

[¶27] Exxon argued before the Commission that operation of Cimarex’s proposed
carbon dioxide injection well would result in waste of methane contained in the Madison
formation of the Moxa Arch and thereby inappropriately deprive Exxon of its correlative
rights in that reservoir. The Commission’s “findings of fact” in this regards were as
follows:




                                              8
                       16. Cimarex and Wold presented rebuttal testimony
               challenging [Exxon’s] model. Cimarex and Wold argued that
               no waste would occur if its application were approved and
               that its proposed operation prevented waste at least in the
               following ways: (1) allowing recovery of Riley Ridge Unit
               methane; (2) allowing recovery of Riley Ridge Unit helium;
               (3) manage reservoir pressure decline and preventing
               unnecessary dissipation of reservoir energy; and (4) retaining
               a valuable product, CO2, for possible subsequent sale rather
               than venting it into the atmosphere.

                      17. Cimarex and Wold introduced a graph in Rebuttal
               Exhibit E-1 which showed that their Riley Ridge reserves
               have been and currently are being drained by ExxonMobil,
               and argued that the approval of the injection well at the Riley
               Ridge #20-14 Well site would decrease, but not eliminate, the
               ongoing drainage of Cimarex and Wold’s reserves and
               thereby protect Cimarex and Wold’s correlative rights.

                      18. The Commission found generally in favor of the
               application for an aquifer exemption and approval of use of
               the well for disposal of waste. However, out [of] abundance
               of caution and in order to address any possible adverse effect
               on correlative rights, found that absent advance Supervisor
               approval and consent from ExxonMobil, Cimarex and Wold
               should not complete/perforate the Riley Ridge #20-14 into
               “Layer 25.” “Layer 25” is located from 16,275’ MD3 to
               16,350’ MD in the Riley Ridge #20-14 wellbore.

The Commission confined its “conclusions of law” in those regards to the following:

                      6. We further conclude that approval of the Riley
               Ridge #20-14 Well for disposal purposes should be granted
               with the following stipulations:

                                             .   .    .

                     e) that the interval defined as “Layer 25” (as defined
               above, Findings of Fact, ¶18), not be completed or perforated

3
  MD refers to the depth measured along the path of the borehole. Measured depth, Schlumberger
Oilfield Glossary, http://www.glossary.oilfield.slb.com/en/Terms/m/measured_depth.aspx (2013); Depth
in a well, Wikipedia, http://en.wikipedia.org/wiki/Depth_in_a_well (last modified 2/2/2013, 21:15).


                                                  9
              by the Applicant for injection absent advance Supervisor
              approval and consent from ExxonMobil;

                     f) that Applicant run a radioactive tracer during initial
              injection to demonstrate that no injectate is leaving the
              wellbore into “Layer 25[.]”

[¶28] The Commission’s decision tells us virtually nothing about the facts on which it
relied to resolve Exxon’s two primary challenges to the Cimarex proposal. In paragraph
17 of its findings, the Commission tells us it found that Cimarex had introduced a graph
and had argued that carbon dioxide injection would protect Cimarex’s correlative rights
by slowing Exxon’s drawing of methane from under Riley Ridge. It did not say that this
evidence and argument convinced it that Cimarex’s allegations were true; nor did it
suggest the part those facts may have played in balancing the correlative rights of
Cimarex and Exxon.

[¶29] The Commission came somewhat closer to the mark in paragraph 18 of its
findings and in subparagraphs 6(e) and (f) of its conclusions. In those portions of its
report, the Commission implied that prohibiting the injection of carbon dioxide into
Layer 25 would protect Exxon’s correlative rights. However, it never expressly said as
much, and more importantly, never gave any hint as to what findings of fact may have led
to that conclusion nor what evidence those findings could have been based upon.

[¶30] We could look to the record in this case and conclude that Exxon’s case regarding
the loss of its correlative rights rested almost entirely on the notion that, if Cimarex
injected carbon dioxide into Layer 25, a raging plume of that substance would quickly
cripple production from Exxon’s Lake Ridge and Fogarty Creek wells. We could also
reasonably find from the record that the projected damage would be substantially abated,
if not largely eliminated, by prohibiting injection into that part of the Madison formation.

[¶31] Cimarex comes close to asking us to do just that and to affirm the Commission’s
ruling. We must decline that invitation. We have long held that we cannot properly
make findings of fact; that task falls to the administrative agency. N. Laramie Range
Found. v. Converse Cnty. Bd. of Cnty. Comm’rs, 2012 WY 158, ¶ 11, 290 P.3d 1063,
1070 (Wyo. 2012). Because we must respect the fact-finding role statutorily assigned to
agencies like the Commission because of their specialized expertise, we do not speculate
as to what the factual findings by an agency might have been when they are nonexistent
or so general as to prevent a reasonable comparison to the evidence on which they may
have been based.

[¶32] The absence of reviewable findings is perhaps even more pronounced in the
Commission’s resolution of Exxon’s assertion that reinjecting carbon dioxide into the
Madison formation would waste a portion of the methane available for production. In


                                              10
paragraph 16 of the Commission’s findings, it noted that Cimarex presented rebuttal
testimony relating to the model used by Exxon to support its claim of waste, but the
Commission did not say whether it found that testimony convincing or identify any
aspects of the testimony that caused it to reject Exxon’s claim. That is also true of the
portion of paragraph 16 which summarized Cimarex’s argument that its proposed
operation would prevent waste by allowing recovery of Riley Ridge methane and helium,
by retaining carbon dioxide for sale, and by slowing the decline in reservoir energy.

[¶33] As already noted, this Court could look to the record and conclude that Exxon’s
case regarding waste rested almost entirely on the notion that dilution caused by a plume
of carbon dioxide injected into Layer 25 might eventually force Exxon to prematurely
shut in a number of its Lake Ridge and Fogarty Creek wells while producible methane
remained accessible by those wells. We could also perhaps find from the record that the
most reasonable course for avoiding waste might be to permit Cimarex to maintain or
slow the decline of reservoir energy by injecting carbon dioxide into the Madison
formation while prohibiting injection into Layer 25 of that formation.

[¶34] For the reasons discussed above, we will not embark upon that path. Instead, as
we have done in similar cases, we will return this matter to the Commission to make
findings of fact sufficiently specific to permit meaningful judicial review of whether the
Commission’s decision was supported by substantial evidence and consistent with its
statutory obligations. See Larsen, 569 P.2d at 93. We do not imply that the Commission
must hold another contested case hearing in this case, however. It may well be that the
existing record is sufficient to allow the required findings to be made, and we leave that
decision to the Commission.

The Petition for Rehearing

[¶35] A month after the hearing described above, Denbury Resources, an affiliate of
Denbury Onshore, announced plans to purchase Wold’s interests and to eventually
remove and sell the carbon dioxide produced by the Riley Ridge wells. Denbury
ultimately acquired Cimarex’s right to operate the gas plant and the remaining working
interests in the field, and it announced its intention to build a pipeline to transport at least
some carbon dioxide rather than reinjecting it, although it planned to reinject until the
pipeline was completed.

[¶36] Exxon petitioned for a rehearing on the theory that the acquisition by Denbury and
the announcement of plans to build a pipeline and sell carbon dioxide was newly
discovered evidence. The Commission found that a change in ownership made no
difference to the decision rendered.

[¶37] Denbury argues in this appeal that it has never sought permission to operate in any
manner other than that permitted as a result of the contested case hearing described


                                                11
above, and that it would be required to do so by the Commission’s rules and regulations.
Therefore, it contends, Exxon will have an opportunity for a hearing if and when
Denbury actually seeks permission to stop reinjecting carbon dioxide into well No. 20-14
or to otherwise operate that well in a manner not previously approved by the
Commission. Exxon has not disputed that it would be entitled to a hearing if and when
Denbury ever does seek to alter the way it operates No. 20-14, but argues instead that the
information would have mandated a different result as to the permit to reinject carbon
dioxide if known at the time.

[¶38] After reviewing the record and the Commission’s regulations, we find it unclear
whether Denbury would have to apply for permission to sell carbon dioxide rather than
reinject it. However, we agree with Denbury that the Commission did not abuse its
discretion in declining to grant a rehearing. See Wyoming Oil and Gas Conservation
Commission Rules, ch. 5, § 14 (Aug. 17, 2010) (upon a timely request for rehearing, the
Commission may order a rehearing). The possibility that at some undetermined future
time Denbury might decide to sell rather than reinject some carbon dioxide does not
require a rehearing now. Those issues can be addressed if and when they ever arise.

[¶39] If we go further and consider the merits, the result is the same. Exxon contends
that the Commission should have granted its petition for rehearing because it was not
until after the contested case hearing that Denbury published its plan to obtain and sell
carbon dioxide stored under the Riley Ridge unit. Contending that its petition presented
what was essentially a newly-discovered evidence claim, Exxon suggests that Cimarex
never advised the Commission that it or its successors in interest might sell Riley Ridge
carbon dioxide. It argues that such sales would materially undercut Cimarex’s assertion
as to the pressure maintenance benefits of reinjecting carbon dioxide into the Madison
formation, because in fact substantial amounts of gas would be sold rather than
reinjected.

[¶40] At the hearing on Exxon’s petition, Cimarex reminded the Commission that its
plan to convert its Riley Ridge No. 20-14 well to an injection well had always been
motivated, at least in part, by its desire to store carbon dioxide for later sale. That point
hardly needed restating. Cimarex’s pleadings and the evidence it presented at the
contested case hearing repeatedly indicated that Cimarex hoped to sell as yet unknown
quantities of the carbon dioxide it was separating from the methane it produced at some
future unknown and unspecified time. The fact that such plans became somewhat more
concrete when Denbury entered the picture did not make them new.

[¶41] Nor can one say that Cimarex’s plan to sell some of the carbon dioxide materially
enhanced Exxon’s position that reinjection would result in waste and also damage
Exxon’s correlative rights. There can be little doubt that while reinjecting carbon dioxide
into the Madison formation could tend to prevent waste by slowing the depletion of



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reservoir energy, selling some of that carbon dioxide instead of reinjecting it could
diminish the projected benefit of increased pressure in the gas-bearing formations.

[¶42] However, Exxon’s arguments at the contested case hearing rested on the notion
that waste and damage to its correlative rights would increase with an increase in the
amount of carbon dioxide injected by Cimarex, particularly if it was injected into Layer
25. At the hearing on Exxon’s petition for rehearing, one of the commissioners pithily
established that the grounds stated in the petition could not be reconciled with the
position staked out during the contested case hearing. The commissioner asked, “[I]f in
fact the party took the CO2 and did something else with it other than inject it, that would
in fact significantly mitigate by a factor of 90 percent the concern that Exxon argued at
the hearing, would it not?” Counsel for Exxon conceded that the commissioner’s
assessment was accurate.

[¶43] Even if by some stretch of the imagination the prospective sale of Riley Ridge
carbon dioxide could be deemed new information in light of the record produced at the
hearing, that change would only reduce the basis for Exxon’s objection to Cimarex’s
plan. The Commission therefore reasonably exercised its discretion in denying the
petition for rehearing.

                                    CONCLUSION

[¶44] Because the Commission’s decision would force this Court to speculate as to its
findings of both basic and ultimate facts, we reverse and remand to the district court with
directions that this case be remanded to the Commission for the purpose of making
appropriate findings. However, we affirm the Commission’s decision to deny Exxon’s
petition for rehearing.




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