Pattie v. Oil & Gas Conservation Commission

Pattie and others (plaintiffs) were oil and gas lessees on land on the edge of a petroleum reservoir. The Sumatra Oil Corporation (Sumatra) was a lessee on an adjacent tract of land. Montana Oil and Gas Conservation Commission (Commission) (defendant) rules required an oil well to be located no closer than 330 feet from a property boundary line. Gas wells were required to be further apart: no closer than 1320 feet from a property boundary line. Sumatra, intending to drill for oil, drilled a well 330 feet from its property boundary with the plaintiffs. However, rather than striking oil, the company struck natural gas. As such, its well was closer to the plaintiffs’ property line than the Commission rules allowed. Sumatra applied to the Commission for an exception to the rule. The plaintiffs also applied for an exception, hoping to drill a gas well 330 feet from the boundary line on the other side of the line. Commission rules provided that an exception be granted where enforcing the spacing rule “would be inequitable or unreasonable.” The Commission granted Sumatra an exception for its gas well, but denied the plaintiffs an exception to build their own well. The plaintiffs brought suit against the Commission based on the denial, arguing that the denial prevented them from being able to protect themselves from having gas drained from their land. The trial court granted the plaintiffs summary judgment and ordered the Commission to reconsider the plaintiffs’ application. The Commission appealed.